Late payment is a common problem for small businesses. How often have you completed the work, sent an invoice and waited weeks, if not months, to get paid? It’s an unpleasant situation, with implications for your cash flow and customer service.
Late fees can create payment friction with clients, if proper communication is not established about penalties for late payments. Biller Genie’s Late Fee Manager automatically notifies your customers of the penalties associated with late payments, ensuring proper communication and positive payment behavior. Set your terms and conditions and they will be attached to your outgoing invoice, with the amount you choose, at your preferred frequency.
PAYING YOUR INVOICES SHOULD BE YOUR CUSTOMER’S PRIORITY
By charging late fees you ensure that your customers understand that you take collections seriously. You provide a product or service and your customers are expected to pay, on time every time. After all, you can’t pay your vendors and suppliers without the cash flow that comes from invoices being paid on time. A PYMNTS report found that 27.5% of businesses who frequently received late payments from their clients often missed their own payment deadlines. This is a serious issue. It’s one that Biller Genie focuses on solving.
ADD LATE FEES WITH JUST ONE CLICK
The Late Fee Manager notifies your customers of late fee terms and conditions. The Genie automatically calculates and applies charges to your existing invoices.
GENERATE REVENUE
Collecting late fees and finance charges adds revenue to your business and gives you more working capital.
HOW ADDING LATE FEES WORKS
In Biller Genie, an invoice is not considered late until it is 30 days past due. After the 30 days, late fees will be applied on a recurring 30 day schedule. Late fees can only be applied to current, existing invoices. You can also add late fees on QuickBooks online.
Simply set your terms and conditions and The Genie will automatically:
- Properly notify your customers of your terms and conditions in every invoice memo and follow-up reminders
- Notify customers in advance of the next late fee to encourage positive payment behavior
HOW TO ADD LATE FEES IN BILLER GENIE
From the Main Menu, navigate to the Tools drop-down menu and select the Late Fee Manager.
To begin charging late fees, under Late Fee Configuration, toggle the “Late Fee Status” to “Active”. Configure your desired schedule, frequency, amount, and customize the terms & conditions to meet your needs. You can choose to add your terms & conditions to the memo field of the invoices, and the body of the reminders, which will automatically be included with every invoice.
All late fees are booked to a new revenue account in your accounting software called “Biller Genie Finance Charge”.
You can choose to waive a late fee by going to Customer > Edit > Customer Portal tab and toggle “Waive Upcoming Late Fee” to “On”. This will waive the upcoming late fee for the customer.
If you wish to refund a late fee charge, remove the line item from the invoice in your accounting software, and upon the next synchronization between Biller Genie and your accounting software, the late fee will also be removed from the invoice in Biller Genie.
Why Charging Late Fees is a Good Idea
Besides encouraging clients to pay, an overdue payment fee is a good idea for several other reasons:
- You need the money – ASAP. In tough times, cash flow is especially important. Late payment fees can be an added incentive to get clients to pay you, sooner. While ideally, you could avoid such measures, the mere idea of late payment fees might motivate clients to pay you as soon as they can, or at least communicate with you if they’re unable to.
- It establishes you as a serious professional who has a business to run. If you don’t include a late fee policy, the perception may be that a client who doesn’t pay on time can repeat this behavior.
- You get paid before other contractors do. The chances are that if that client isn’t paying you on time, he’s doing the same to other contractors. But if you have stricter payment policies and kick up a fuss, they’ll move your payment to the top of the pile.
There is scientific research behind late fees and why they not only ensure positive payment behavior, but also how sellers can increase profits by adding late fees. “Rationalizing Time Inconsistent Behavior: The Case of Late Payments” was published by Washington State University, School of Economic Sciences in 2017.