Finance Charges on a Bill

CarolT · #21 01/03/12, 10:56 PM

My dh was a superintendent for a major commercial construction co and if you think the foreman or even superintendent has a company credit card to pay major expenses, you're wrong. Yes, they need to get work orders, etc, but paying for it right on the jobsite is very unusual. There are limits on what those company cards can do, even filling a big diesel tank has to be cleared before it'll go through.

That said, good luck on collecting, hopefully this'll give them the nudge they need to get a move on.

Danaus29 · #22 01/04/12, 01:40 AM

A letter notifying the debtor of your intent to persue the matter in small claims court usually gets results.

Paquebot · #23 01/04/12, 03:50 AM

When brother and I were in business together for 7 years, it was noted right on the work repair invoice. Net 30 days, 1½% monthly fee after that. We had Quickbooks for our accounting program which was tied in with our CPA and didn't allow for any exceptions without a lot of hassle. That was in the restaurant equipment repair business and owners didn't care what something cost as long as they could feed their customers. Finding enough money to keep their kitchen operating was often a different story!

Martin

Astrid · #24 01/04/12, 03:51 AM

Before you start charging interest make sure you send them a letter, particularly if you are changing your terms. You don't want to get into any legal trouble. Think banks or credit card companies that send you a letter telling you are rising interest rates or late fees. They are required by law to alert you to anything happening on your account.

lonelyfarmgirl · #25 01/04/12, 07:55 AM

I guess thats what will have to happen then. I just can't help but think, there have been a few times over the years that we were late paying something, and always after 30 days, you get a bill with interest. Non of those places ever informed us beforehand. Some were businesses here, such as the mill or the gasoline place, others were out of state suppliers.

**Cabin Fever** · #26 01/04/12, 09:54 AM

Quote:

Originally Posted by lonelyfarmgirl

I guess thats what will have to happen then. I just can't help but think, there have been a few times over the years that we were late paying something, and always after 30 days, you get a bill with interest. Non of those places ever informed us beforehand. Some were businesses here, such as the mill or the gasoline place, others were out of state suppliers.

I'm thinking when you gave them your name and address for billing that somewhere on the form - probably in fine print - it said something about payments and interest. At least that is what I see when I fill out a form for a company when giving my name and address.

CesumPec · #27 01/04/12, 10:05 AM

Quote:

Originally Posted by GoldenCityMuse

The foreman should have access to company funds, either via a checkbook, company credit card or whatever.

Otherwise it can be easy for the co to say the foreman did not have authority to encumber the company, and you are out bucks.

It is my understanding that any employee who reasonably represents the authority to bind a company can legally bind a company. So a janitor can't bind a company to purchase an office building because no reasonable person would believe he has the authority. But you definitely have the reasonable belief that a job site foreman has the legal authority to bind his company to take care of his construction equipment. After all, if he wasn't using the company's equipment with authorization, why haven't they reported him for theft or fired him?

But like so many others, this common law doesn't apply to gov't. Only a gov't employee with a warrant, a written authorization to sign contracts, can legally bind the gov't.

Astrid · #28 01/04/12, 10:56 AM

Quote:

Originally Posted by lonelyfarmgirl

I guess thats what will have to happen then. I just can't help but think, there have been a few times over the years that we were late paying something, and always after 30 days, you get a bill with interest. Non of those places ever informed us beforehand. Some were businesses here, such as the mill or the gasoline place, others were out of state suppliers.

Most companies have terms that they give their customers that they allow to charge. These would be in the paperwork that is signed when an account is opened. Most people don't even read them until something happens. The mouse print is there to inform customers of things that might happen in different circumstances such as delinquency or death. If you use the account you agree to the terms.

If you haven't set any kind of terms for your customers before allowing them to charge goods or services you can't change them unless you inform the customers of a change in terms. Look online for a form or pay a lawyer a fee to draw up a form to let your delinquent customers know that you are giving them a certain amount of time to get current. This could be by paying a minimum payment that you set or by paying the account off. Most of the time there is a time limit to keeping an account on the books. You can decide what that amount of time is. After that, accounts can be sold to a collection agency which is another reason for charging interest and late fees. If you end up doing something like that, a higher balance means you will recoup more of your initial balance since these companies pay pennies on the dollar. Setting interest rates are up to you as well. Check the laws in your state to decide what can be charged. Some states allow a small interest rate others allow ridiculously astronomical rates. It just depends. These rates are different than bank rates. You need to make sure you follow the laws your state has put into place for businesses.

lonelyfarmgirl · #29 01/04/12, 11:06 AM

Quote:

Originally Posted by Cabin Fever

I'm thinking when you gave them your name and address for billing that somewhere on the form - probably in fine print - it said something about payments and interest. At least that is what I see when I fill out a form for a company when giving my name and address.

Nope, in the case of the feed mills (both) and the gasoline company. It was a phone call. I need ___. Where do you live? We deliver on this day, see you then, and they hand you a bill. No fine print, no filled out form. I looked after this discussion started. Just sayin'

Astrid · #30 01/04/12, 11:23 AM

I don't know if I would want to risk a legal problem by just starting to charge interest or late fees without at least checking on the laws in your state.

mekasmom · #31 01/04/12, 03:13 PM

Quote:

Originally Posted by lonelyfarmgirl

Companies that charge a late fee charge go 1.5 or 2% per month. One of the 1.5% per month bills says something to the effect of 18% per annum, accumulated monthly at 1.5% per month.

SO, here is my question. Do you charge interest on the accumulated interest for someone who is not paying?

My husband's company is 18% per year. And each month it is 1.5 on the unpaid balance including any interest added in from previous months.
The computer does this automatically, so I can't tell you unless you simply add 1.5 every month to the balance.

ChristieAcres · #32 01/04/12, 03:34 PM

Due to the economy, three years ago, I changed our payment policy. We are in the Construction industry as DH is an Industrial Machinist/Welder, self employed, licensed, etc... We present a bid, upon acceptance, 50% of it is due immediately. The balance is paid upon job completion. An example is our latest job:

Series of steel handrails, fabricated for a new home (hard to believe as it is a spec). They accepted our bid, as we beat out the competitors in price, and we were paid 50% down to start the work. DH fabricated the railings, fit them, and also has drilled all the holes needed in the concrete (for the bolts). He will be dropping off the completed railings at the powder coater's. DH will make an appt with the Contractor to deliver/install the Railings. At that time, he is paid the balance. If not? The Railings would go back to our shop and be stored there until the balance was paid. That 50% deposit covers the materials at the very least, so we wouldn't be left holding the bag.

I understand this is a different type of company, but the point is relevant. In a bad economy, changes have to be made or there will be customers not paying at all, and there is an increase in bankruptcy...

belladulcinea · #33 01/04/12, 03:38 PM

You can charge a late fee and call it a late fee. That's what we do.

ChristieAcres · #34 01/04/12, 03:43 PM

Quote:

Originally Posted by belladulcinea

You can charge a late fee and call it a late fee. That's what we do.

That is what we used to do before. That didn't stop one CO from stiffing us, then filing BK. So, we changed our payment policy altogether. We are a small business and sure couldn't afford to be stiffed on a $10,000 railing system...

Still, if a biz is going to carry accounts, that is the way to go, so I agree completely with your policy.

lonelyfarmgirl · #35 01/04/12, 06:21 PM

Quote:

Originally Posted by lorichristie

Due to the economy, three years ago, I changed our payment policy. We are in the Construction industry as DH is an Industrial Machinist/Welder, self employed, licensed, etc... We present a bid, upon acceptance, 50% of it is due immediately. The balance is paid upon job completion. An example is our latest job:

Series of steel handrails, fabricated for a new home (hard to believe as it is a spec). They accepted our bid, as we beat out the competitors in price, and we were paid 50% down to start the work. DH fabricated the railings, fit them, and also has drilled all the holes needed in the concrete (for the bolts). He will be dropping off the completed railings at the powder coater's. DH will make an appt with the Contractor to deliver/install the Railings. At that time, he is paid the balance. If not? The Railings would go back to our shop and be stored there until the balance was paid. That 50% deposit covers the materials at the very least, so we wouldn't be left holding the bag.

I understand this is a different type of company, but the point is relevant. In a bad economy, changes have to be made or there will be customers not paying at all, and there is an increase in bankruptcy...

Not entirely. DH is a mechanic. This issue we are having was an offsite job for a huge excavating company. Interesting how you do it.

ChristieAcres · #36 01/04/12, 07:40 PM

Quote:

Originally Posted by lonelyfarmgirl

Not entirely. DH is a mechanic. This issue we are having was an offsite job for a huge excavating company. Interesting how you do it.

We know local business owners, who also offer "Mechanic" services. They expect payment when the work is done and never carry accounts, even with larger companies. All their work is done off-site (mobile service is what they are known for). Currently, we are working with a larger company. They were so thrilled to get a superior custom railing system built at a better rate through us than anyone else, they had no problem paying us 50% up front. But just since this has worked so well for us, doesn't mean it will or does for every type of service business.

Yes, it is an interesting way to do it, but in the last three years we haven't had to go after customers for not paying their bills.

If any one has a business that requires accounts to be carried, I agreed above with:

Quote:

belladulcinea- You can charge a late fee and call it a late fee. That's what we do.

CrossAcres · #37 01/07/12, 02:59 AM

When I ran a painting/construction business, our policy was to recieve 1/3 upon contract signing, 1/3 midway thru job, and then final 1/3 at the completion of job. This not only motivated us to get the jobs done, but also let the customers know when and how much they needed to pay us. If someone didn't pay, we didn't finish and went on to another job. when they had the money, we finished the job.

MNBobcat · #38 01/10/12, 06:39 PM

I charge a $35 late fee. Even if the amount owed was an unpaid bill for $5.

I just put on the bottom of the invoices that there is a $35 late fee. I give them a 10 day grace period. So if the payment is due on the 30th of the month and I've not received it by the 10th of the following month, then I asses the fee. But, honestly, I selectively asses it. If I'm late mailing out invoices, I don't charge the customer a late fee if the payment is received late. Mainly I asses the fee when I can see a customer is going to be problem. I create an invoice for the fee and mail them the invoice and their statement that shows the past due balance.

If you don't make the late fees large enough, its not enough motivation for them to pay. Sometimes a customer will send in a payment and ignore the late fee. In that case, I apply the payment to the late fee and whatever else is left goes to the outstanding amount which leaves them with an unpaid balance which can generate another late fee. I do not let customers get away with not paying their late fees. Once they have to pay it once or twice, they generally are always on time from then on.