How to invoice late fees
Thread poster: Thomas Johansson

Thomas Johansson  Identity Verified
Peru
Local time: 20:36
Member (2005)
English to Swedish
+ ...
Sep 23, 2016

I wonder how to issue late fees for an unpaid invoice. Suppose I have already issued an invoice for project P, thus:

Invoice number: 1234
Amount due: USD 100

Now, suppose invoice 1234 hasn't been paid in time (and remains unpaid) and I want to charge the client a late fee of USD 25. How do I do that in terms of the invoice issuing process itself?

Do I:

1. Issue an additional invoice (e.g. with invoice number 1287) for the late fee of USD 25 only, while invoice 1234 remains in force for project P?

2. Issue a new invoice (e.g. with invoice number 1287) for both the late fee of USD 25 and the original amount of USD 100 for project P, while invoice 1234 is somehow redrawn?

3. Send an updated version of invoice 1234 with the late fee of USD 25 added (thus changing the amount of invoice 1234 to USD 125)?

I would appreciate if someone could please provide some clarity on this.

Thomas

[Edited at 2016-09-23 22:26 GMT]


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John Fossey  Identity Verified
Canada
Local time: 21:36
Member (2008)
French to English
Agreement? Sep 23, 2016

How does the agreement read that you have with the client? That is really what answers your question.

Assuming, that is, that you have an agreement with the client that they owe you late fees if they pay late.

If you don't have any such agreement, then don't count on getting paid for any late fees imposed after the fact.


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Sheila Wilson  Identity Verified
Spain
Local time: 02:36
Member (2007)
English
+ ...
Concentrate on chasing the debt Sep 24, 2016

I'm not saying to not charge fees if you have an agreement to do so - you're owed them. But if the client can't or won't pay the original amount, how likely is he to pay even more? So I'd want to put most of my efforts into getting the original sum out if him.

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Soonthon LUPKITARO(Ph.D.)  Identity Verified
Thailand
Local time: 08:36
Member (2004)
English to Thai
+ ...
A New York Translation Agency Sep 24, 2016

Sheila Wilson wrote:

I'm not saying to not charge fees if you have an agreement to do so - you're owed them. But if the client can't or won't pay the original amount, how likely is he to pay even more? So I'd want to put most of my efforts into getting the original sum out if him.


I am chasing for payment out of a New York translation agency which did not pay since 2014. On the conciliation process, they insist not to pay for interests (it is customary/legally determined for commercial practice in my country). I want to get the opinion whether it is reasonable not to pay for interests due to late payment?

Soonthon L.


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Thomas Johansson  Identity Verified
Peru
Local time: 20:36
Member (2005)
English to Swedish
+ ...
TOPIC STARTER
please, focus on the question Sep 24, 2016

My question is about the appropriate invoicing procedures (not about the related issues concerning agreements or best collection strategies etc., which can be discussed in separate threads).

For the purpose of the example, please suppose there is an agreement in place about a late fee of USD 25 in case of late payment. What would be the appropriate or usual way of handling such a case in terms of invoice issuing as such: issuing an additional invoice for the late fee, issuing a new invoice replacing the old one, or modifying/updating the original invoice? Or something else?

I was hoping to hear some concrete practices or examples from people.

Thank you.

[Edited at 2016-09-24 02:53 GMT]


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jyuan_us  Identity Verified
United States
Local time: 21:36
Member (2005)
English to Chinese
+ ...
Go for common sense Sep 24, 2016

Thomas Johansson wrote:

My question is about the appropriate invoicing procedures (not about the related issues concerning agreements or best collection strategies etc., which can be discussed in separate threads).

For the purpose of the example, please suppose there is an agreement in place about a late fee of USD 25 in case of late payment. What would be the appropriate or usual way of handling such a case in terms of invoice issuing as such: issuing an additional invoice for the late fee, issuing a new invoice replacing the old one, or modifying/updating the original invoice? Or something else?

I was hoping to hear some concrete practices or examples from people.

Thank you.

[Edited at 2016-09-24 02:53 GMT]


I don't think there is any rule or established practice. The only acceptable answer should come from your client who owes you money.


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Angela Rimmer  Identity Verified
United Kingdom
Local time: 02:36
Member (2014)
German to English
+ ...
Statement of account Sep 24, 2016

Thomas Johansson wrote:

My question is about the appropriate invoicing procedures (not about the related issues concerning agreements or best collection strategies etc., which can be discussed in separate threads).

For the purpose of the example, please suppose there is an agreement in place about a late fee of USD 25 in case of late payment. What would be the appropriate or usual way of handling such a case in terms of invoice issuing as such: issuing an additional invoice for the late fee, issuing a new invoice replacing the old one, or modifying/updating the original invoice? Or something else?

I was hoping to hear some concrete practices or examples from people.

Thank you.


I have never been in a position where I need to start considering charging late fees, but if we look at examples in other industries where late fees are more common (let's say, the government's tax agency or your phone company), then usually they would issue a statement of account, which shows both the original money due and an itemised list of any additional charges (late fees etc), with an updated total at the end. It's not a new invoice and not an updated invoice, but somewhere in between those two.


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Sheila Wilson  Identity Verified
Spain
Local time: 02:36
Member (2007)
English
+ ...
The problem Sep 24, 2016

Thomas Johansson wrote:
My question is about the appropriate invoicing procedures (not about the related issues concerning agreements or best collection strategies etc., which can be discussed in separate threads).
.............
I was hoping to hear some concrete practices or examples from people.

I've been around these forums for quite a few years now and I don't recall anyone ever saying they've been successful doing it. I believe you're supposed to do it in France nowadays, but I have no idea if that's just something written down, or actual current practice.


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David Lin  Identity Verified
United Kingdom
Local time: 02:36
Member (2013)
English to Chinese
+ ...

MODERATOR
New invoice for the late fee Sep 24, 2016

I suggest you issue a new invoice only for the late fee of US$25, but in the new invoice you must refer the late fee is charged because the original invoice No. 1234 of US$100 is overdue and unpaid.

This practice will in my humble opinion be clearer for your client and also for your own accounting records.

Hope you find my response helpful.

David

[Edited at 2016-09-24 08:51 GMT]


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Samuel Murray  Identity Verified
Netherlands
Local time: 03:36
Member (2006)
English to Afrikaans
+ ...
I think... Sep 24, 2016

Thomas Johansson wrote:
3. Send an updated version of invoice 1234 with the late fee of USD 25 added (thus changing the amount of invoice 1234 to USD 125)?


I think that this would be the best option. Don't forget to update all your records (including tax returns, if applicable) if you amend an invoice.

I'm just not sure what you would do to the invoice date. You'd have to use the current date as the invoice date, but at the same time the invoice has to state the original invoice date somewhere.


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Mirko Mainardi  Identity Verified
Italy
Local time: 03:36
Member
English to Italian
+ ...
National regulations Sep 24, 2016

Weird no one mentioned this, but the first thing I'd do is get information about national regulations about this and the best approach in view of that. I suspect tax regulations in Peru may not be the same as in the USA, EU, etc...

In any case, amending an already sent invoice might be troublesome, also considering the fact you're not the only party who would be affected by such a modification.


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