Professionals only, please: I am a professional and I send monthly statements for services rendered -?

Question

prior to receiving one, each client has signed an agreement specifying interest rate of 18% if not paid within 15 days. Statements also make this clear. Despite, this, the majority of my statements are not paid on time. Because I don't want to be a bank, I charge a high rate of interest. Clients don;t seem to care - they either ignore and pay the orig balance eventually, or sometimes just go ahead and pay with int. But hate having to chase them down and the interest can lead to disputes / hard feelings. Lately, instead of just throwing in stuff for free, I itemize it, list price, then indicate on bill it's free if statement is paid on time; if not, it's going to be on next statement. This is also made clear in plain English on statement - it too fails to motivate timely payment from most clients. Any recommendations? Maybe 15 days is too quick, but I fail to see how a 30 day deadline is going to make anyone pay any quicker!? The credit cards and others don't allow 30 days.

Answer 1

It's a problem that all businesses and all professionals face -- some percentage of clients won't pay, and some will pay late.

30 days is more common in many industries, and might help your situation because many people operate on a monthly budget cycle -- especially if you notice that the people paying late tend to pay within the 30 day window if not the 15 day mark.

I like your idea about the "free if paid on time" parts -- that's creative and a good way to incentivize people. Other than that, it just part of doing business.

Answer 2

Rather than focus on the slow-pays, why dont you consider giving a discount for clients who pay within a prescribed time frame. For example, a business might give a 3 percent discount if the invoice is paid within 10 days, a 2 percent within 15 days, and a 1 percent if paid within 30 days.

Many busineses are very loathe to pay interest to other businesses. I think it's probably not worth your time to chase this down for people who pay within 45 days, but take a hard stance against clients who are chronically slow-pays even after 45 days.

Answer 3

Most businesses I have dealt with offer their sevices "interest free" if paid within a certain time frame. Usually 15% charge after 15 days past due. You are a little higher interest wise but are not alone in your billing practices.