How do you handle late payments?

yaniimarie

Member
Hey all

I've been working on modifying my service agreement template and policies documents, getting things all neat and tidy. I hit the section that addresses late invoice payments and I'm halfway stumped. I have written right now that there be a $25 late fee applied after 5 days of being overdue. I'm curious as to whether or not I should do this, charge interest, or both. What works best for you?

Any input is appreciated. Thanks in advance. :)
 

ljadminsupport

New Member
Aloha Aiyana, I have written into my service agreement that all payment is due upfront before any works begin whether it's hourly or a package. This works for me so that I avoid having to deal with late invoices/fees. If additional hours is needed, they can amend the contract and pay for more hours upfront. Linda
 

SuzannaK

New Member
I have also found that upfront payment works the best. It avoids the worry of not getting paid or having to chase clients who haven't paid you. I have one client who pays me for 5 hours at a time. If I go over the 5 hours a little bit, I carry it over to the next 5 hours.
 

Tess

Administrator
Staff member
I try to avoid this issue altogether now and have done a few different things over the years to avoid late payments altogether including taking deposits or requiring payment in full beforehand (depending on the work being done). You can also consider using package pricing (and there's actually a free webinar tomorrow for VAF members with my good friend Lisa Wells - you can register here)
Retainers are another way to avoid this - the client pays for X hours at the start of each month in advance.

All that said - a late payment penalty at 5 days is a little steep. I'd reconsider the timing on that. And you would want to do either the late penalty OR the interest - not both.
 

yaniimarie

Member
Thanks everyone! (Sorry for coming back so late >.<)

I'm still playing around with different versions of contracts I'll be using. I'm close to settling on an hourly option that I've seen a lot of people do (deposit upfront, billed on the 15th and last of the month). For that, I'd apply some sort of late fee if necessary. And then the pay upfront retainer, which is a must in this business.

But thanks to everyone for all your input. :D
 

Tricia

Administrator
Staff member
Late payments can really cause headaches. I normally send my bill on the 1st. I resend on the 5th if not paid and I send a nice note with the invoice again on the 10th stating that starting on the 15th of the month I will not be able to complete any more work until payment has been made. Also a suggestion that you add 10% on if not paid by a certain date.
 
Thanks everyone! (Sorry for coming back so late >.<)

I'm still playing around with different versions of contracts I'll be using. I'm close to settling on an hourly option that I've seen a lot of people do (deposit upfront, billed on the 15th and last of the month). For that, I'd apply some sort of late fee if necessary. And then the pay upfront retainer, which is a must in this business.

But thanks to everyone for all your input. :D
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I have also found that upfront payment works the best. It avoids the worry of not getting paid or having to chase clients who haven't paid you. I have one client who pays me for 5 hours at a time. If I go over the 5 hours a little bit, I carry it over to the next 5 hours.
How Make Real Money Online | Virtual Personal Assistant

If you are a business owner you can hire virtual assistants for your business watch this video ►
 
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