Finance Charge & Company Default

Configure Finance Charges for Overdue Invoices

Finance Charges may be assessed per account to produce late fees based on a customer’s unpaid invoices. Finance Charges will reside on a customer’s account as a separate transaction from the original invoice. Finance Charges have a balance and may have payments submitted towards them the same as with invoices.

It should be noted that you cannot apply prepayments towards finance charges.

Note that finance charges are applied manually at the user’s discretion, on a per-account basis.

Finance Charges work with Net Payment Due days. You will need to set both defaults to have Finance Charges calculated at the correct time.

Company Default Settings

Net Payment Due Within Setting

Finance Charge Monthly Interest Rate

Minimum Finance Charge

 

To configure finance charge settings go to Gear Icon > Company > Settings > Account

 

Net Payment Due Within Setting

This setting defines when the finance charge will be assessed, based on the invoice date

  • Net Payment Is Due Within
  • Set the number of days an invoice can be unpaid before it is considered late

    • Only late invoices qualify for finance charges

Finance Charge Monthly Interest Rate

This setting defines the percentage that will be assessed based on the invoice balance


  • Finance Charge Monthly Interest Rate
  • Set percentage of the overdue balance to be assessed as a finance charge

    • Set as a whole number

Minimum Finance Charge

This is the minimum whole dollar amount you will assess as a finance charge [i.e. if 3% of the outstanding balance is $0.59 this will be rounded up to the minimum set]


  • Minimum Finance Charge

  • Set the minimum value for finance charges in dollars (regardless of the percentage)

    • Prevents any finance charge from being assessed for a smaller value than the amount specified here.


Customer Default Settings

To configure default customer payment terms go to Gear Icon > Company > Settings > Customer

Note: you do not have to set a default payment term, but the payment term must be set on the customer profile for finance charges to be calculated

 


 

 

Calculating Finance Charges:
To apply late fees to any customer account, open the customer and navigate to their AR tab across the top of the page. From here press the “Calc FC” button on the right-hand side of the screen and the system will automatically identify any late invoices present on the account, and add a Finance Charge to the account for each one (these will be labeled as transaction type “FC” and reflect the invoice that incurred the charge in the “Reference” field).

Note that invoices on the account that have not exceeded their payment terms will not incur a finance charge. Also, note that finance charges may not be processed again until a number of days have passed based on the customer’s account terms (or the “Net Payment Is Due Within” value) from when the first finance charge was applied. Example: if payment is due within 10 days and an invoice has gone unpaid for over a year, 10 more days must still pass after the first finance charge is applied before a second finance charge may be applied.

 

FAQ: Are Finance Charges reversible, or can they be credited off of accounts?

Finance Charges cannot be credited off using Credit Memos, only paid or deleted. If a finance charge is no longer applicable, navigate to the customer's AR tab and right click on the FC and choose "Delete".