Here's one for y'all with a little more billing experience than myself.

We're currently in the process of migrating all our customers over to Ubersmith, which means a whole new billing and support structure for our clients.

Right now, our shared and reseller customers are given a 14 day grace period between the time an invoice is sent and the due date of that invoice.

I've just been setting up Ubersmith, and I began wondering whether offering such a long grace period is actually the correct way to go to get payments to us on time. FWIW, we actually extended our grace period from ten days to 14 days, and it doesn't seem to have helped.

I know of companies that send invoices out on the same day that the invoice is due, and then send a reminder two days later and finally suspend the account after five days overdue. Granted, that isn't for shared hosting, but the point still rings true.

I guess I'm just looking to hear your experiences with long and short grace periods. Which worked best for you? Was it best to give your customers an invoice X days before the due date, or was it best to have the due date on the same day as the invoice was sent?

From experience and using Ubersmith I think the best way is as follows. I will assume you have a 7 day cancellation notice ( adjust this if needed )

1) Issue an invoice 7 days + 3 days before someone has to get in their cancellation notice. On the invoice say "If you wish to cancel please do this...".

2) Send a reminder on the day its due saying "You have 3 business days to pay"

3) After 3 days suspend the account and issue a late fee (depends on the customers service but something small, £5 or so). This is to tell them don't do it again but not to bankcrupt them.

Offer discounts for having standing orders, paypal subscription and debit/credit cards that are autobilled.

Your running a business, not a charity and with billing you have to be very harsh but that said if someone emails in saying can they please have a bit of extra time I give it to them.

In my 10 years of experience, the grace period from the time you generate a new invoice to the time it is actually due makes no difference. Its the grace period you give before you suspend that makes all the difference in the world. Giving a long grace period before you suspend an overdue account makes little or no difference in jostling payment out of customers. Make the suspension date 1 to 3 days after the due date and you'll cut your losses quite a bit.

Anyway, to answer your question, I believe that 10 to 14 days grace period, with a couple of reminders in between, before an invoice is due is fair. That's what we do.

--Tina

How many customers do you lose per year due to non-payment? If you don't have high turnover, then do Net 15. Our colo provider charges us Net 30, and most companies in general do Net 30 or 2 Net 10 (2% discount for paying in 10 days). However, an argument can be made that Net 30 is more appropriate with larger customers or invoices. If it's $20 here and there, then a shorter time period is probably not too out of the ordinary. At the same time, realize that people do go on vacation, etc so sending an invoice on 12/23 with payment due in 5 days after which the service is deactivated may not be a good idea for customer relations.

One of the larger providers we use for a single dedicated server invoices with Net 10 terms. I actually put a note in my calendar to remember to request that invoice early in case I'll be out of town for 10 days during the time the invoice will arrive.

I give my customers 20 days after notifying them and it is working well for me. I do not see why I should reduce this to 10 days or 5 days... this doesn't really make a difference for me.

First of all, it's important to understand that the period of time between when you send out the invoice and when it is actually due, is *not* a "grace period".

A "grace period" is when the payment is actually overdue, and you are giving them "grace" by not suspending their account.

Prior to the due date, the invoice is simply an invoice... the payment is not actually due yet.

I hope that makes sense.

Anyway... here's what we do right now:

1) Send out invoices 15 days before they are due.

2) On the due date, if they have not yet paid, we send out an email that says their payment is now overdue.

3) Two days after payment is overdue, we send another email to inform them that we have assessed a $5 late fee, and their account will be suspended in 2 days.

4) Five days after payment is overdue, we suspend the account and send them an email informing them that if payment is not received within 25 days we will send the account to collections.

Depending on the client, we will also sometimes try to contact them by phone, etc..

5) After 30 days payment is overdue, we either cancel the account and void the invoice.. or (if the invoice is for a lot and/or it has cost us money, etc) we'll cancel the account and send the bill to collections.

I hope this helps.

My clients have their invoices generatd 7 days before the due date with a reminder 3 days before the due date.

1 Day after the due date the account an overdue notice is sent. 3 Days afterwards an account suspended notice is generated and a late fee of £5 is added. 14 Days after the due date the account is terminated and passed onto collections.

I lease a dedicated server and one time I was on vacation but my CC didn't go through!!.. I was nearly a month late on payment but they didn't shut down my site.. and i've always remembered it - so staying with that company/

Part of decision probably needs to be based on what kind of image you want to portray to your clients. A 10-15 day grace period is probably about mid range while 5 days or less makes you seem a little more strict about things and 15-20 days makes you seem more laid back.

In the end, it's exactly like Tina said, it's more about when you take action on the delinquents that's what really matters. People who pay late will pay late after 5 days just as much as they will after 25 days.

It's usually just in their nature on account of procrastination, laziness or because they're constantly juggling every cent in and out the door. A 5 day vs. a 15 day period probably won't net you too much difference realistically. It's more about when you bring the hammer down that's going to affect the bottom line.

Most of our customers are at least quartely payments and many are a year. We're still small enough that we can judge on a case-by-case basis, but this thread has given me thought that I have to make some kind of blanket decision and get it into the ToS.