The Good and Bad of Charging Late Fees

account and financeDo you struggle with getting your customers to pay their bills on time? Charging late fees might be helpful, but there are pros and cons to this approach.

On the plus side, late fees:

> May serve as an incentive for customers to pay bills by their due dates

> Are a source of additional cash if and when you receive them

On the downside, late fees:

> May not achieve the desired result of on-time payment

> Could alienate customers who sometimes pay late but are otherwise good to do business with

If you decide you will impose late fees, make sure your customers know about your policy up front. You should include the policy in customer contracts and on the face of your invoices. And be sure the amount you charge complies with any restrictions your state may have.

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