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  1. #1
    Join Date
    Oct 2005
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    Northern Central California
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    Default how much to charge for past due accounts

    I recently finished a home repair. The insurance money, which was issued jointly to the homeowner and the mortgage company ( a really large bank which had received billions of bailout money). When It came time for my progressive payments - no check arrived. I have since finished the job and still after 45 days no check. What is a reasonable and legal fee to charge them for late payment - payments were due upon delivery of invoice. We are talking almost $10,000.00.
    Chileab -
    “Out beyond ideas of wrongdoing and rightdoing, there is a field. I will meet you there.”

  2. #2
    Join Date
    Dec 2008
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    Somerset, NJ
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    Default Re: how much to charge for past due accounts

    The rate will be governed by what your state allows as a maximum and what your contract states.

    CALIFORNIA, the legal rate of interest is 10% for consumers; the general usury limit for non-consumers is more than 5% greater than the Federal Reserve Bank of San Francisco's rate.
    http://www.lectlaw.com/files/ban02.htm

    With that in mind, it has to be an amount that is high enough to be useful. 1% doesn't encourage someone to pay their bill.
    "American political opportunities are heavily loaded against those who are simultaneously intelligent and honest" --Richard Dawkins

  3. #3
    Join Date
    Oct 2005
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    Default Re: how much to charge for past due accounts

    Quote Originally Posted by JayNos View Post
    The rate will be governed by what your state allows as a maximum and what your contract states.

    CALIFORNIA, the legal rate of interest is 10% for consumers; .
    So, I could charge 10% per year? so 30 days past due could be 1/12th of that - Am I assuming correctly?
    Chileab -
    “Out beyond ideas of wrongdoing and rightdoing, there is a field. I will meet you there.”

  4. #4
    Join Date
    Jun 2004
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    Friday Harbor, San Juan Island, Washington
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    Default Re: how much to charge for past due accounts

    Hopefully you've filed a lien on the house. Trying to add interest to a late bill is risky if the interest rate and other terms are not spelled out in your contract with the owner.
    Bailer Hill Construction, Inc. - Friday Harbor, WA
    Website - Facebook

  5. #5
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    745

    Default Re: how much to charge for past due accounts

    Quote Originally Posted by David Meiland View Post
    Hopefully you've filed a lien on the house. Trying to add interest to a late bill is risky if the interest rate and other terms are not spelled out in your contract with the owner.
    This could actually result in a good argument for them to not pay. If you change the contract terms without their agreement, they have legal standing to fight it (and not pay it until it's settled)...they have $10,000 to throw at a lawyer before they lose anything (aka, a head start).
    "American political opportunities are heavily loaded against those who are simultaneously intelligent and honest" --Richard Dawkins

  6. #6
    Join Date
    Jun 2004
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    Meadow Vista, CA
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    Default Re: how much to charge for past due accounts

    You're going to wait 90 days for money from a bank in my experience.

  7. #7
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    Jun 2004
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    Friday Harbor, San Juan Island, Washington
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    Default Re: how much to charge for past due accounts

    Quote Originally Posted by JayNos View Post
    the contract terms
    My contract says something to the effect of "interest at the maximum allowable rate" and also specifies payment due date as being X number of days after invoice date. Almost all invoices are emailed PDF files, which will hopefully eliminate any major dispute over when an invoice was handed over.
    Bailer Hill Construction, Inc. - Friday Harbor, WA
    Website - Facebook

  8. #8
    Join Date
    May 2009
    Location
    Kent UK
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    Default Re: how much to charge for past due accounts

    where you can come unstuck with your own contract conditions is trying to impose what on the face of it are "reasonable" additional chages

    just because the client aint paying

    the judge may well find against you because your additional charges........... however reasonable, wernt written into the original contract

    the judge sees it as you are trying to alter the original contract after it was signed. that is a no go area

    however unreasonable it might appear (because you didnt impose any sanctions on the client for late payment at contract signing stage) you loose both ways

    you cant impose a new condition of payment that is undefined, nor can you insist on a payment period that is undefined
    Last edited by Tom Bainbridge; 08-23-2010 at 03:46 PM.
    Limey Carpenter

  9. #9
    Join Date
    Jan 2009
    Location
    Danbury area of western CT
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    Default Re: how much to charge for past due accounts

    I ALWAYS have a late payment/non-payment penalty clause in my contracts. You can't charge after the fact.
    If you were supposed to get regular pay-outs, you should have stopped work when the first one did not arrive. That too should have been in your contract.
    The only way to collect interest damages is to take the bank and insurance company to court, but without a written agreement involving them, you will probably be out of gas.
    The other way to collect is to initially have the customer be responsible for compensation. The customer will get paid from the insurance eventually, but that's no reason that you have to finance the project.

    I stipulate 1.5% for every month past the first 30 days. No progress in work if scheduled payments are missed and the owner of the property is responsible for payment, NOT insurance or banks.

    Been burned once, for about the same amount of coin.;-)

    phil
    It's better to try and fail, than fail to try.

  10. #10
    Join Date
    Apr 2009
    Location
    Richmond VA
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    179

    Default Re: how much to charge for past due accounts

    "You're going to wait 90 days for money from a bank in my experience."

    But his contract is with the home owner, not the bank or insurance company, so he should expect to be paid on completion.

  11. #11
    Join Date
    May 2009
    Location
    Kent UK
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    Default Re: how much to charge for past due accounts

    both phil's and mr e hilton's ring true in english law

    you cant change contract conditions after the event

    it shows how close english and amaerican law is. regardless of the years and different precedents (rulings)

    both sets of law are broardly similar because they work on similar priciciples. they both feed off each other

    you only have to listen to "really serious" legal discussion radio programs to understand how close the systems are

    there ARE nuances (between english and american law) but over time they get ironed out
    Limey Carpenter

  12. #12
    Join Date
    Jan 2009
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    Danbury area of western CT
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    Default Re: how much to charge for past due accounts

    Quote Originally Posted by e hilton View Post
    "You're going to wait 90 days for money from a bank in my experience."

    But his contract is with the home owner, not the bank or insurance company, so he should expect to be paid on completion.
    That's just it, Chileab was not specific. Around here a lot of contractors work for insurance companies directly, so some specifics need clirification.

    phil
    It's better to try and fail, than fail to try.

  13. #13
    Join Date
    Oct 2005
    Location
    Bridgewater, Mass
    Posts
    133

    Default Re: how much to charge for past due accounts

    Keep this in mind...

    I recently did a job for a car dealership, waited 75 days to get paid, not unusual for some customers. I explained this to my supplier, they said "no problem" just pay us when you get paid.

    Go to pay the bill and see a $250 interest charge. I paid the total, never charged my customer any interest.

    Fast forward.....Now I am doing a $20,000 job for the same dealer, and my original supplier is not getting the business, nor have they had any business from me since I was charged interest.

    So to date I would guess that the $250 charge cost them over $30,000, and rising.

    I am quite sure that I have become one of their competitors best accounts since.


    Think about whether a few bucks in your pocket is worth the bad rep you will ultimatly get, because you know that no matter how good you did on the remodel, the only thing they are going to tell their friends is how you try to screw them because the insurance company took a while to pay.

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