5 ms·

Do you have late fees, and are they exercised? I am curious, because I recently added said terms to contracts.

eli 13y ago
I think that's probably useful to have in your default contract, but IMHO the people who are adamantly refusing to pay you $5,000 are very unlikely to have a change of heart when you inform them it's $5,100. Consider that debt collectors typically offer to settle for potentially far less than the original amount owed. One of the most surprising things I found when I started working in B2B is the percentage of clients who simply don't pay their bills. Like tptacek said, I think that's just the way it is and, at least at a certain scale, the only reasonable approach to hire people to do collections.
- pnathan 13y ago
  > One of the most surprising things I found when I started working in B2B is the percentage of clients who simply don't pay their bills. What scale of company was this?!?
  - eli 13y ago
    Well, I've pretty much only worked at B2B startups (from 3 employees to ~50), but I would assume it's an issue at all scales. The worst was when I worked for a mom & pop consulting shop. The clients were mostly other local business owners and getting them to pay on time was a serious problem. Law firms were the worst. I assume because threatening them with a lawsuit didn't carry much weight.
arctangent 13y ago
Another way to do this is to offer a discount for "early payment" but charge more initially. In other words, build the fee for late payment into the original quote.
- adrianhoward 13y ago
  Yup. I do that. I've found it works much more effectively than late fees. People love getting a bargain. Some financial departments are setup so that they will always take the cheapest option. Make the cheapest option the one that gets you paid up front. Made my life much simpler. You also get some of the advantages - to channel patio11 for a moment - of "charge more". Your base day rate - the one that anchors your true value - is the "expensive" one that factors in the cost of late payment to you.
30047f 13y ago
There's a cultural aspect to this too. In some types of business, putting late terms in contracts and hassling customers for payments is normal. In other types, quietly putting up with late payment is normal. In those cases, as a vendor, you factor the likelihood of late payment into the price. For repeat customers, it turns into a game of tit-for-tat. For one-offs, it's harder.
tptacek 13y ago
Not that I know of.

eli 13y ago

I think that's probably useful to have in your default contract, but IMHO the people who are adamantly refusing to pay you $5,000 are very unlikely to have a change of heart when you inform them it's $5,100. Consider that debt collectors typically offer to settle for potentially far less than the original amount owed. One of the most surprising things I found when I started working in B2B is the percentage of clients who simply don't pay their bills. Like tptacek said, I think that's just the way it is and, at least at a certain scale, the only reasonable approach to hire people to do collections.

pnathan 13y ago
> One of the most surprising things I found when I started working in B2B is the percentage of clients who simply don't pay their bills. What scale of company was this?!?
- eli 13y ago
  Well, I've pretty much only worked at B2B startups (from 3 employees to ~50), but I would assume it's an issue at all scales. The worst was when I worked for a mom & pop consulting shop. The clients were mostly other local business owners and getting them to pay on time was a serious problem. Law firms were the worst. I assume because threatening them with a lawsuit didn't carry much weight.

arctangent 13y ago

Another way to do this is to offer a discount for "early payment" but charge more initially. In other words, build the fee for late payment into the original quote.

adrianhoward 13y ago
Yup. I do that. I've found it works much more effectively than late fees. People love getting a bargain. Some financial departments are setup so that they will always take the cheapest option. Make the cheapest option the one that gets you paid up front. Made my life much simpler. You also get some of the advantages - to channel patio11 for a moment - of "charge more". Your base day rate - the one that anchors your true value - is the "expensive" one that factors in the cost of late payment to you.

30047f 13y ago

There's a cultural aspect to this too. In some types of business, putting late terms in contracts and hassling customers for payments is normal. In other types, quietly putting up with late payment is normal. In those cases, as a vendor, you factor the likelihood of late payment into the price. For repeat customers, it turns into a game of tit-for-tat. For one-offs, it's harder.

tptacek 13y ago

Not that I know of.