Had a chat with a bookkeeper that made me nervous about my payment terms

I was talking to this bookkeeper at a networking thing in Phoenix last Thursday, and she told me that a lot of small businesses she works with have clients who deliberately wait for the second or third reminder before paying, just to see if they can stretch it. She said one guy admitted he holds payments for 90 days if the invoice doesn't have a clear late fee listed. Has anyone else noticed if putting a specific late fee amount speeds up payments?

3 comments

3 Comments

beng512d ago

Wait, are you sure about that 90 day thing? In my experience most people will pay quicker if theres a clear late fee listed, even if its just 1.5% monthly.

xenam842d ago

Actually had a client take 87 days once even with a 2% late fee clearly listed. Charged them the fee but they acted like I was the jerk for bringing it up. In my book penalties only work if people actually care about their credit or reputation. Half the small business clients I deal with just pay whenever and don't sweat the extra couple bucks.

the_cameron1d ago

Read a study once that said the longer a payment goes past 30 days, the less likely it ever gets paid at all - something like 80% of invoices over 90 days old just become losses. So your client dragging it out to 87 days makes total sense, they probably figured you'd just give up. Late fees really only work on people who have some basic level of shame or risk avoidance, which clearly isn't everyone.