Childminder late payment fees -does this sound excessive?

[Vinomum]

A friend of mine has just started using a new childminder and she was asking me about what my CM charges for late payment of fees. Ours charges us £5 per day. Hers is saying that she'll be charged a one-off late payment fee of £25 plus £10 for every subsequent day that it's late. This applies from day one.

I know childminders have a living to make and I'm sure my friend would never knowingly pay her late so hopefully it wouldn't ever happen anyway, but I thought this seemed incredibly high. What do others think?

I charge a one of payment of 15 and any more than three days late I state in my t&cs I will cease care. I have never ceased care but I have charged. I don't think it's to much at all. we are an essential bill surely and should be paid on time. I have heard of so many cm friends be short by hundreds if not paid on time

Both of these fees are excessive and almost certainly unenforceable in law.

To be enforceable any contractual late payment fee must be a genuine pre-estimate of the costs incurred as a result of late payment, however a precedent is set by the legislation which applies to commercial debts (The Late Payment of Commercial Debts (Interest) Act 1998) which for debts of less than £1,000 is a one-off charge of £40 and interest of 8% over base rate (currently only 0.5%). Although this law does not apply to services to individuals it is likely that a court would accept a charge of anything up to this amount as fair.

But you don't want to be taking your childminder to court do you? So if you don't want to pay the excessive fees, pay her on time.

I agree it sounds excessive BUT presumably this meant as a precautionary warning & jolly good reason not to pay late.

I charge £5 per day too, though have recently waived the late-fee as a one off when the voucher payments were late. (It was only their second month so I mentioned that I would normally charge and was waiving it.)

MrA, what is the rate for debts over £1000? Lots of my monthly invoices are for over that.

£40 up to £1,000; £70 up to £10,000; £100 over £10,000. Statutory interest is currently 23.29p per day (as in just over 23p, not £23.29) per £1,000.

If you put these sums in the contract there is nothing to stop you charging less than these amounts - so for a payment of £1,500 that is 14 days or more late charging £70 but if only 7 days late £35 which will in practice be the same as you are currently doing.

why would it be a problem what the late payment fees are if you pay on time?

So many small business go out of business due to late payment that I can understand why such an insentive to pay before or on time has been put in place.

Why not just start by paying a week up front and that way you will never get behind.

My afterschool care used to give a discount for payment in advance of 5% and I always took advantage

... and the other thing you can do is add £5 to your daily childminding rate for any time when the account is in arrears which provides a similar incentive for on-time payment but is even more legally watertight (providing it is in the contract of course).

I charge £10 which is what I am charged by my bank for going over my overdraft (which is what happens if I am not paid on time!) so it covers the expenses I then accrue.

If a parent approached me before payment was due and said they'd struggle to pay all at once, and we could reach an agreement over payment, I'd waive the fees.

I have occasionally waived late payment fees, but anyone planning to pay on time really shouldn't be worried about them.

Thanks all for your responses, I just wanted to get an idea of how this compares to other CM's contracts as obviously I only have my own to compare it to. As I said in my OP I'm sure my friend has no intention of paying late so it will never become an issue but it was just something we were discussing. Interesting to see how wildly diverging CM contracts can be, the more I find out about others the more I think how lucky I am to have found mine, she's a gem! Plus I've never paid her late

The tricky thing for me is that one of my parents claims she gets paid (and therefore gets her childcare vouchers) on the 28th of each month. Obviously depending on the length of the month, then if the voucher company requires a certain number of working days notice, she's not going to be paying me on time. If it's late again this month I think I will have to suggest that she pays me in cash one month and has a voucher 'in hand' for the following month.

Zuleika - I have that. The payroll goes to the voucher company on the last day of the month, so the credit doesn't come to me til about the 5th.