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This is known as the "Blockbuster Video" model for treating customers for being late. How did that model work out for them? Dude, these are your CUSTOMERS. Yes

This is known as the "Blockbuster Video" model for treating customers for being late. How did that model work out for them? Dude, these are your CUSTOMERS. Yes, don't be a doormat and YES it sucks waiting 3 months for a check when you expect it in two weeks. But sending 10% a week interest notices for being as little as 1 day late is going to backfire on you. No matter how great you are. And what will potential customers think of blog posts like these...

john_flintstone 14y ago
>This is known as the "Blockbuster Video" model for treating customers for being late. How did that model work out for them? It worked fine until their industry (renting videos and DVDs) dwindled to nothing. Blockbuster's demise had nothing to do with late fees.
- TylerE 14y ago
  Really? Besides the selection, I think Netflix's keep-it-as-long-as-you-want policy was a big reason it took off.
  - jamesbritt 14y ago
    They're also charging your credit card each month. There's no notion of late fees because you're paying all the time.
    - TylerE 14y ago
      True, but that's ok. The real boon to the netflix model is that it doesn't make you consider individual decisions financially. Once you're on the service, deciding to see something, or keep it longer, or whatever, doesn't have financial implications, so you don't even think about it.
      - jamesbritt 14y ago
        Once you're on the service, deciding to see something, or keep it longer, or whatever, doesn't have financial implications, so you don't even think about it. Well, it does, though maybe people don't think about it. It's the "health club membership" model. Pay for stuff you don't use. Just like people figure out they never go to the gym, at some point though some people (such as myself) realize, hey I'm paying each month for Netflix but I don't bother getting new movies (or get anything I really care for), so why not cancel and go for the a la carte Redbox.
  - rmc 14y ago
    Don't forget that you can pirate all the films on the internet. That'll have an effect.
jerf 14y ago
"Dude, these are your CUSTOMERS." If they've stopped paying you, no they aren't.
- slantyyz 14y ago
  There's a difference between "stopped paying you" and "haven't paid you yet".
  - jerf 14y ago
    When you are in the position of not being paid, you have no practical ability to distinguish between the two at the time. You are not the omniscient narrator. Also, I'm not advocating being some sort of deliberate jerk or something. You should treat not-customers well too, because someday they may be customers, and that's probably especially likely in this case. But they have ceased being customers at the point of nonpayment, and it's important to understand that.
    - slantyyz 14y ago
      >> you have no practical ability to distinguish between the two at the time That's BS. You talk to your customer and tell them payment is due. You then act accordingly based on the legitimacy of the response. Believe it or not, there are quite a lot of organizations that just pay on their own schedule (i.e., 60 days after receipt of invoice, regardless of terms), but they do pay. Going adversarial at the first moment of non-payment (i.e., "they have ceased being customers at the point of nonpayment") is just a sign of inexperience and honestly, ignorant of how businesses typically work.
      - jerf 14y ago
        Read the original article again. If you tell him about those things up front, he'll work with you. If you don't realize how easy the "check in the mail" excuse is for people whose job it basically is to sell you on that, consult for five years and check back with me. This isn't adversarial. This is how payments work. Adversarial is not making payments you agreed to make. Adversarialness has already arrived. You need to react to that fact. Again, that doesn't mean "go directly to lawsuit, do not pass go", but you do need to correctly understand the situation.
carerra 14y ago
agreed. from the client's perspective, they are underwater (can't pay now), then after a few weeks of late fees (10% of total), they are REALLY underwater. How about escrow or a payment plan. That would be a good payment service to offer clients.
ruswick 14y ago
I think the notion of having a steep penalty isn't necessarily bad. My problem is how he implements it. It's totally unreasonable to charge someone %10 if they're 15 minutes late. It's even more unreasonable to implement the same penalties for someone who is 15 minutes late and someone who is 7 days late. If he is going to be that strict, he should charge per day and not per week. Think about it. If I forget to pay and he charges me %10, I'm probably going to wait the whole week to pay him just to make life harder for him as payback. This system over-punishes people who have just made mistakes and encourages and enables his customers to antagonize him.
- samuellevy 14y ago
  If a client up-front with me and tells me that they will be late paying, then I'll usually happily give them extension. The problem occurs when clients ignore the invoice, or think that they can get away with paying it at their leisure (whenever that may be). In practice, my clients have either negotiated better contracts paid on time (I've not had an issue with any client who's negotiated); or paid up the original amount as soon as I mentioned activating this clause.
vellum 14y ago
I think a "city library" model would work better. Patrons don't get get to borrow books until they've returned or paid for the old ones. So as a freelancer, you would stop working until they pay you.

john_flintstone 14y ago

>This is known as the "Blockbuster Video" model for treating customers for being late. How did that model work out for them? It worked fine until their industry (renting videos and DVDs) dwindled to nothing. Blockbuster's demise had nothing to do with late fees.

TylerE 14y ago
Really? Besides the selection, I think Netflix's keep-it-as-long-as-you-want policy was a big reason it took off.
- jamesbritt 14y ago
  They're also charging your credit card each month. There's no notion of late fees because you're paying all the time.
  - TylerE 14y ago
    True, but that's ok. The real boon to the netflix model is that it doesn't make you consider individual decisions financially. Once you're on the service, deciding to see something, or keep it longer, or whatever, doesn't have financial implications, so you don't even think about it.
    - jamesbritt 14y ago
      Once you're on the service, deciding to see something, or keep it longer, or whatever, doesn't have financial implications, so you don't even think about it. Well, it does, though maybe people don't think about it. It's the "health club membership" model. Pay for stuff you don't use. Just like people figure out they never go to the gym, at some point though some people (such as myself) realize, hey I'm paying each month for Netflix but I don't bother getting new movies (or get anything I really care for), so why not cancel and go for the a la carte Redbox.
- rmc 14y ago
  Don't forget that you can pirate all the films on the internet. That'll have an effect.

jerf 14y ago

"Dude, these are your CUSTOMERS." If they've stopped paying you, no they aren't.

slantyyz 14y ago
There's a difference between "stopped paying you" and "haven't paid you yet".
- jerf 14y ago
  When you are in the position of not being paid, you have no practical ability to distinguish between the two at the time. You are not the omniscient narrator. Also, I'm not advocating being some sort of deliberate jerk or something. You should treat not-customers well too, because someday they may be customers, and that's probably especially likely in this case. But they have ceased being customers at the point of nonpayment, and it's important to understand that.
  - slantyyz 14y ago
    >> you have no practical ability to distinguish between the two at the time That's BS. You talk to your customer and tell them payment is due. You then act accordingly based on the legitimacy of the response. Believe it or not, there are quite a lot of organizations that just pay on their own schedule (i.e., 60 days after receipt of invoice, regardless of terms), but they do pay. Going adversarial at the first moment of non-payment (i.e., "they have ceased being customers at the point of nonpayment") is just a sign of inexperience and honestly, ignorant of how businesses typically work.
    - jerf 14y ago
      Read the original article again. If you tell him about those things up front, he'll work with you. If you don't realize how easy the "check in the mail" excuse is for people whose job it basically is to sell you on that, consult for five years and check back with me. This isn't adversarial. This is how payments work. Adversarial is not making payments you agreed to make. Adversarialness has already arrived. You need to react to that fact. Again, that doesn't mean "go directly to lawsuit, do not pass go", but you do need to correctly understand the situation.

carerra 14y ago

agreed. from the client's perspective, they are underwater (can't pay now), then after a few weeks of late fees (10% of total), they are REALLY underwater. How about escrow or a payment plan. That would be a good payment service to offer clients.

ruswick 14y ago

I think the notion of having a steep penalty isn't necessarily bad. My problem is how he implements it. It's totally unreasonable to charge someone %10 if they're 15 minutes late. It's even more unreasonable to implement the same penalties for someone who is 15 minutes late and someone who is 7 days late. If he is going to be that strict, he should charge per day and not per week. Think about it. If I forget to pay and he charges me %10, I'm probably going to wait the whole week to pay him just to make life harder for him as payback. This system over-punishes people who have just made mistakes and encourages and enables his customers to antagonize him.

samuellevy 14y ago
If a client up-front with me and tells me that they will be late paying, then I'll usually happily give them extension. The problem occurs when clients ignore the invoice, or think that they can get away with paying it at their leisure (whenever that may be). In practice, my clients have either negotiated better contracts paid on time (I've not had an issue with any client who's negotiated); or paid up the original amount as soon as I mentioned activating this clause.

vellum 14y ago

I think a "city library" model would work better. Patrons don't get get to borrow books until they've returned or paid for the old ones. So as a freelancer, you would stop working until they pay you.