Should I Charge a Late Payment Fee?
Date Posted: 08/30/2010 | Category: BillingForward to a Friend
For music teachers, unlike credit card companies, charging a fee for late payments poses a couple of dilemmas.
You’ll certainly not make students and/or their parents happy by charging an extra fee for late payments. And the last thing you want to do is lose a student and jeopardize their music education. But music teachers, like everyone else, have bills and expenses to pay, so receiving timely payments is a must.
So if you are going to charge a late fee, how much should it be? The amount charged by independent music teachers and music schools typically ranges from $10 to $20. You also must decide how far a payment is past due before it accrues a late fee. Credit card companies usually impose a fee if payment is received just one day late. Students and/or parents often expect a grace period of 7 to 10 days before being penalized with a late payment fee.
To avoid confusion, it’s important to have your billing policies in writing and clearly understood by students and parents before they start a new music lesson program. That way, if a student misses the payment due date and grace period, you can simply add the late fee to their next invoice. More than likely payments will not be late again.
Grace period or not, customers often express some degree of anger and frustration after paying an extra fee. Giving a lesson to a student who was just forced to pay a late fee can be awkward and cause unwanted tension during the lesson. One way to eliminate the problem is to switch to a “set monthly dues” billing method. Students pay at the beginning of the month for a specified number of lessons. No payment, no lessons. Problem solved!
Teachers who do have a late fee payment policy, however, will likely run into a situation when parents simply refuse to pay a late fee, regardless of whether it’s clearly written in your payment terms. In such a stand-off, you may have to choose between collecting a small fee, or losing a student. That’s a difficult dilemma to say the least.