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Thread: Late Payments: Interest fees, Handling fees, Collection Costs, Service fees

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    Bronze Member ACEsterhuizen's Avatar
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    Late Payments: Interest fees, Handling fees, Collection Costs, Service fees

    Can someone special please advise me on what fees (on top of the invoice amount) i can charge on outstanding invoices (30 days and more).

    At the moment I charge 2% interest fee Incidental credit agreement as per the credit act. I add another 4% Administration Charges and 4% Collection Costs. This adds up to 10% per month (i know ) for non-paid invoices and it accumulates monthly.

    Can I do this or is it illegal?

    Thanks in advance.
    Last edited by ACEsterhuizen; 21-Jan-15 at 12:11 PM. Reason: Grammar and add file

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    I write at the bottom of my invoice that I will charge 7% per month for non payment of my cod invoices, starting from day 2. I've never had to do it in all the years and never intended to . That little phrase has saved me lots of heartache and frustration.

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    Bronze Member ACEsterhuizen's Avatar
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    Thanks Leecatt, I had a very educated customer inform me that it is against the national credit act to charge more than 4% Total Fees per month, and that the amount of total fees may not become more than the invoice amount.

    Now from the act I assume I can charge (incidental credit) 2% interest per month, cumulative per period. I also read that I can charge Admin Fees and Collection Fees.

    What I want to know and I cannot find it in the act, is there a ceiling on the (R) amount of fees that can be charged on an outstanding invoice? Is there a time limit on adding these fees?

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    The point I was trying to make was that by writing that on my invoice people just cough up the money they owe me as I stand there, it's a great leverage tool for an unpaid invoice too. Implementing it may be illegal but writing it certainly isn't.
    To make a mistake is human, to learn from that mistake is knowledge and knowledge is strength.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by ACEsterhuizen View Post
    At the moment I charge 2% interest fee Incidental credit agreement as per the credit act.
    No problem there, obviously.

    Quote Originally Posted by ACEsterhuizen View Post
    I add another 4% Administration Charges and 4% Collection Costs.
    Admin fees may not exceed R50 per month. Interestingly, banks treat that number as ex VAT (i.e. they charge R57 per month).

    As far as I know, collection costs should ordinarily relate to your actual costs of collection.

    Quote Originally Posted by ACEsterhuizen View Post
    Thanks Leecatt, I had a very educated customer inform me that it is against the national credit act to charge more than 4% Total Fees per month, and that the amount of total fees may not become more than the invoice amount.
    I don't know about the 4% part of your customer's claim, but in terms of total fees, you might want to check out this post on the NCA in duplum rule.
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member Blurock's Avatar
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    Admin fees may not exceed R50 per month. Interestingly, banks treat that number as ex VAT (i.e. they charge R57 per month).
    I wonder if anyone has ever challenged the banks on this "administration fee". They are credit providers. It is their job to do admin. They lend money and they receive interest for it. By charging an "admin fee" on top of the interest earned, they are actually earning more interest than was agreed on in the contract. Consumers should refuse to pay this add on from the banks!

    I have successfully refused to pay a "document fee" of about R1000 on my last HP about 3 years ago as the bank could not explain to me the reason for the charge. If you are a finance house, you need to have the correct, standard stationery for the type of contract, be it a lease, HP or whatever. It is not like a lawyer who has to draw up a new agreement between different parties with different conditions all the time.
    Excellence is not a skill; its an attitude...

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Blurock View Post
    By charging an "admin fee" on top of the interest earned, they are actually earning more interest than was agreed on in the contract. Consumers should refuse to pay this add on from the banks!
    Oh it's in the contract. At least the ones I've seen.

    Quote Originally Posted by Blurock View Post
    I have successfully refused to pay a "document fee" of about R1000 on my last HP about 3 years ago as the bank could not explain to me the reason for the charge.
    Which bank? Maybe I should try using them next time I need some asset finance.

    I can tell you that when I challenged Standard Bank when they introduced the documentation and admin fees on new finance, they blamed it on the National Credit Act.
    The trouble with opportunity is it normally comes dressed up as work.

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    Diamond Member Blurock's Avatar
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    Quote Originally Posted by Dave A View Post
    Oh it's in the contract. At least the ones I've seen.


    Which bank? Maybe I should try using them next time I need some asset finance.

    I can tell you that when I challenged Standard Bank when they introduced the documentation and admin fees on new finance, they blamed it on the National Credit Act.
    I do not wish to disclose which bank, as I do think that the person that allowed it could be in trouble afterwards. A bank's function is to do admin, so adding an "admin fee" borders on criminality.

    Although the "Admin fee" or raising fee or any additional fees may be in the contract, if you add it to the interest charged, the actual return for the bank will exceed the interest rate quoted. I believe that this practice is illegal, but no-one has had the balls to challenge it in court. It is the same as a farrier quoting you to shoe a horse and then charging you an additional fee for being a farrier. Or a garage charging you for a service on your car and adding a "mechanic fee".

    How about an electrician charging for a job and the adding an "electrician's fee"? I sincerely hope you sparkies will do your bit when next invoicing a bank.
    Excellence is not a skill; its an attitude...

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    Oh Blurock, I couldn't agree with you more.

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    We've never charged interest....but due to recent posts on another thread am contemplating it. Problem though if I charge interest my debtors book will increase, not even talking about handling fee...decisions decisions...

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