Keep your clients and the courts happy by staying under the maximums below. Beyond legal complications, though, late fees that exceed usury rates would likely be considered exorbitant. While an unpaid invoice is usually legally distinct from a loan, courts have determined in some cases that contracts appearing to be sales agreements are actually disguised loan agreements. Staying under these limits (known as usury rates) is wise. Most jurisdictions set limits on the amount of interest a lender can charge. But does the law limit how much you can charge? Is it legal to charge late fees?Īs long as the terms are agreed upon ahead of time, imposing late fees is a legally sound and effective strategy for collecting payments from reluctant clients. If you’re applying late fees as a flat rate, it’s a good idea to calculate the percentage anyway to ensure you’re not running afoul of usury rate laws. Keep in mind that there may be legal implications associated with charging late fees. On average, freelancers charge 1.5% per month on late invoices. On the flip side, you may want to enforce a stricter policy for clients who consistently pay late.
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