Late Fees - Policy in charging them?

[flightg6]

I am a freelance theatre technician and I am wondering what I am allowed to charge for late fees for late payments. I know that I have to put on the original invoice what the late fees will be, but I am wondering how long I have to wait until I can charge late fees, how often can it be compounded, what percent can it be. Any help is greatly appreciated.

[deep]

I'm not sure if there is legislation or not regarding what is acceptable, as long as you inform your client in advance. When I'm working for individuals, my terms are 0 days...payable in full upon completion or they don't get whatever it is they wanted.

For corporate clients, my terms are 30 days, 2% compounded per month after that.

It STILL is no deterrent. Maybe 10% of my invoices are paid on time.

[CheapScotsman]

Do you actually manage to collect any of the late fees?

[deep]

Do you actually manage to collect any of the late fees?

Always. I have collected 100% of the late fees that I've billed for. I had one client laugh one time when I brought it up, but after I explained that he hadn't paid in full for his application, and would lose his site license for it, he stopped laughing.

I've heard that many companies just ignore any late fees and pay the original invoice, but the vast majority of my clients pay them without asking, and the few that ignored them received additional invoices. To date, no one has ignored them twice.

Late fees are entirely unprofitable. Generally, it's more of an opportunity cost for me to edit or create a new invoice and get it to a client. However, I think my clients take me more seriously for enforcing them, and they tend to pay on time from then on.

[dark169]

2% seems pretty normal, if its in your terms I'd push the issue. Issue monthly statments with the updated outstanding balance. Don't let others push you around as you'll find yourself in a cashflow crunch if it happens to much with big $$ invoices.
remember its your money they are sitting on and after a reasonable amoutn of time set out in your terms (15 days, 30days, 15th of following month ect) its totatly reasonable to expect some inrest on that cash just like a credit card would.

[deep]

Exactly - it's more about preserving my cash flow than actually getting more money out of my clients.

[flightg6]

Thank you all for you help!!!

[mayfly]

Just in case you have to litigate to collect your unpaid accounts, and you win, you will only be awared the published prejudgment and post judgement interest rates. For your reference, the prejudgment interest rates for 2006, as published by the ON Attorney General's office are as follows:

1st quarter - 3.3% p.a.
2nd quarter - 3.8% p.a.
3rd quarter - 4.5% p.a.

More rates are available at http://www.attorneygeneral.jus.gov.o...erestrates.asp