My contract with clients spells our that "all payments made after the 10th of the month will be subject to an 15% late fee of the total past due". I charged this late fee to a customer who paid Feb 12. The due date was February 1. I charged her $115 (100 + 15)She complained that this is considered usury and that I cannot calculate late payment percentage rates regardless of time. She said she owes me only $0.50 because she was only 12 days late (100*0.15 *12/360). And if I charge a late payment fee, I have to spell it out as a flat late payment fee amount, not as a percentage of the total past due.So, is there any merit to her claim?
      Answer1:To the best of my knowledge, most places charge a monthly late fee of 1.5%, with an annual rate of 18%. If you contract clearly states it, the client is obliged to abide by it. For instance, apartment complex charge a flat rate for late rent, and then an additional fee for each day late. While there are no laws against your contract stipulations, its probably against best business practice to charge that high. If a customer is late, they dont have any incentive to pay off the past due balance any quicker, because they are being charged a flat 15% regardless of how late it is. In my opinion, you should revise your contract to say something like a daily finance charge of 0.5% will be charged for every day past due, that way in the case of this lady, you would charge her 6% (thats 0.5%*12) translating to $6.00 as opposed to the $0.50 she claims to owe. Besides, 12 days is significantly late, 1 or 2 days is negligible, but 12 days is plain irresponsible. Goodluck!PS - I derived my 0.5% suggestion based on your contract charge of 15% (Thats 15%/30 days a month)