Finance charges paid by customers
Finance charges are amounts added to an outstanding balance as a penalty for late payment. They are usually added to a customer’s statement. When the charge is paid by the customer, the payment is recorded in the Receive Payments window.
How finance charges are calculated Each open invoice’s due date is calculated using the terms specified on the Selling Details tab of the Card Information window. The overdue balance is then increased by 1/30th of the monthly charge for late payment for every day it is overdue, where the monthly charge is calculated by multiplying the amount overdue by the %Monthly Charge for Late Payment value you specified on the customer’s card. If the customer makes a partial payment during the overdue period, the finance charge is adjusted accordingly.
Setting up finance charges Before you can apply finance charges, you need to select an account for tracking late‐payment charges. Go to the Setup menu, choose Linked Accounts and then Sales Accounts. Select the I assess charges for late payment option and select an income account to record the late payment charges. Set the percentage you will be charging for late payments in the %Monthly Charge for Late Payment field of the Selling Details tab of each customer card.
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