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What are the laws that govern late fees?

Discussion in 'Commercial Snow Removal' started by SnowMan4U, Feb 17, 2006.

  1. SnowMan4U

    SnowMan4U Member
    Messages: 43

    I live in MASS. I need to start kicking some arse when it comes to these late paying customers. Can I say on the bottom of my bill...

    Payment due upon receipt. Payments over thirty days subject to a late charge of 1.5% of amount due compounded daily. All checks with insufficient funds will be subject to a $25.00 handling fee.
     
  2. plowed

    plowed Senior Member
    Messages: 344

    The nsf check fee can be whatever you want it to be. As for the late fee, as a percentage, it can not exceed your states usery rate, which I believe is 18% annually in MA. Therefore, 18% breaks down to 1.5% per month. You can not compound the 1.5% daily, but rather monthly.
     
  3. go plow

    go plow Senior Member
    Messages: 322

    yep yep... 18 annum 1.5 per 30 days in ct.....
     
  4. bigjeeping

    bigjeeping Senior Member
    Messages: 676

    wow I'm an idiot. i knew there we're laws but never actually looked into them. I thought those "fees" were only if you were charging interest on their balance... like a credit card company, instead of as a late fee. .... confused :dizzy:


    Mine agreement flat out says 5% after 30 day then 5% every 2 weeks after that.
     
  5. plowed

    plowed Senior Member
    Messages: 344


    I think if you change it to a flat fee you'd be ok, but make sure. The 5% is likely not legal, as that would make the usery rate like 60% and they can actually challenge you on it. I think the highest usery rate I've seen is about 30% in some states.
     
  6. Daner

    Daner PlowSite.com Addict
    Messages: 1,187

    This is why i pick and choose my customers

    Most of the people that i deal with pay up front before the month begins...then there is no hagelling about snow amount etc....Or the per push guys i get paid right there on the spot...or after 3 pushes... i will never let the bill add up too high
    Some times i think they get mad at us working guys cause it snows LOL..Hee Heepayup wesport
     
  7. justme-

    justme- 2000 Club Member
    Messages: 2,138

    It is totally state dependant. I have a $5.00 surcharge plus charge the state max of 1.5% per month. AFAIK you can have a surcharge amount for late payment as long as it's a flat fee them you can add the intrest on top per month.
     
  8. SnowMan4U

    SnowMan4U Member
    Messages: 43

    We are in the same state. When you say 1.5%, are you compounding that daily after thirty days?
     
  9. rembrandt100

    rembrandt100 Member
    Messages: 43

    All my invoices have at the bottom "2% per month charged on unpaid balances."

    The only time I use it however is if an account is more than 2 months old and no one has called me to explain why. Everyone has unexpected expences once in a while. But in 21 years I have had only a handful of people call and say they would be late due to whatever reason.

    Dave
     
  10. justme-

    justme- 2000 Club Member
    Messages: 2,138

    nope- law only allows 1.5% monthly. I have only had to do late payments once- and the intrest has no effect of scaring the customers in to paying- hence the $5.00 surcharge. At least it covers my time to rewrite a bill.
     
  11. SnowMan4U

    SnowMan4U Member
    Messages: 43


    That was my thinking as well. If they couldn't pay the XXX.XX on time, why would anyone think 1.5% would scare them. I think a flat $10-20 might be better.
     
  12. Rappa

    Rappa Member
    Messages: 84

    I charge $15 a month late fee. I don't know if it's legal, but it gets the job done.
     
  13. SnowMan4U

    SnowMan4U Member
    Messages: 43

    Mind if I ask what you charge for a bounced check?
     
  14. Rappa

    Rappa Member
    Messages: 84


    25$ unless it is a customer that I really like. If it is an honest mistake, just cover my costs for the bad check. Thankfully, I haven't had any bounce in over 3 years. 40 customers. I have great customers. I only give my customers 10 days from invoice to pay. You people that give 30 days are crazy. We aren't a bank, we are little guys who need to get payed. 30 days is ridiculous. I state on my bills that late fees will be applied if payment is not recieved within 10 days on invoice date. I very rarely enforce that because I usually get checks fast.
     
  15. go plow

    go plow Senior Member
    Messages: 322

    before you go saying people are crazy, find out what the laws are first.. many states are different. ever heard of 30 days net..? who has ever heard of late fees after 10 days??? you have to give them 30 days before you can add late fees............ so does that mean that if i get my phone bill on monday and i mail it out on the following tues.... by thurs. i should owe late fees? huh ....
     
  16. MBB

    MBB Senior Member
    Messages: 129

    in most states it is 30 business days, sat sun holidays don't count. Rule of thumb the bigger the client the slower they pay. Gets pretty quick when They call and complain that their equipment is not ready or their lot is not plowed your reply is previous bill not paid! no tickee no washee. I really hate carrying 4-5 grand/mo. because of this.
     
  17. Rappa

    Rappa Member
    Messages: 84

    30 days net??????? WHA? If you want to get technical, payments are do upon completion of work provided. It is a CONVENIENCE that I send them a bill and therefore they do not have to meet me in the driveway to pay me. 30 days net. .. C'mon... These are residential. I understand that commercial is different. I expect to be payed for my resi's as soon as possible. To give them 30 days is being extremely generous.
     
  18. hhfco

    hhfco PlowSite.com Veteran
    from MA
    Messages: 5

    But it's all kind of pointless on residential. The interest isn't worth the aggravation. If they owe you $200 you can charge them $3 in interest per month. My invoices ( & contract) say "invoices are due on receipt" & "accounts with past due balances will not be plowed". If they're consistently slow - dropped next year! Only had to do it a couple time in 15 years. There are to many good customers to waste your time with the bad ones. Next season tell them you can no longer service them and tell them your biggest competitor would be your recommendation as a replacement.

    I used to do that all the time when I was doing design build. Had 30 or so questions I would work into the first phone conversation. Based on the answers I knew from experience if they were a good fit for my company or had problem written all over. If I didn't want them - I'd tell them my competition was probably better suited to their project (or budget). :D Keep the good customers and let the competition waste their time with the problem ones.