Late Fees

[glorybound]

I use Freshbooks to manage my business. In Freshbooks I have a 1.5% late fee bi-monthly, and I do this mainly to initiate a late payment reminder. Now, 3% a monthly really isn't an incentive to pay; what is? Do you guys charge late fees? If so, how much?

[andybot_cg]

nah, personally I never have. Either someone is decent about paying on time, or they get shuffled to the bottom of the stack.

[glorybound]

what would be a fair late fee?

[jujubee]

I think 1.5%-3%. Have it in your initial contracts as well as your invoice.
Make certain to watermark until payment received. If anyone asks just say it's standard policy within the industry.
I will make exceptions in most cases especially with repeat clients, but will mention the charges should anyone be abusive towards fulfilling payment.
I know a lot of people are under the impression that most businesses operate Net 30 days, but I say screw that if you want to survive.
People can just run with your images and not feel obligated to pay up.
You don't go into a restaurant, order $100 worth of food and say to the waiter, "I'll pay in 30 days. Thanks for the meal!"

[alexyork]

I think 1.5%-3%. Have it in your initial contracts as well as your invoice.
Make certain to watermark until payment received. If anyone asks just say it's standard policy within the industry.
I will make exceptions in most cases especially with repeat clients, but will mention the charges should anyone be abusive towards fulfilling payment.
I know a lot of people are under the impression that most businesses operate Net 30 days, but I say screw that if you want to survive.
People can just run with your images and not feel obligated to pay up.
You don't go into a restaurant, order $100 worth of food and say to the waiter, "I'll pay in 30 days. Thanks for the meal!"

The trouble with that analogy is that, as a diner, you are able to fully enjoy the meal as provided by the chef. In our business, if you supply a "final" image/animation to a client, after they've signed it off, with a watermark, they will, quite rightly, say that you've not supplied them with a usable image/animation, since the watermarked version can't be printed or used as intended. If you demand payment right away before you send them the unwatermarked version this can cause major issues in my experience.

I agree that 30 day terms don't help, so I use 14 day terms. Most of the time this is completely ignored by clients anyway, so in that respect you can demand payment in 24 hours if you like - in reality you'll probably see payment in 4-6 weeks, in my experience, regardless. I also require 50% payment in advance prior to work starting. It's not an ideal setup but it's the one I've found that works best and doesn't put the client in a very awkward position at sign-off.

[glorybound]

good stuff. I get a 50% deposit before starting - no exceptions! I also ask for the balance upon completion, but that rarely happens, but I don't have issue collecting the final a week or so later. I do charge a 1.5% late fee every 14 days, which is an automated process for me in Freshbooks.

[jujubee]

I rarely have any issues with payment upon delivery.
If anything, it's made clear through a reminder that I lived up to my responsibilities and they should as well.
If they NEED the image right away, I may choose to remove the watermark and send it along. It really depends on how the individual I'm working with.
It shouldn't come as a surprise as it's stipulated in all contracts.

if you supply a "final" image/animation to a client, after they've signed it off, with a watermark, they will, quite rightly, say that you've not supplied them with a usable image/animation, since the watermarked version can't be printed or used as intended.

Like I said, it says it clearly in all contracts before work commences that images will be watermarked. Drafts on the other hand are not.

If you demand payment right away before you send them the unwatermarked version this can cause major issues in my experience.

Rarely for me. What causes major issues in my experience is waiting months for a client to pay unless of course you're already sitting on a pile of cash and can afford to wait. That's what causes the majority of artists to fail.

in reality you'll probably see payment in 4-6 weeks, in my experience, regardless. I also require 50% payment in advance prior to work starting.

I see payment within a few days generally. Half of all cases are 2-3 weeks. I've had only a handful in the 12+ years I've worked and freelanced try to stiff me. And yes I agree that a deposit/retainer is important.

"Standard" business practices are not always correct nor the right way to go about things, otherwise we'd all be millionaires. So I suggest a different approach. Perhaps my method has actually done more harm than good but it's never been said. The standard artist flops when it comes to running the business end of things. I'd say that number is at a good 98% of the artist population that has to take a regular full-time job in a non-art-related field to pay their bills.

[flino2004]

I wouldn't use any late fee because if you have it there in some way you are allowing late payments...even if you take your client to court after 2-3 years they would pay you without interests.
if it's a client that you already have a business relationship you know that they will pay sooner or later...and if is a new client good luck to you to become a regular one.

if they don't want to pay if really not much to do if the amount is less than 6K because is a small claim in MN....more than that you have to see if having a lawyer makes sense to recover $6000.01 or more

[jujubee]

I've heard of people not receiving payments or receiving them very late.
They are self-defeating as they always quote some mysterious "business standard" or "way" of doing things like everyone else.
If you don't want to get paid or don't mind getting paid late because you're sitting on a pile of cash, then continue that method.

Life would be much easier in this field if we all came to an agreement on both minimum pricing (note: not price-fixing) and terms.
Contract. Watermark. Payment upon delivery. No exceptions.
We didn't go into business as Credit Card agencies.

As much as a like to honor people's words, for every 20 great clients you might get one that decides they can take their time when its convenient for them. Especially in a recovering economy, I've discovered many self-employed architects that also don't know the first thing about running a business so they're stuck kicking the can down the road as well. Shouldn't be our problem.

And 6K is 6K - I'll take it. Better than nothing. At that point you wish you had a contract. In the decade I've been working, I've had three cases out of hundreds in which I actually had to enforce my terms and take them to small claims court.

[glorybound]

that's the great thing about contracts, it's nothing personal. The saying goes, "it's not that I don't trust you, I just don't trust anyone!"

[jujubee]

Lol. One also has to remember that contracts should work both ways. It obligates you to your client as well so it's also serves their benefit.