Is There A Limit On Late Fees For Unpaid Invoices

**thoffland** · 08-08-2007, 05:23 PM

I did some website work for a small organization in CA a while back (I'm in AZ). They had to reorganize their business into something that was more fitting for the area they were in. (long story)

I emailed them an invoice on June 1 for the work I did in May and received a response that they were re-orging and needed time to pay. I gave them an extra month then sent another. Got another email with the same thing. Today I sent an invoice with 20% penalty for late fees and got an email back stating that I was over my legal limit and not to expect late fees included with the payment.

I'd had the terms on the invoices prior to this one, so it's not like this was a surprise. At this point I'd be happy to get my money, but I'm tired of being jerked around too. Should I push for the 20%... or is it a lost cause.

Thanks for any advice.

Tim

**aaron** · 08-09-2007, 09:20 AM

Is this a late fee you made up after-the-fact, or is it something they agreed to in the contract?

I have found that it is usually a better approach to offer an on-time payment discount. That way the customer knows what the difference will be if they don't pay on time, and as it is a discount (not interest or a penalty) it doesn't potentially trigger usury laws.

**thoffland** · 08-09-2007, 10:01 AM

Quoting aaron

Is this a late fee you made up after-the-fact, or is it something they agreed to in the contract?

I have found that it is usually a better approach to offer an on-time payment discount. That way the customer knows what the difference will be if they don't pay on time, and as it is a discount (not interest or a penalty) it doesn't potentially trigger usury laws.

Thanks for the reply.

It was something I added to the last 3 copies of the same invoice I sent to them. We never created a contract for the work to be done, it was all over the phone. I didn't have any problems with them in the months prior to this, but now it's been 3 months and I'm getting frustrated.

**aaron** · 08-09-2007, 10:10 AM

I doubt that you will get anywhere with a unilaterally imposed late fee. There's no contractual basis for such a fee and, as interest, it would violate state usury laws.