Late Payment Issues

[ughosting]

We've had a growing problem of late payments recently.

We rarely lose a customer, but they do get a little lazy when it comes to splashing the cash on time.

This can be an issue with monthlies as these make up the majority of the cash, so if people don't pay on time it leaves us wondering whether they will pay at all.

Don't read what I'm not saying 99% of customers renew on time, 99% of late paying customers do pay eventually!

So the problem is not Churn, it's cashflow.

How you other hosts deal with the problem of late payment.

 

[lowesthost]

charge a late fee & suspension after x # days
slow pays can can hurt the bottom line
set up one that works for you

 

[traxt]

add taxes on overdue payments

 

[Alex - A2 Hosting]

It is very common to add late fees for late payments (which can be automated into WHMCS) though remember, it could loose you a few clients.

Simply give them a grace period followed by an automated suspension and at a much later day (1 - 2 months) an automated termination. This way it gives your customers a grace period should they need it and the suspension will act as a notification, if they wanted to keep the site running they will either reach out to see what can be done or pay the invoice.

If they have no intention of renewing they won't bother with it and will just leave the account to terminate.

 

[nigelb]

We give clients as much notice as possible, but even after termination we do have a restore service.

 

[dedideals]

Charge a fee, but our systems generally make people subscribe and if they have no bank or whatever they let us know or already know to checkout.

So for us we rarely have an issue but late fees and suspension or get them to setup a subscription

 

[Rado_Ch]

It is very common to add late fees for late payments (which can be automated into WHMCS) though remember, it could loose you a few clients.

Simply give them a grace period followed by an automated suspension and at a much later day (1 - 2 months) an automated termination. This way it gives your customers a grace period should they need it and the suspension will act as a notification, if they wanted to keep the site running they will either reach out to see what can be done or pay the invoice.

If they have no intention of renewing they won't bother with it and will just leave the account to terminate.

I`m with Alex on this one - applying additional fees or taxes is unprofessional and can harm your reputation.

The procedure of late payments should be visible, clear and your clients should be aware of it before they purchase the service. Failure to renew can be due to many reasons and its important for the customer not to be pressured. A grace period of around a week is standard, make sure to send many reminders before and after renewal date - set a schedule to send at least two before the renewal is due, and another after that.

After the grace period you can suspend the account but still keep the content on your servers for at least a month, because sometimes a person is absent for a longer period with a good reason and we should respect that. Failure to contact/renew from the client side after 30-40 days is a sign that they are no longer interested in the service and you can safely terminate it fully :crash::rolleyes2

 

[HeartHost_CO]

This. Honestly, it's best to keep the clients data for a while, because if they happen to lapse on payment, then they could ask for a copy of their data within the next couple of weeks... needless to say though, they should be keeping their own sets of backups...

I`m with Alex on this one - applying additional fees or taxes is unprofessional and can harm your reputation.

The procedure of late payments should be visible, clear and your clients should be aware of it before they purchase the service. Failure to renew can be due to many reasons and its important for the customer not to be pressured. A grace period of around a week is standard, make sure to send many reminders before and after renewal date - set a schedule to send at least two before the renewal is due, and another after that.

After the grace period you can suspend the account but still keep the content on your servers for at least a month, because sometimes a person is absent for a longer period with a good reason and we should respect that. Failure to contact/renew from the client side after 30-40 days is a sign that they are no longer interested in the service and you can safely terminate it fully :crash::rolleyes2

 

[easyhostmedia]

Below is our invoice structure which is in our TOS and KB

For New Clients

If order left unpaid then
After 1 day a First Overdue reminder is sent.
After 2 days a Second Overdue reminder is sent.
After 3 days your order will be cancelled and your IP blocked and reported.

For existing clients

An invoice will be generated and sent 14 days before the due date
A reminder will be sent 1 day before the due date
Invoice then resent on due date and then if unpaid
After 1 day a First Overdue reminder is sent.
After 2 days a Second Overdue reminder is sent.
After 2 days your account will be suspended and a 20% or £2 late fee is added to the invoice, whichever is greater.
After 3 days a Third and Final reminder is sent
After 14 Days you account will be terminated.

so basically from issue to termination you have had 28 days to pay the invoice or contact us

Cancellations must be submitted no later than 7 days prior to your next due date

don't forget that until the account gets terminated even if they are suspended then their files are still taking up space on the server.

Depending on the invoice size we may even issue a Letter before action once an account is terminated and they still have active invoices.

 

[domaingood]

Add a late fees on overdue.

 

[easyhostmedia]

This. Honestly, it's best to keep the clients data for a while, because if they happen to lapse on payment, then they could ask for a copy of their data within the next couple of weeks... needless to say though, they should be keeping their own sets of backups...

we never keeps backups for clients, although we do carry out daily backups using cpremote and offer clients access to these backups for a fee of £2 a month which will allow them to request copies as and when they want them, if they dont pay this and asked for a backup copy we then charge them a one off £15.

but if a late payers account is suspended then need to pay before they can have any files and if they dont pay and their account is terminated then all their files are removed from server and from backup server at the same time

 

[Alex - A2 Hosting]

Below is our invoice structure which is in our TOS and KB



don't forget that until the account gets terminated even if they are suspended then their files are still taking up space on the server.

Depending on the invoice size we may even issue a Letter before action once an account is terminated and they still have active invoices.

Not a fan of your setup, sounds a little harsh actually. 2 days after due date a minimum of £2 is added to the invoice? Do you get many going over?

 

[easyhostmedia]

Do you get many going over?

This set up works fine, I have only had 1 client go over, in the 3 years i have had it at this setup.

When i first introduced a late fee i have it set at a fixed £10 and many of my clients would go over, reduced it to 20% or £2 then clients always pay on time.

Never lost a client because of late fees.

 

[Alex - A2 Hosting]

This set up works fine, I have only had 1 client go over, in the 3 years i have had it at this setup.

When i first introduced a late fee i have it set at a fixed £10 and many of my clients would go over, reduced it to 20% or £2 then clients always pay on time.

Never lost a client because of late fees.

£10 late fee, wow . If I had that I would never think of renewing.

I guess as your company grows more you'll see more late fees (hopefully not ), I think it really matters about how you attract.

 

[easyhostmedia]

£10 late fee, wow . If I had that I would never think of renewing.

I guess as your company grows more you'll see more late fees (hopefully not ), I think it really matters about how you attract.

but the priced of my plans were high to warrant a £10 late fee.

I restructured my business when i changed servers. 300+ clients currently and the 20% or £2 late fee works.

 

[paul-ukwsd]

People do miss payments from time to time, they could be on holiday or in the hospital etc.. It's this reason we send out all invoices 30 days in advance. I don't agree with late fees we just suspend the account once an invoice becomes 7 days overdue, an account suspension normally triggers the customer to pay.

 

[ughosting]

Thanks for your ideas!

Usually I try not to charge for anything that doesn't take a human.
So suspension and unsuspension, I just leave the site suspended until they pay. (and notify periodically).

What I'm really after I suppose is a why to incentivise people to pay on time.

 

[easyhostmedia]

Thanks for your ideas!

Usually I try not to charge for anything that doesn't take a human.
So suspension and unsuspension, I just leave the site suspended until they pay. (and notify periodically).

What I'm really after I suppose is a why to incentivise people to pay on time.

informing clients that they will face a late fee of they don't pay on time usually is enough to have them pay on time.

why to incentivise people to pay on time.

well it is simple, if they don't pay on time then this could make you unable to pay your own bills. yes you should have enough to cover these, but its still the same, you have bills to pay and have to pay these on time, so why should your clients be any different.

 

[HN-Alejo]

Late payments can be a problem. Do any of you ever call the clients directly to try to collect? If so, have you had any success with this method?

 

[Jump systems]

Late payments in many cases is simply due to lazyness. Subscriptions will help mitigate this. Allow grace period then suspend and eventually terminate