Late Payment Penalty Fee

Late Payment Penalty Fee

Beware of contract language which stipulates that your carrier suppliers have the ability to assess late payment penalty fees. Here's what we've begun to see,,,

Carriers contract language goes something like this:
"...a late payment penalty fee of ten (10% percent of the total charge will be assessed on all invoices which are not paid within thirty (30) days..."

Shipper agrees to language, but often fails to meet the required payment date of each carrier invoice.

Carrier, however, does not assess late payment penalty fees although it has the legal right to do so.

Because of this Carrier action, Shipper is "lulled" into believing that Carrier has unilaterally chosen to forego this right and continues to pay Carriers invoice a few days beyond the penalty date.

At time of next contract period, shipper decides not to include Carrier as a primary carrier; i.e., "cuts off" the Carrier.

Carrier then responds by billing Shipper all of the late penalty fees for previous shipments or by threatening to bill for these late penalty fees (which by now, could easily total tens of even hundreds of thousands of dollars) if its services at the same level of freight tenders are discontinued.

Solution

Build a fence around the late penalty fee language by stipulating something to the effect that (check with your attorney for your own specific language):

"Carrier agrees that any billing or invoice for late penalty fees must be presented to (shipper/receiver name) within thirty (30) days from the date the late payment occurs. Should Carrier not bill or invoice (shipper/receiver name) within thirty (30) days, Carrier agrees to waive late payment penalty fee."

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