Should we charge late fees or just nag more?

I was talking to my buddy Dave who runs a landscaping biz and he said he never charges late fees because it scares off the repeat customers. But I've been thinking, I lost like $300 last quarter just waiting on slow payers and I'm wondering if a 5% late fee would fix that. What do you all think, is it worth risking the relationship or do you need that stick to get paid on time?

3 comments

3 Comments

the_mary8d ago

Huh, I used to be on the "late fees ruin relationships" side of this debate, but your breakdown actually makes a ton of sense. A small, flat fee sounds like the perfect middle ground that keeps people honest without feeling like you're trying to punish them. I think you just convinced me to give it a shot.

lee.cora8d ago

$15 feels like the sweet spot. It's enough to make someone think twice but not enough to start a fight over. Have you decided on a number yet?

-1

paulnguyen8d ago

Man I went back and forth on this for like a year with my gutter cleaning crew. Finally I split the difference - no late fee if they pay within a week of my reminder text, but after that it's a flat $15 charge. Lost maybe two customers over it in three years (you know, the type that would have been a headache anyway) but the rest just started paying on time. The key for me was making the fee small enough that it feels like a gentle tap rather than a punch, but big enough that people actually remember to send the money.