When can I charge interest on late payments?

By Nina Kaufman, Esq.

Q.:  I own a pet-sitting business. Can I charge interest to my clients if they don’t pay within, say, a month?

A.:  You cannot charge interest – and expect them to pay it — if you have not previously notified your clients that you will do so if payment is late.  That’s changing the terms of your agreement.  If you could get away with that, your clients could just as easily come back to you at say, “I’m not paying you $100 per dog sit; I’m only paying $50” and you’d have to stick with that.

However, if you had a written agreement (that they signed) stating your fees and that you charge interest on late payments, then yes, you would be entitled to collect, because it’s part of your contract.  You can find more information in my legal guide on making clients pay, Even better, get the client to agree (in writing) to making automatic payments by valid credit card.  That way, you won’t have to deal with late payers.

Here are more law questions about handling business customers and how to collect money.


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