Many businesses charge late fees or finance charges on invoices that are overdue. This allows business owners to recover costs incurred by carrying unpaid bills on their books. Finance charges are usually calculated on a monthly basis for all transactions that meet the criteria that the business owner has set up.
To set up finance changes:
• Go to Setup > Accounting > Preferences > Finance Charge Preferences.
• In the Annual Rate % field, specify the annual percentage rate of interest you charge on unpaid balances.
• In the Income Account field, use the dropdown list to select the income account that will be credited by this finance charge.
• In the Grace Period field, enter the number of days you allow from the due date of an invoice before you begin to assess finance charges.
• In the Minimum Finance Charge field, enter the minimum finance charge you apply.
• In the Assess on Finance Charges field, place a check mark in the box if you assess finance charges on previously assessed unpaid finance charges.
• In the Assess From field, chose one:
Due Date – if you begin to assess finance charges only when an invoice is due
Transaction Date – if you begin to assess finance charges from the date of transaction
• In the Custom Form field, use the dropdown list to select the form on which you would like to invoice finance charges.
(Most companies choose the Standard Finance Charge Invoice, but you can customize the Finance Charge Invoice if you want)
Assessing Finance Charges:
- Go to Transactions > Customers > Assess Finance Charges.
- Accept today's date for the transaction, or enter another.
The Amount field updates to show the total finance charges you are assessing. Amounts in currencies other than your base currency are converted to your base currency for this total.
(You can only assess finance charges for a customer once per day even if subsequent charges would be in different currencies than the first finance charge.)
Choose to print, email or fax the finance charge invoices.
In the fields To Be Printed, To Be Emailed, and To Be Faxed, set the preferences for sending the completed form. Make a selection in each field individually.
- Check the box in front of each customer account on which you want to assess finance charges. You can manually adjust the amount you want to assess for each customer.
- Click Save.
Once the record is saved a new ‘Invoice’ will be generated for the customer with the Finance Charge Amount.
