| Pages in topic: [1 2] > | Penalty for late payment of invoices Thread poster: Armorel Young
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I am considering adding a penalty for late payment of invoices to my terms and conditions.
Most of my clients are very good about paying my invoices, but I have one who more often than not has to be chivvied once the 30 days are up and they are due. I am beginning to find this very irritating - especially as I often put myself out to deliver things for her at short notice: I have never missed a deadline, so I don't see why I can't get paid promptly too.
At present this... See more I am considering adding a penalty for late payment of invoices to my terms and conditions.
Most of my clients are very good about paying my invoices, but I have one who more often than not has to be chivvied once the 30 days are up and they are due. I am beginning to find this very irritating - especially as I often put myself out to deliver things for her at short notice: I have never missed a deadline, so I don't see why I can't get paid promptly too.
At present this client has excelled herself: she went away on holiday for 2 weeks a few days after more than 1,000-euros worth of invoices were due, having "forgotten" to pay them before she went away, and she can't do anything about paying them until she gets back. (She has now supposedly been back for a week and I still haven't heard from her, but that's another story.)
Principally with this client in mind, I would like to specify a penalty charge where payment of invoices is late. Do other people successfully impose such a charge, and what would an appropriate amount be? ▲ Collapse
| | | | Erik Freitag 
Germany
Local time: 09:42
Member (2006)
Dutch to German
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| Turn it the other way round | Jul 27, 2014 |
Dear Armorel,
I do charge a small fixed amount as a reminder charge. Usually, I don't charge interest, although this would be perfectly legal (and absolutely common in most other professions).
In some other cases, where clients insist on longer payment terms, I charge them for that (just as an example: 2% of the invoice amount if they want to extend their deadline by four weeks). I make sure that they can clearly see on their invoice how much they are paying for my serv... See more Dear Armorel,
I do charge a small fixed amount as a reminder charge. Usually, I don't charge interest, although this would be perfectly legal (and absolutely common in most other professions).
In some other cases, where clients insist on longer payment terms, I charge them for that (just as an example: 2% of the invoice amount if they want to extend their deadline by four weeks). I make sure that they can clearly see on their invoice how much they are paying for my services, and how much for having me lend them money.
Sometimes, clients try to get away with paying late and ignoring my late payment fees, though.
Therefore, I think it's a good idea to turn things around with notorious late payers: Include your late payment fees in your initial offer, and then offer them a discount for early payment. That way, you either get paid in time, or you save the trouble to chase after your late payment fees.
That said: In Germany, interest for late payment is regulated by law (although you are free to agree on something else in your contracts). At the moment, it is 7,27% p.a. (or 4,27% for contracts with private individuals). I don't know about the situation in the UK, though.
[Bearbeitet am 2014-07-27 10:07 GMT] ▲ Collapse
| | | | | Dont think a reminder fee is the solution | Jul 27, 2014 |
My clients are nearly all good payers as well but a few months ago I found a statistic on facebook which was really suprizing me.
Unfortunately I didn't found the link but if my memory is right
- in France the average client pays several weeks late, I think it was even 10 weeks (!!)
- one of the only countries in Europe where clients nearly always pay in time is Germany....
Just had a look at that page... See more My clients are nearly all good payers as well but a few months ago I found a statistic on facebook which was really suprizing me.
Unfortunately I didn't found the link but if my memory is right
- in France the average client pays several weeks late, I think it was even 10 weeks (!!)
- one of the only countries in Europe where clients nearly always pay in time is Germany....
Just had a look at that page which is in German though:
http://www.atradius.ch/news/press-releases/
5 % of the clients in Western Europe never pay.
If your client is a regular one and if you finish by getting paid each time I think I would not charge her a reminder fee. You may loose her and she looks for another translator. Getting paid a few weeks late seems unfortunately to be normal.
I think Eriks idea is good. Offer them a discount for early payment after having increased your prices.
Other possibilites: Ask for an account before starting work. Most of my clients accept.
Is the client who pays late an agency? Maybe they dont have enough cashflow and wait for the payment of the end client before paying you? Did you ever have a good conversation in order to know what the real problem is? Maybe you can find a solution together?
[Modifié le 2014-07-27 10:30 GMT] ▲ Collapse
| | | | | I just wouldn't work with them | Jul 27, 2014 |
My approach to this is that I just won't work with clients that regularly pay late or can't meet my payment terms. I usually issue my invoices at the end of the month and then allow 30 days for payment, so I feel this is plenty of time.
If there is any problem with payment that is not resolved the first time I ask I will just strike that client off my client list and not work with them again. I simply don't want to spend my time chasing invoices.
This might seem a bit d... See more My approach to this is that I just won't work with clients that regularly pay late or can't meet my payment terms. I usually issue my invoices at the end of the month and then allow 30 days for payment, so I feel this is plenty of time.
If there is any problem with payment that is not resolved the first time I ask I will just strike that client off my client list and not work with them again. I simply don't want to spend my time chasing invoices.
This might seem a bit drastic, and may not be feasible for all, but it works for me and means that over time I have built up a good base of clients who do pay promptly.
I also feel that by working for clients that drag their feet about paying you may be running the risk of not getting paid at all if they go bankrupt (if the late payment is a symptom of financial problems). I had some experience with that early in my career and it has made me very wary.
[Edited at 2014-07-27 11:08 GMT]
[Edited at 2014-07-27 19:09 GMT] ▲ Collapse
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| The whip or the carrot? | Jul 27, 2014 |
In my case, late payment is particularly relevant, since interest rates (on loans, overdraft, etc. - not on savings accounts: that's how banks make a gigantic bundle) in Brazil are now 11% per month.
The whip consists of setting up penalties for late payment, and some such practitioners may "overlook" that 2% fine stated on your invoice for payment beyond a certain date. They'll pay late the net stated amount. If you question them about the penalty, they'll apologize, ask you for an... See more In my case, late payment is particularly relevant, since interest rates (on loans, overdraft, etc. - not on savings accounts: that's how banks make a gigantic bundle) in Brazil are now 11% per month.
The whip consists of setting up penalties for late payment, and some such practitioners may "overlook" that 2% fine stated on your invoice for payment beyond a certain date. They'll pay late the net stated amount. If you question them about the penalty, they'll apologize, ask you for an invoice on that, and eventually pay it... late again!
The carrot would be a discount offered for timely payment. For instance, if your invoice says that the full amount is $1,000, however there would be a check box immediately below it saying "Check here, get it paid by (date), and pay only $980.00!"
Depending on your invoicing system, you may do this only for clients that tend to be neglectful regarding payment due dates, taking for granted that no client of yours will be showing your invoices to others.
If you ever consider raising your rates, that would be a good opportunity to implement that. Prompt payers will have a smaller raise.
(In my case, I explain the situation in Brazil, and offer them much larger discounts for COD payment. After all, if they pay me on an extended term, this is tantamount to taking a loan in my country, at the local interest rates.) ▲ Collapse
| | | | 2GT
Italy
Local time: 09:42
English to Italian
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| Interest rates | Jul 27, 2014 |
José Henrique Lamensdorf:
interest rates (on loans, overdraft, etc. - not on savings accounts: that's how banks make a gigantic bundle) in Brazil are now 11% per month.
This means that interest rates are 132% per year?
Cheers
Gianni
| | | | | Accrued interest! | Jul 27, 2014 |
2G Trad wrote: José Henrique Lamensdorf:
interest rates (on loans, overdraft, etc. - not on savings accounts: that's how banks make a gigantic bundle) in Brazil are now 11% per month. This means that interest rates are 132% per year? Cheers Gianni
These figures were taken from my bank's web site, interest rates on overdraft:
Actual monthly interest: 10.29%
Actual annual interest: 229.25%
This page shows a comparison between all banks in Brazil. Please note that many of them are not commercial banks that have branches everywhere, that anyone can have a checking account there, where anyone can get a loan, etc. Also, these are their raw interest rates, devoid of other fees (e.g. a factor for their not knowing when a client will cover an overdraft).
Why do I use overdraft interest rates?
A translator's payable bills supposedly have a specific due date. The translator relies on the payments they'll receive from clients on the agreed dates. If clients unduly delay payments, translators are conceptually supposed to 'go overdraft' to pay their bills. Translators should not be expected to fund their clients' revolving capital interest-free with their personal savings, if they have any.
| | | | 2GT
Italy
Local time: 09:42
English to Italian
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| Interest rates differences | Jul 27, 2014 |
José Henrique Lamensdorf: 2G Trad: José Henrique Lamensdorf:
interest rates (on loans, overdraft, etc. - not on savings accounts: that's how banks make a gigantic bundle) in Brazil are now 11% per month. This means that interest rates are 132% per year? These figures were taken from my bank's web site, interest rates on overdraft: Actual monthly interest: 10.29% Actual annual interest: 229.25%
OK. In Italy the annual interest rate on overdrafts in bank accounts could be between 15% and 23%.
Otherwise it will be considered as usury.
Interest rates on loans are quite lower.
Cheers
Gianni
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Karen Stokes
United Kingdom
Local time: 08:42
Member (2003)
French to English
| Pay On Time website | Jul 27, 2014 |
There's a wealth of information here http://payontime.co.uk/ including how to calculate interest under the Late Payment of Commercial Debts Regulations 2013, standard letters, etc. that might be useful. It's geared to the UK but there's some good general advice on credit control.
| | | | Thayenga
Germany
Local time: 09:42
Member (2009)
English to German
+ ...
| Basic interest rate + | Jul 27, 2014 |
2G Trad wrote: José Henrique Lamensdorf: 2G Trad: José Henrique Lamensdorf:
interest rates (on loans, overdraft, etc. - not on savings accounts: that's how banks make a gigantic bundle) in Brazil are now 11% per month. This means that interest rates are 132% per year? These figures were taken from my bank's web site, interest rates on overdraft: Actual monthly interest: 10.29% Actual annual interest: 229.25% OK. In Italy the annual interest rate on overdrafts in bank accounts could be between 15% and 23%. Otherwise it will be considered as usury. Interest rates on loans are quite lower. Cheers Gianni
The German goverment is working on a law that allows any service provider to raise a 40.00 Euro late payment fee, and said law is also to raise the interest rate for late payments from formerly 8% to then 9% above the basic interest rate.
As soon as the Federal President of Germany has signed the law, it will become effective some time this summer. After all, the banks - and which one of us can claim to be presidents or owners of a bank? - apply hefty fews for overdrawn accounts and loans.
| | | | | Late payment fee | Jul 27, 2014 |
In France the 40 € charge for late payers exists already and some mention it in their invoices.
I am not sure though that this really helps...
| | | | Sheila Wilson
Spain
Local time: 08:42
Member (2007)
English
+ ...
| Repeat something often enough and it becomes true | Jul 27, 2014 |
Andrea Halbritter wrote:
If your client is a regular one and if you finish by getting paid each time I think I would not charge her a reminder fee. You may loose her and she looks for another translator. Getting paid a few weeks late seems unfortunately to be normal.
One more nail in the coffin for those of us insisting that payment on time is our right. Do you think a client would continue to use a translator's services if s/he was consistently late with deliveries? There are plenty more clients out there, who DO pay on time. I know it adds to the risk and stress to dump clients, but it also makes a great deal of difference to the quality of your professional life over time.
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| One earns it | Jul 27, 2014 |
Sheila Wilson wrote: Andrea Halbritter wrote:
If your client is a regular one and if you finish by getting paid each time I think I would not charge her a reminder fee. You may loose her and she looks for another translator. Getting paid a few weeks late seems unfortunately to be normal. One more nail in the coffin for those of us insisting that payment on time is our right. Do you think a client would continue to use a translator's services if s/he was consistently late with deliveries? There are plenty more clients out there, who DO pay on time. I know it adds to the risk and stress to dump clients, but it also makes a great deal of difference to the quality of your professional life over time.
I tell my clients that I haven't delivered one single translation job late since 1973, so I've earned my right to demand to be paid on time. Those who don't agree, well, I won't take their jobs to retaliate by delivering them late, thus spoiling my immaculate record.
[Edited at 2014-07-27 18:02 GMT]
| | | | mariealpilles
France
Local time: 09:42
Member (2014)
English to French
+ ...
| Penalty for late payments | Jul 28, 2014 |
I used to have one client - a famous media group - who always paid late and came up with all sorts of excuses. They also just ignored my penalties for late payment, so in the end I just included it in the translation. Now I do not work with them any longer because I do not like to feel like a beggar, especially when I have always been very reactive and never ever missed a deadline. In any contract there are two parties and if one does not comply with the rules, break the contract. They would cer... See more I used to have one client - a famous media group - who always paid late and came up with all sorts of excuses. They also just ignored my penalties for late payment, so in the end I just included it in the translation. Now I do not work with them any longer because I do not like to feel like a beggar, especially when I have always been very reactive and never ever missed a deadline. In any contract there are two parties and if one does not comply with the rules, break the contract. They would certainly not think twiceif it were the othe way around. ▲ Collapse
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Thanks, everyone - lots of useful ideas there. I should say that I agree that I would not normally continue to work for late payers, but in this case the work is quite interesting and is an ongoing project that I have been working on on and off for several years - to that extent I have built up what I thought was a good relationship with the client, and I rather like the job and so haven't been in a hurry to ditch it. The question is how much one should put up with before saying "enough is enoug... See more Thanks, everyone - lots of useful ideas there. I should say that I agree that I would not normally continue to work for late payers, but in this case the work is quite interesting and is an ongoing project that I have been working on on and off for several years - to that extent I have built up what I thought was a good relationship with the client, and I rather like the job and so haven't been in a hurry to ditch it. The question is how much one should put up with before saying "enough is enough". I've now written to the client pointing out that our relationship is in jeopardy: at the same time, I have stated that I am reducing my terms of payment from 30 days to 14 and will from now on impose a 2% surcharge if payment is late. In the present circumstances and for this particular client that represents the right balance for me between wanting to be reasonable and yet not wanting to be taken for a ride. ▲ Collapse
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