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Hosting Discussion > Operating a Web Hosting Business > Billing and Accounting > Charging a Late Fee? Do they REALLY works?
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  Post #31 (permalink)   06-16-2018, 06:55 AM
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While late fee's I think in everyone's mind sounds a reasonable thing to ask for especially when the customer decided not to pay on time, but collecting it I think is a whole other story which doesn't always end up happening. Let's put it this way if they aren't paying the original amount they owe you, most likely that late fee they aren't going to pay either and they will just move on to the next provider.
 
 
 


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  Post #32 (permalink)   06-16-2018, 07:08 AM
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Originally Posted by ronweeks View Post
While late fee's I think in everyone's mind sounds a reasonable thing to ask for especially when the customer decided not to pay on time, but collecting it I think is a whole other story which doesn't always end up happening. Let's put it this way if they aren't paying the original amount they owe you, most likely that late fee they aren't going to pay either and they will just move on to the next provider.
depending on how much they owe, adding a late fee then allows you to take the debt to the next level, but the whole point of adding a late fee is to encourage clients to pay on time It is reasonable to ask for a late fee as while the client is not paying even if you suspend them, their files etc. are still on your server using up space etc. Also you are having to chase the debt which takes your time.
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  Post #33 (permalink)   06-19-2018, 04:59 AM
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Late fee should be added as client's will pay within due-date to avoid late fees.
If you donot apply late fees, then the clients would take the billing system for granted and it will affect the overall accounting.
 
 
 


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  Post #34 (permalink)   06-26-2018, 09:03 AM
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We have tried late fees and the money gained was far outweighed by the extra customer churn this created.

However, we moved up the suspension, so you get suspended the day after the due date. This does get people to pay and doesn't annoy them as much as late fees and has the added benefit of them understanding the consequence.

We understand that we could lose customers this way, but "no payment, no service" is easier to understand than late fees.

Since the API for PayPal "Billing Agreements" has come along the customer now has to make an effort not to pay, the default is that they will pay.

Stripe are making recurring billing agreement changes to their API and as soon as they are ready for production, we will implement those too.
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  Post #35 (permalink)   06-26-2018, 10:24 AM
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Originally Posted by ughosting View Post

Since the API for PayPal "Billing Agreements" has come along the customer now has to make an effort not to pay, the default is that they will pay.
Yes we had various issues over the years with PP subscriptions, so moved to the PP billing agreements, which allowed us to try and take the funds if the client failed to pay
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  Post #36 (permalink)   09-25-2018, 02:59 PM
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In some cases late fee is good but in some cases it not. We pay our bills on time just because we know if we will not pay on time then we will have to pay some extra charge as a late fee. So in this case many people prefer to pay bills on time.

But some cases late fee irritate a lot and put a question on loyalty.
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  Post #37 (permalink)   09-25-2018, 03:13 PM
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Originally Posted by techperx View Post
In some cases late fee is good but in some cases it not. We pay our bills on time just because we know if we will not pay on time then we will have to pay some extra charge as a late fee. So in this case many people prefer to pay bills on time.

But some cases late fee irritate a lot and put a question on loyalty.
late fees should not irritate anyone or put a question of loyalty as if clients pay on time then late fees will not bother them.

In the UK all utility companies use late fees if you pay late.
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  Post #38 (permalink)   10-09-2018, 12:41 AM
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Hello, I am wondering if late fees really works? Do you get a profit from charging customers a late fee?
It works but in my opinion it is not targeted to make a profit but to avoid customers making late payments.
 
 
 


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  Post #39 (permalink)   10-09-2018, 02:56 AM
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It works but in my opinion it is not targeted to make a profit but to avoid customers making late payments.
yes you are correct as the last thing you want is clients paying a late fee.

It is just a consequential result placed on a client who has not paid their invoice on time and most times several days after the due date.

Simple thing to prevent paying a late fee is for the client to pay their invoices on time or contact their host to say they will be late in paying, so the host can extend the time for you to pay the invoice.
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  Post #40 (permalink)   10-16-2018, 11:38 PM
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Late fees results in such a bad customer experience I am totally against it.

With shared hosting you don't really have an immediate cost if the customer doesn't renew on time. Why penalize them? Especially as it can potentially drive them out the door (the bad customer experience). A grace period if much more soft about this.

Now if you're leasing dedicated servers and reselling them sure you might have an immediate cost so MAYBE it becomes more acceptable but even still, I am against it.

Fact is, people don't really read the terms of service. Most customers won't even know you have a late fee policy. A day or two late they come with intent to pay, see the late fee and now they have 2 options: Pay the invoice inc late fee or move to another provider.
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  Post #41 (permalink)   10-17-2018, 03:18 AM
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Originally Posted by Alex - A2 Hosting View Post

With shared hosting you don't really have an immediate cost if the customer doesn't renew on time. Why penalize them?
They Legally sign and agreed to pay you on time, if they don't pay you then they have to pay a late fee penalty. you will find all utility companies (water, gas, telecom etc.) all do this if you dont pay ontime

Quote:
Originally Posted by Alex - A2 Hosting View Post
With shared hosting you don't really have an immediate cost if the customer doesn't renew on time.
They are taking up space on your server that you could rent to someone else who will pay or are you in a business to give clients free space as they cant pay their bills on time



Quote:
Originally Posted by Alex - A2 Hosting View Post
Fact is, people don't really read the terms of service. Most customers won't even know you have a late fee policy. A day or two late they come with intent to pay, see the late fee and now they have 2 options: Pay the invoice inc late fee or move to another provider.
That is not your problem, buy using your services they accept and agree to your TOS whether they have read them or not.

I never once had anyone leave because their invoices had a late fee added, they either paid it or contacted me and i removed it.

The whole point of late fees is not for client to keep paying them, but to make them aware if they dont pay their invoices on time it will cost them more. Mine was set at 20% or 2 whichever was greater.
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  Post #42 (permalink)   10-17-2018, 03:36 AM
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Originally Posted by easyhostmedia View Post
They are taking up space on your server that you could rent to someone else who will pay or are you in a business to give clients free space as they cant pay their bills on time
[...]
That is not your problem, buy using your services they accept and agree to your TOS whether they have read them or not.
You are looking at it differently I guess.

I've never been an operator, but I have to side with Alex - A2 Hosting on this issue.

The "taking up space" is so minuscule in terms of cost that losing a client over a small late fee completely outweighs it. Now what do you think is going to be received better by the client: fees thrown at them or a helping/understanding/flexible hand?

You certainly can act strictly by TOS, you can throw the book at clients all you want, that however doesn't change the fact that a client can walk away from your service if he feels the service isn't being "friendly". As much as you have the right to charge the fee, a client has the right to walk away.
 
 
 


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  Post #43 (permalink)   10-17-2018, 04:24 AM
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You are looking at it differently I guess.

I've never been an operator, but I have to side with Alex - A2 Hosting on this issue.

The "taking up space" is so minuscule in terms of cost that losing a client over a small late fee completely outweighs it. Now what do you think is going to be received better by the client: fees thrown at them or a helping/understanding/flexible hand?

You certainly can act strictly by TOS, you can throw the book at clients all you want, that however doesn't change the fact that a client can walk away from your service if he feels the service isn't being "friendly". As much as you have the right to charge the fee, a client has the right to walk away.
Late fees are just part of it, if you offer an excellent service in server reliability and support service, then clients will be fine paying such small fees if they don't pay on time rather than leave.
One way to eliminate late fees is to get clients to pay by recurring payments, but that does not always work as i had 1 client who his PP subscription kept getting cancelled due to lack of funds (PP try 3 times to take the funds), so why should a client not have to pay such a fee when PP would try 3 times to take the funds
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  Post #44 (permalink)   10-17-2018, 02:42 PM
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Originally Posted by easyhostmedia View Post
Late fees are just part of it, if you offer an excellent service in server reliability and support service, then clients will be fine paying such small fees if they don't pay on time rather than leave.
One way to eliminate late fees is to get clients to pay by recurring payments, but that does not always work as i had 1 client who his PP subscription kept getting cancelled due to lack of funds (PP try 3 times to take the funds), so why should a client not have to pay such a fee when PP would try 3 times to take the funds
It certainly works for when the client is consistently late.

When this happens once or twice, and the late fee is thrown at them, I see the mood of the client change rapidly. The industry is way too competitive to lose a customer over $2.
 
 
 


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  Post #45 (permalink)   10-17-2018, 03:12 PM
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It certainly works for when the client is consistently late.

When this happens once or twice, and the late fee is thrown at them, I see the mood of the client change rapidly. The industry is way too competitive to lose a customer over $2.
If you offer a good overall service then a client wont leave over $2, as anyone that uses late fees will tell you its the last thing you want is clients paying late fees, you want them to pay on time as you as a host have bills to pay which you have to pay on time, so why let your clients off for not paying their bills on time. If a client cant pay on time then they can easily contact their host and explain. A late fee is to encourage clients to pay their bills on by the due date.

like i used issue invoices 14 days before the due date and then a reminder was sent 1 day before due date and then again on due date, then an overdue notice 1 day after due date, then another reminder 2 days after due date and then 3 days after due date a late fee added and account suspended then 14 days after due date the account would be terminated if still not paid.

so in effect 17 days to say they they will be late paying before late fee added
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