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CTLawyer, Attorney
Category: Business Law
Satisfied Customers: 573
Experience:  over 15 years business and real estate law experience
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I have a customer who wont pay his bill for work completed.

Customer Question

I have a customer who wont pay his bill for work completed. The proposal and invoice clearly states payment is due upon completion of work. I am invoicing my customer again and this time with a due date. If the payment is not made in full by the date I have set forth I want to  charge them late fees and intrest for the amount due from the time due to the time collected. How much can I legally charge. Do I charge by day, week or month. Also I will be adding these notes to the invoice that they will inccur all collection and legal fees as well as intrest and late fees if need to send this to collection or small claims.
Submitted: 7 years ago.
Category: Business Law
Expert:  Law Educator, Esq. replied 7 years ago.
On bills such as this, there really is no limit on interest and late charges, the usury laws apply to loans and set judicial and maximum interest on loans. You generally charge simple interest per your standard billing period, meaning if you have 30 day billing you charge the interest each billing cycle. If this is for construction work, you can also file a lien on the home or business property. As long as the interest rate is reasonable and customary in the industry (I normally have seen and used 20%-25%).

It is fine to also put on there they will be liable for any attorney's and collection fees if they fail to pay. You should also have that in your actual contracts and you should modify them to say this as well as designate the interests charges and penalties for late payments.

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Customer: replied 7 years ago.
I dont bill monthly, All my jobs are due upon completion so what would be reasonable amount for late fees and intrest. Should I charge daily, weekly or what, and yes I am in contracting. Im in New York State if this is any help to you for my answer
Expert:  Law Educator, Esq. replied 7 years ago.
I am going to refer you to a collegue for further assistance.
Expert:  CTLawyer replied 7 years ago.
The late charge is supposed to relate to the amount of time, incovenience, etc. incurred as a result of rebilling, paperwork and the like. It cannot be out of relation to the original invoice either. So I would suggest something on the $25 to $45 range depending on the amount your invoices are typically. As to interest on late accounts, the usury rate in New York is 16% and even if usury does not apply to an open account situation like this, I would stick to the usury limit to avoid any issues. The interest would be an annual rate, usually billed monthly (16% of the balance, 1/12th of that added to the bill, then rebilled).

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