Late Fees?

[Adehus]

Like many here I include a late fee clause (5%/month), and I'd guess I'm not too atypical in saying that clients who pay late rarely pay them. How diligent are you/should we be about pursuing late fees?

[STRAT]

after advise i invoice and give the client 31 days to pay. if after 31 days he hasen't i'll ring up 2 times per week for a week or 2, then every other day until it's paid.

 

if it's in your initial contract about payments due and so fourth and you've both signed it before works undertaken, then you should be water tight in pursuing things further without the risk of incuring any legal fees if it ever gets to that.

 

it's all down to your initial contract. cover yourself for all eventualities and get all parties concerned to sign it.

 

if not, then keep on ringing them until you get your money out of them.

[Adehus]

Thanks for the reply, Strat. What you say makes total sense, I'm just concerned about screwing up a relationship over a couple hundred bucks. The contract is very clear, but the client has told me it is their policy to never pay late fees (even though they agreed to)

[Ernest Burden III]

In practice I've found collecting late fees is a lost cause. On the rare occasions that a client really takes a long time to pay me, they usually go from the original invoice and ignore my 'statement on account' invoices that follow, showing the late charge. Actually, 5% sounds good. I think mine is 1.5%. That' doesn't add up fast enough to be much of a deterent.

 

So if you spend months to get a check and you finally get it but its short the late fee, what's the value in spending months more trying to force the client to pay the little extra. I keep it in my contract, but it's pretty worthless.

[Devin Johnston]

Unless this client is a repeat customer, if that's the case I would just add the late fee into their next job, or tell them that I can't do work for them until they've paid their last bill.

 

Do any of you use Pay Pal, I've used it a few times and for small amounts under $500 it's pretty good. I usually tell the client that I'll send a small proof image and once I receive payment I'll send the full rez image or animation over.

[Jim Mann]

For small businesses in the UK there is "statutory late payment" set down in law which I think is about 1% above base rate. Its one of those un-waiverable things, a bit like penalty clauses being illegal. That said, if you can't get the fee in the first place, you stand less chance of collecting an additional late payment fee.

 

Late payment is a real pain and clients know this. The danger is that it can start costing you money but luckily, up to now, I haven't needed to call the A-Team.

[Adehus]

Ernest- Yeah, I've talked with quite a few other designers, and your take on things was the general consensus... so it goes...

 

Maxer- This is my first time with this client. First time not getting paid on time, actually. But if I have another go at them, your idea will be used.

 

I've used paypal in the exact same way... like you said, good for small stuff. Haven't tried for anything over $500 though.

 

Jim- Unfortunately I don't think we have anything like that in the states, but it sure seems like a sensible law.

[STRAT]

i've personally never plumped for a late payment clause either. makes for better future relations with the client. and besides, up to 5% is near as damn it not worth the grief imo. i just prefer to nag their accounts department to death on the phone

[Jeff Mottle]

Every year I get several deadbeats on CGA who refuse to pay their advertising bill. I give them a few warnings after the late payment and then I send it to a collection agency. I figure if they don't pay now, they are not going to be a future client, so what I do have to loose.

 

I've just recently added a clause to my contract that states that if you do not pay, the amount sent to collection will equal 150% of the original fee. That way I can recoup the cost of the collection, which is usually 25-50% of the fee.

 

The ad agencies that represent these big software companies are the worst. It's one thing not to get paid on time, but then they play games on top of it. For example just this week I was told not only by the account rep handling a current advertiser on the site that I would be paid this week, but the owner of the ad agencies told me herself that I would be paid and the check sent via Fedex for me to receive today. When it did not arrive, I sent an email and she had the nerve to tell me "we agreed to send it via normal mail" which was an outright lie. Followed by a host of other excuses and BS.

 

Anyway, bottom line if they don't pay and you know they won't pay, send it to a collection agency. Anyone in the US, let me know and I can forward you the name of the company I use.

[DennisHolland]

Route: Contract, deliver your work as ordered, invoice > get paid.

 

If your client is a returning one and won't pay your bill, then it is pretty clear that the decision was made that it's the last one for you. These % on top of the original invoice is nice, but not effective for relatively small fees. As Jeff stated, the invoice should be paid, if not send a reminder > then a friendly telephonecall, then a collector. This is the best/most effective next (and last) step. Client gone, also the trouble in the future with them. Best part in this is the statement you make that one can not F*** with you. It's an upgrade for your professional outlook towards other, new/loyal customers.

 

Those telephone calls to get paid and ' positively intimidate' the dishonest client are not nice in the beginning, but after a few you'll see that it's rather enjoyable and good for your selfconfidence...

 

Regards,

Dennis

[Ernest Burden III]

I disagree with the idea of carrying over a late fee to a new contract. While it seems only fair, it muddies the waters. I do give repeat clients better rates and priority attention, but that's how I chose to work. Better to be able to close the books on a project. If the client who was late paying comes back for more work then you decide whether you want to work with them based on their former behaviour. I have used previous lateness as a reason to require a retainer, or a bigger retainer, or to not take any more work.

 

Each project should be a new entity with a beginning, middle and end. How can they end if you are carrying a small balance--and a grudge--forward for a long time?

[STRAT]

it's a matter of judging your client. i do numerous repeat work for clients way before i even get paid from the last job i did for them. just guage their history.

 

as mentioned, if it's clearly signed by all parties concerned in a black and white contract, then you cant loose, and if it does end up in court then you still cant loose. the trick is a proper contract. all in my experience of course.

 

if you have a client that constantly comes back for repeat jobs but isn't the world's most promt payer, draw up a special repeat work contract that both parties sign from the very beginning.

[Devin Johnston]

Maxer- This is my first time with this client. First time not getting paid on time, actually. But if I have another go at them, your idea will be used.

I've used paypal in the exact same way... like you said, good for small stuff. Haven't tried for anything over $500 though.

I recently completed a job for a guy in Europe, the total amount for the job was $2000 and I decided to use Pay Pal. I have a business account with them which allows you to receive unlimited funds, minus a small percentage for Pay Pal. What I didn't know is that for that to work the person sending you money not only has to have an account with Pay Pal but they must go through a verification process which includes handing over your bank routing number to Pay Pal. Also there are only certain countries that have been approved to do business with Pay Pal, if you customer isn't living in one of those countries you can't us Pay Pal. After about a week of jumping through hoops my client was finally approved and was able to send me the money, but he wasn't very happy. Bottom line is Pay Pal is good for small funds under $500 but make sure your client know that to transfer anything over that requires a verification process on their part.

[Jeff Mottle]

I recently completed a job for a guy in Europe, the total amount for the job was $2000 and I decided to use Pay Pal. I have a business account with them which allows you to receive unlimited funds, minus a small percentage for Pay Pal. What I didn't know is that for that to work the person sending you money not only has to have an account with Pay Pal but they must go through a verification process which includes handing over your bank routing number to Pay Pal. Also there are only certain countries that have been approved to do business with Pay Pal, if you customer isn't living in one of those countries you can't us Pay Pal. After about a week of jumping through hoops my client was finally approved and was able to send me the money, but he wasn't very happy. Bottom line is Pay Pal is good for small funds under $500 but make sure your client know that to transfer anything over that requires a verification process on their part.

 

Yeah, a pain isn't it. I've finally decided to get a regular Credit Card processing gateway. I had one client who, because of that limitation actually sent payment in 4 installments. One from his account, his wife's account, his daughter's account and a new account LOL.

[Jeff Mottle]

Like many here I include a late fee clause (5%/month), and I'd guess I'm not too atypical in saying that clients who pay late rarely pay them. How diligent are you/should we be about pursuing late fees?

 

The other option is to require an advance up front fee. On smaller stuff it's harder to justify, but when I was in production anything over about $1500 was elegible for 50% up front before I started. This way, if they are late at least you do have some money, which is some cases is all you would get if it went to collection.

 

Also, as was mentioned earlier some places do have legal limitations on the amount of interest you can charge, so you can say something like:

 

"All outstanding fees are subject to interest equal to the lesser of 10% per annum or the highest interest rate permitted by applicable law."

This was pulled from an ad contract I have used before.

[Ernest Burden III]

I have a business account with them which allows you to receive unlimited funds, minus a small percentage for Pay Pal.

 

I also have a 'verified business' PayPal account. But I've only used it to send money. What is that 'small fee' you are charged? I've been wondering what it costs the people I'm paying to recieve. Its still better than sending a check overseas.

[_PopArt]

wow late fees for me this is a luxury! Here in Italy, if you arent lucky enough to work for a big company, and even thats no garauntee, you are really screwed. Last week i got a payment for a job i did 8 months ago! And i've been calling once a week for 7 months! No kidding they made up a new excuse every month. 'we lost the invoice' 'you didnt do the invoice right' 'the font on the invoice is strange' 'we're on vacation' 'the accountant quit' then it starts all over again with 'we've lost the invoice'

[Jeff Mottle]

wow late fees for me this is a luxury! Here in Italy, if you arent lucky enough to work for a big company, and even thats no garauntee, you are really screwed. Last week i got a payment for a job i did 8 months ago! And i've been calling once a week for 7 months! No kidding they made up a new excuse every month. 'we lost the invoice' 'you didnt do the invoice right' 'the font on the invoice is strange' 'we're on vacation' 'the accountant quit' then it starts all over again with 'we've lost the invoice'

 

Gee, that sounds very familiar. It took HP 9 months to pay me last year and this current ad agency seems to play from the same rule book as your client. I guess these are the new versions of "the check is in the mail"

[thinice]

Some ad agency purposely pay their contractors late.

 

Basically it is just part of their business practice to sit on the money their client gave them and earn 6 months interest before passing it down.

 

If you know you are dealing with these type of clients, the best thing is just to load the cost upront and just wait (with continuous hassling, of course) .

[_PopArt]

Some ad agency purposely pay their contractors late.

Basically it is just part of their business practice to sit on the money their client gave them and earn 6 months interest before passing it down.

If you know you are dealing with these type of clients, the best thing is just to load the cost upront and just wait (with continuous hassling, of course) .

 

Yes I have heard this too many times, and I have some friends who work in larger companies who tell me that they do things this way. This makes me mad sometimes because if looks like its a privelege for me to be paid by them, but when i do the work its always a rush job. I used to write in big letters on my invoices 'to be paid in 60 days' then it became 'too be paid in 30 days' and now i write 'to be paid immediately,' but it makes no difference. Here the laws are more complicated than the dead sea scrolls, but i really need to find a way to fix this problem.

[ZFact]

as mentioned, if it's clearly signed by all parties concerned in a black and white contract, then you cant loose, and if it does end up in court then you still cant loose. the trick is a proper contract. all in my experience of course.

 

Care to give any advice on what should or should not be included on the

contract Strat?

[DennisHolland]

Product, price (fixed or hourly fee), deadline, start/finish dates, payment within' a certain amount of days (if necessary the % for a late payment) and the most important and tricky part is revisions (how many, in what timeframe etc). I'm sure i forget a few items, feel free to post 'm....

 

Ah, wait....have your contract signed by the CEO. If a regular fellow signed your contract and he/she is not entitled to do so, stated in an employment contract, the chance is there that you'll lose when it goes to court.

 

Good luck,

Dennis

[ZFact]

In the UK... do you need a solicitor to draw up

the contract for it to be worth the paper its

written on... or is a contact drawn up by yourself

and signed by the client good enough

[DennisHolland]

Your contract has to be correct. We (artists) are not really educated in legal issues. Therefore it's better to have a sollicitor make up a standard contract for your company. It's not so that a sollicitor HAS to do it, it only is better to let someone write a contract who's been to school for that....

 

Regards,

Dennis

[Justin Hunt]

Many years ago I used a post production company to do some video dumping and basic editing. They were COD and would hand over the finished product until I paid. The problem was the company I worked for had a policy of paying bill 60 days, (Which is fair standard through out the country). With a little negotiating with my acconts dep and theirs we agreed to pay 30 days.

 

I have often wondered if a COD basis would work for me now. The biggest excuses I get if "You will be paid when we get paid", to which I reply, "My contract is with you and not your client." it doesn't help though, I still wait 2 to 6 months before I get the money in my grubby little paws. Although luckily with my best client, who gives me the most work, usually pays within the week, even though I invoice 30 days.

 

JHV