Late Fees

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Curtix2

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Simple questions.
What would you all think is a fair late fee to charge.
Let me give you two give a couple of examples.
Assume both are due at the end of the month and invoices come 1-2weeks before they are due.
1) Invoice is for R10000 - 10 days late or more Fee should be: (Fill in the blank)
2) Invoice is for R5000 - 14 days late or more Fee should be: (Fill in the blank)

Thanks for your input.
 
You speak of invoices yet many business work on statement date, e.g. payable within 30 days from statement date. This can vary from vendor to vendor, e.g. BEE vendors are paid within 30 days of invoice date whereas non-BEE vendors are paid within 30 days of statement date.

Is this specified on your invoice?

Do you specify an interest rate to be charged on overdue accounts?

http://www.creditmatters.co.za/consumer_liability_interest_charges_fees.htm
 
Last edited:
Allow me to give a bit more detail for this example.
They are standing orders to be payed at the end of every month.
These are not one time invoices. This is more like rent if you will.
they know the amount and due date of the invoices from previously agreed upon contracts.
Although you have already given me some information - thanks.
 
Pleasure! Is there any mention in the contract of interest to be charged on late payments?
 
Curtix2 said:
Simple questions.
What would you all think is a fair late fee to charge.
Let me give you two give a couple of examples.
Assume both are due at the end of the month and invoices come 1-2weeks before they are due.
1) Invoice is for R10000 - 10 days late or more Fee should be: (Fill in the blank)
2) Invoice is for R5000 - 14 days late or more Fee should be: (Fill in the blank)

Thanks for your input.
Click to expand...

@18%pa

1) R150 in month 1
2) R75 in month 1

Interest is charged for a full month and not per day.
 
So in your opinion saying invoice is due on June 31st and there is a 18% finance charge if not paid by July 31st would be fair. Or could I back it up and say "If payment is later than 14days there is a18% finance charge."
Something in that area.
*I really want to be far but lately people have really be taking advantage of our small business.
**Our business is almost almost exclusively to other businesses so I tend to have less sympathy to companies with full time accountants.
***We also mostly sell services based inside of "projects" and these projects normally have a start and finish dates. 99% of the time the purchasing company wants to spread payments out over the duration of the project and we don't require money down so at the end of the first month we invoice the first payment and then they seem to want to wait and pay somewhere between 2 weeks and over a month. That is what I want to stop.
Again thank you for your input!
 
Curtix2 said:
So in your opinion saying invoice is due on June 31st and there is a 18% finance charge if not paid by July 31st would be fair.
Click to expand...

Yep, very fair.

Somewhere on every invoice you should insert a phrase such as "Interest will be levied at 18% pa if payment is not received within 30 days of invoice".
 
ok so: 30 days late on R10000 = new bill for R11500. And if 60 days it gets another 1.5 and so on. But you list it as 18% pa. Great thanks.
 
150 bucks on ten grand over a month...you sure that's gonna be enough incentive to pay early? I know plenty of people who'd still pay late If the penalty was only that much....just my two cents:)
 
With the legislation of the NCA the days of nailing people with 25% per month are over... You also cannot add end up paying more interest than the principal debt.

The % can vary slightly but is also regulated. Not sure what the maximum is at the moment, but it could be around 22% pa.
 
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