Has your business ever received a late fine? Did it do its job, motivating you to not be late next time? In most cases, people would say that if performing an action late cost them more, it would motivate them to complete it on time. But one fascinating study published in 1998 provided evidence that the opposite can be true.
Researchers introduced a late fee for parents picking up their children from preschool after closing time by more than 10 minutes. Parents had not been clearly informed about the consequences of a late pickup prior to this. It was expected that the late fee would be a deterrent to parents, and late pickups would decrease during the study. But surprisingly, when the fine was imposed, the number of late pickups increased by over 100%. In research studies, the following explanation is offered for the findings- once an action has a specific value, regardless of whether it is referred to as “price” or “penalty,” in our minds it is seen as an exchange. Before the fine was introduced, staying after hours to care for children was considered an act of generosity. But after putting a price on collecting your children late, it becomes a commodity that you can purchase if needed. The late-coming parents were now literally “buying time”.
What can we learn from this? Any late penalty you receive can be seen as a purchase of time. If the time is valued above the cost of the late penalty, then is it a worthwhile purchase? It can be tempting to think this way. But as the context of management scales up from an individual to a business level, other factors come into play, like company reputation. If your management is resulting in late fees, your stakeholders are not going to be happy. Every time you fail to meet an obligation, you buy more time but you also erode your credibility as a well-managed company.
When you get a late fee
Businesses failing to meet legal compliance requirements on time often contend with penalties. So, this calls into question- when you receive a late fee, is the time you’ve bought worth its price tag?
Well, there are three scenarios in which you might find yourself slapped with a late fee-
SCENARIO 1- You missed the ball
This is the classic example of a late penalty. In most cases, getting a late penalty in your organization means that somewhere, something has gone wrong. The entire process slowed down because someone forgot to do an important task or missed some important information.
A late penalty like this always seems like such a waste because, on the surface, they are completely avoidable. If only the task hadn’t been missed, if only our timing was better, etc. The truth is, whenever humans are involved, there is the possibility of human error. So even though the late fee itself may have been unexpected, it is not unusual to see this happen occasionally.
SCENARIO 2- You’ve been forced to divert resources elsewhere
In this scenario, despite being aware of the fine being late will cause, you are not able to gather the necessary resources to meet the deadline. This is a very frustrating feeling. It’s not uncommon for deadlines to be overshadowed by other factors, such as being behind in your operations or experiencing a sudden event that diverts resources.
It is possible for it to happen again if it has happened before. Chronic, recurring problems like this will sap your company’s resources. If this sounds like your organization, it’s critical to examine and improve the systems you have in place to reduce the likelihood of this happening.
SCENARIO 3- The cost of getting it wrong is more than the cost of the fine
Sometimes, getting it right is worth the fee. It’s sometimes necessary to buy time, and although the price may be high, the alternative is more expensive in the long run.
Business-related fines can involve large sums of money, so this exchange is often conducted through gritted teeth. In this instance, you should be asking, “How can I speed up the process without compromising quality?”. There is a variety of software available today those businesses use to automate some or all of the tasks involved with specific compliance tasks. This may be a great way for you to reduce the overall costs to you and your business and ensure you are keeping your stakeholders happy.
Automation is the answer
Do you know how much late fees are costing your company each year? No matter how you feel about late fees- whether they’re recurring, a one-off annoyance, or a way to buy extra time during an emergency- you can probably agree that they’re something you’d rather avoid. Examining how frequently you are receiving late penalties, and implementing systems to remove them is a great investment for most businesses. Late penalties may appear to be an afterthought in the budget. But over time, they erode company reputation and drain your resources.
By changing systems, late fees can often be reduced or even eliminated entirely. Using digital management systems, many business owners and managers have saved thousands of dollars in late fees every year.
We believe an automated approach is the best way to combat issues like late fines. In places where late fees are a recurring problem, automation takes a major factor- human error- out of the equation. Most organizations struggle with this factor when it comes to completing tasks on time. By automating, your company can save money, reduce employee workload and redirect resources where they would be better spent in the long run.
Automation is the answer. Having a centralized, automated system that manages tasks related to important obligations is the best way to ensure consistency in the filing of documents and forms, where failing to do so could cost your organization thousands.
About the Totum system
Our system at Totum is designed to integrate into modern business operations, streamlining and automating potentially costly administrative processes. When a client comes on board, we help with the setup of your system to ensure everything runs like clockwork. Since each business is structured and run differently, we work closely with businesses to figure out where the pain points are, and help to automate your key business processes. We remove human error from the equation, speeding up processes, and more importantly, effectively eliminating late fees.
Our software solution serves many happy businesses, who would never consider reverting back to manual systems again. If your company wants to eliminate late fees and streamline your manual processes, get in touch to see how we can help your business to do just that.
