Your Late Fees
We’ve talked about others charging fees to writers who miss deadlines (and I think all of us agree so far that it’s a great idea). Now let’s talk about your late fees. What are you charging customers who don’t pay on time?
Recently I posted somewhere that my late fee was 25 percent. That was met with a little bit of “too high!” talk. However, my late fee is spelled out in my contract. If you’re late with payment, here’s what you’ll pay. Honestly, I’ve had maybe one person pay the late fee (and it was a client who is not normally late). I’ve charged it to numerous customers. I rarely collect it. And to be completely truthful, I don’t care. My goal is to secure payment in full. If that means letting the lax ones feel they’ve “won” something by ignoring my late fee, who cares? I got what was due. That’s what matters.
So set ’em high, I say. However, not all take my stand on this issue. Some charge lower fees – really low, like a few percentage points. Let’s discuss – if you charge high, why do you and what are the results so far? If you charge low, how are your collection attempts going? I’m of the opinion, and feel free to disagree, that if a client sees a huge jump in the price, he/she is going to respond to that bill much more quickly than if it’s a few percentages. Then again, there are those who just won’t pay no matter what – you could sell their mothers on eBay and they’d ignore your bill.
So what are your late fee rates like?
I’m a freelance editor, and most of my current clients are large bureaucracies that pay on an established, glacier-paced schedule (sometimes 60+ days). No amount of cajoling or late fees will change that; late fees would be completely ignored. I know that going in and simply plan my finances around it.
For individual clients that are new to me, I require partial payments throughout the job and final payment upon delivery, so late fees don’t apply.
For small business clients and established individual clients, I do note that a late fee of 10% will be applied if payment is not received in 30 days, but I’ve never had to impose it.
Lori, interesting thoughts on late fees. I agree with the percentage idea. Flat rate fees have never made sense to me. ($10 overdue? $40 fee. $5,000 overdue? $40 fee.) The small business I work for still uses the almost antiquated NET30. Ours is a vastly different business than yours though–maybe we’re a bit sheltered.