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Rant: Found out late fees on net-30 terms are basically a myth in most states
Last week I was digging through my state's commerce rules because a contractor in Ohio still owes me $4,800 from a job I finished in March. I always assumed charging 1.5% monthly after 30 days was standard. Turns out, unless you wrote a specific late fee clause into the original contract, most states won't back you up, and even then the max is capped way lower than I thought. Meanwhile the other side of my brain says hey, chasing late fees just burns bridges, especially with repeat customers who pay eventually. I've had two slow payers completely ghost me after I tacked on a penalty, but I've also got a guy who treats my invoice like a suggestion until I threaten collections. So which is it, do you push the legal late fee angle hard, or do you eat the delay and keep the relationship? Has anyone actually collected a late fee without losing the customer over it?
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garcia.cameron29d ago
Pushing the legal angle hard usually costs you more than the fee is worth. I had a $2,300 invoice go 90 days with a regular client, and when I added the 1.5% clause from our contract she paid the base but stopped calling me for new work. Lost about $9k in future jobs over a $45 late charge. The math only works in your favor if the customer is a one-off and you never want them back. For repeat folks, a phone call beats a clause every time. Save the contract talk for the guy who treats your invoice like a suggestion, and even then just say it once and mean it.
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