Paying bills late can cost your client time and money, not to mention the risk to their credit score. In this article, Bryce Sanders explains how these clients can take steps toward paying bills on time and actually saving money rather than wasting it.
If you have ever knocked over a full can of paint while painting your house, you know making a huge mess can take only a second, while cleaning it up can take hours. You might have a friend or client who doesn’t pay their bills on time and considers late fees an acceptable annoyance. They are on that ladder, and the paint can is about to tip over. They just don’t know it yet.
Advising clients like these gives you a chance to offer them financial planning. Once a client sees the value you can add in this aspect of their lives, they may be more receptive to additional financial planning services.
The Risks of Knocking Over the Paint Can
Your client might think that making a service provider wait for payment is no problem, but it can cost them in ways they probably haven’t considered:
The late fee. When someone pays their cable TV bill or trash collection bill late, they might see a “late fee” notification on their next bill in the range of five to $20. Your client might see this fee, but be unbothered by it.
Credit card late fees and penalty rates. If your client carries a revolving charge card balance, the credit card company might charge $35.00 for this. While it’s annoying, your client is probably putting up with it. The credit card company might be charging 16 percent, which is about the average. If your client misses even one payment, the company might apply the penalty interest rate, which currently averages a whopping 28 percent. This can happen when your client is 60 days in arrears, which is only one or two missed payments. The credit card company does need to notify a party before applying the penalty rate, but once a client is “in the naughty corner,” getting out can take a while.
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Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides high-net-worth client acquisition training for the financial services industry. His book, Captivating the Wealthy Investor, can be found on Amazon.com.