Charging Interest For Unpaid Invoices

[bf071080]

Hi,
I have a dilemma, one of the customers that I do a lot of business for has been slow at paying me for the appraisals I do. I was considering trying to charge interest for outstanding invoices from this point forward? What is everyone's take on this? Is there any reason why that won't work? Right now it is just a thought, but I wanted to get some more opinions about it first. Thanks

 

[CANative]

rots of ruck collecting interest on overdue's.

 

[Chris Colston]

I charge a LATE FEE rather than interest. My invoices are specific, due upon receipt, with a late charge of $25.00 for every 30 days late. After 90 days I file a claim in small claims court. I only have several clients that are still invoiced, every one else is CASH AT DOOR.

 

[Peter LeQuire]

What Greg says.

I'm glad you didn't describe this client as "good" 'cause somebody that doesn't pay timely ain't. I"ve never been able to collect interest or late fees. The only leverage I've ever felt I've had is work for that client that is not delivered. Not that I'd hold hostage an appraisal, but I've been known to move a status inquiries to a discussion of accounts payable.

Which brings to mind the old adage (and maybe the only thing we have in common with MBs): three rules of doing business - get the money up front; never trust the b@$^@&%$); get the money up front.

ROR

 

[Jan Roseberry]

It's a great deal of fun to charge a late fee to banks!

Quoting the 'Cleveland Regional Loan Center VA Fee Appraiser Training' --

"Recently we have noted an increase in collection activity for the non-payment of appraisal fees properly due VA Fee Appraisers from some lenders and mortgage holders. Therefore, effective with appraisal assignments ordered on or after the effective date of this release, appraisers and other fee personnel are authorized to collect a reasonable late charge for fees that are not paid promptly. Reasonable 'late charges' are defined as no greater than $15.00 per month after 60 days have elapsed from the date of billing. Further, in those cases where VA has documented evidence of non-compliance with this policy, fee appraisers may be given authorization to collect their fee prior to the performance of the appraisal."

Sending a copy of this with an overdue bill has had checks overnighted to me. Quite effective.

 

[Tom Barclay]

I charge a late fee of $25 per month, I call it a re billing fee. Plus 1.5% per month on over due balances. All my invoices have this information attached to the report. Do not usually collect on the "late" payers, those between 30-60 days, but I have always collected not only the billing fee, but the interest on the over due balance, compounded monthly when I make a claim against their surety bond. I do not use small cliams court, I write the lender directly and give them ten days to pay as soon as they go over 90 days. If no payment arrives, I then send a certified letter to the bonding company demanding payment from them. Have yet not to be paid, though with the bonding company it usually takes 9 months, but they do pay all the late fees, interest and re billing fees when they do pay.

 

[Bryan Kubiak]

Originally posted by Chris Colston@Apr 21 2005, 04:16 PM
I charge a LATE FEE rather than interest. My invoices are specific, due upon receipt, with a late charge of $25.00 for every 30 days late. After 90 days I file a claim in small claims court. I only have several clients that are still invoiced, every one else is CASH AT DOOR.

I like that idea a lot. Our clients are pretty good about paying sometimes they go 45 days or so. The fisherman lenders are always COD and that solves the problem of collecting.

 

[Ross (CO)]

bf,........Invoicing, follow-up phoning, waiting, emailing, re-invoicing, waiting, re-phoning, adding charges, accounting for new rolling totals, waiting, re-invoicing, threatening, waiting, losing one's patience, steaming, waiting, fuming, phoning them at home, filing a small claims summons, the other side fails to show.......then what ?

Stop the madness. Bring sanity back to your life and take control of the monies owed you.......give the client a simple choice. Tell them that your invoicing software "crashed" and you have to go back to the old-fashioned method. Either they pay in-advance as the order is sent to you and that frees the property owner of that burden since your client wants the borrower's business, or the property owner pays your fee when you visit the property and frees your client of that payment and commits the borrower to your client's pending transaction. Let the client choose. You can accept either option.

I can be that easy. I've lost one fee since 1999.

Therer are two types of clients. Those who have proven their trust and from whom payments are mailed every 2 weeks. And, there are all the others.

Find the diplomatic startegy that works for you......gets you ALL paid-up with that client.......and then you propose a different set of rules and understandings......and sell your client on how fair and reasonable your proposal actually is. I bet......they accept. Good luck.

 

[Dave Smith]

I have been successfully collecting late fees for years. My invoice states that "Invoices are subject to $20.00 late fees after 30 days, and monthly thereafter until paid in full." I seldom have to send a second invoice but do so if necessary, with reference to Small Claims Court at 90 days.

Out of courtesy for my best clients I usually give them a reminder notice at 30 days for the very few invoices that run late. I will then get paid in a few days, without hitting them up for the late fee. Those are the invoices that "fell through the cracks." After all, it does happen.

For new mortgage banker clients I collect up front. With banks I never have a problem.

 

[Marty Skolnik]

I had an attorney tell me that the only way you can charge late fees and/or interest is if the original service agreement/contract said so. That is, you can't just add interest and late fees to an invoice after you've completed the appraisal -- you have to notify the client up-front before beginning the assignment that, if they pay late, they would be subject to late fees and/or interest (and you have to specify the amount and terms). The key to this is that if the client then gets the choice to enter that contract with you on those terms and do business with you, or they can pass.

For those of you not putting this type of language into a service agreement at the beginning of the engagement, your client can say, "I'm not paying your additional fees because I didn't agree to those terms when I agreed to hire your services."

For those of you who are successful in collecting late fees and/or interest by just adding a statement to an invoice at billing time, I would suggest that you add that statement to your contract for services first, or else you might not be able to collect should you have to take the client to court to collect.

If you have a master agreement with a lender, you should add these provisions or else some reasonably smart accountant might not want to pay your late fees.

But, remember ---- I'm just the appraiser-guy, not the legal-guy... any legal advice that I've given you is worth what you paid for it!! hahaha


Marty Skolnik
Baltimore, MD