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Comment by rwhitman | Hacker News Reader

Late fees are critical. In some businesses the accounting department will manage debt by paying off vendors in the order of who charges the most interest. If you don't have a late fee, you get shuffled to the bottom of the pile and stay there. Accountants are generally hardwired to avoid penalties, so if they see there are penalties they'll pay before the penalty period (provided they have the money).

However I have found that if your late fee is high, they will simply pay the invoice and "forget" the late fee. And then you're left squabbling over the late fee, which is quite annoying.

Also note that I disagree with OP's interest scheme - in my case its a flat 1-2%. For a freelancer you don't want to tip the scales into lawyer-worthy disputes...

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"Late fees are critical."

In theory you can assess late fees and you might actually collect some.

But the truth is if someone is jerking you around on payment and they offer to pay sans the late fees most vendors will accept that and move on. In fact I've had people who claim to be filing bankruptcy (claim) and offer x cents on the dollar for any amount owed. In the end you make a decision do you want to take the money or go for door number two.

Legally entitled really means very little. What counts is the cost of enforcing the contract and the time it takes and any leverage that you have (like a kill switch as OP had mentioned)

"and any leverage that you have (like a kill switch as OP had mentioned)"

A kill switch is pretty silly. All you need is "the copyright transfers on full payment for services rendered" in your contract.

+1 This is my method as well. Until the work is paid for, I own it.

If they are OK with not paying you, they probably don't give a flying f#ck about the copyright either.

So true.

Possession is 9/10th of the law.

Or as Capone put it "You can get more with a kind word and a gun than you can with a kind word alone."

A late fee is a tool to encourage payment, if they ignore it and pay even just the invoice amount earlier than they otherwise would have you could say it has done its job.

As long as they pay the invoice, most people at that point will waive the late fee (providing it's not a very large sum of money as would be the case with the suggested 10% per week). I know I've done this in the past when a client has called me up after weeks of nagging and apologised for the late payment and the lack of a fee.

Yea I think I've only ever refused to waive the late fee once

In addition, the late fee can come as a shock to the reluctant payer and spur an email expressing said shock. This is a great time to offer a waiver of the late fee if they pay by 5.

I'd go further than disagreeing with his scheme, there is a reasonable chance it is illegal to charge such an extortionate interest rate, and may constitute usury...

It’s perfectly reasonable if the rate is agreed on up front, though I wouldn’t charge 10% myself. Consider (legitimate) short-term loans—they have high interest rates to discourage abuse by debtors. Here, the author is perfectly willing to renegotiate until the deadline. Once the deadline is past, however, the client is simply in breach of contract, and ought to be penalised as such.

Apart from the fact that these types of contractual terms are legally invalid and unenforceable.

http://en.wikipedia.org/wiki/Penal_damages

Wow. That’s very interesting. So the rate must actually be a reasonable estimate of expected loss. If you were to bill for the time you took out of your schedule to resolve the payment issue, it might work out to a few percent anyway.

It's not charging an extra "late fee", it's removing the "discount for early payment".

how about instead of late fees, offering early payment incentives? A positive way to say if you don't pay by a certain time you will pay more. Interesting debate. Found an entire blog just on getting paid: http://blog.fundinggates.com. More focused on SMB but good advice for anyone freelancing.

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