Im in Georgia, and I was in contact with my attorney yesterday. Iim certain the attorney has a good formula on how much to charge, Im just curious as to how much everyone else charges and the success rate of collecting
That's great that you've been in touch with your attorney, it's important to make sure you are legally compliant.
While it varies widely, many businesses seem to charge either a flat late fee or a percentage of the invoice as interest. For example, you might charge a $25 late fee plus 1.5% - 2% interest on the amount that's overdue per month. However, remember that such rates ultimately depend on regulations in your specific jurisdiction.
Also, bear in mind that late fees can have both positive and negative effects. The positive is that it can motivate customers to pay on time to avoid incurring extra costs. However, it can also damage your relationship with your customers if not handled carefully.
In terms of collection, you can consider involving a collection agency once an invoice becomes extremely overdue, say, 90 or 120 days past due. Be sure to conduct due diligence when selecting an agency and make sure you negotiate their cut of the collected amount—industry standards are approximately 25-50% of the collected amount.
Success rates can vary wildly depending on the collection method. Generally, the sooner you get started with the process, the better. One survey conducted by the Commercial Law League of America suggests the probability of full collection drops to around 50% at 90 days past due, and it drops even further to around 25% at a year past due.
Maintaining active communication, having clear terms in your contract, and taking a firm but fair approach can help you manage late payment scenarios effectively.
Remember, each business environment and client relationship is unique, and what works best may vary on a case-to-case basis.
Again, be sure to consult your attorney and understand the laws of Georgia on this matter.
