If you assign finance charges to balances that aren't paid by their due date, finance charges will be assessed beginning the day after the due date. Due dates and finance charge amounts are determined by the selections you make in the Late Payment Monthly Charge % field in the Customer Terms Information section of the Selling Details window.
A finance charge amount is calculated by multiplying the customer's overdue balance by 1/30th of the monthly finance charge rate for each day the balance is overdue.
For Example: If a customer's overdue balance is $100 and their monthly finance charge rate is 1.5%, their daily finance charge rate is .05% (1/30th of 1.5%), and their finance charge amount for each day their payment is overdue is $0.05 ($100 multiplied by .05%).
If a customer pays part of an overdue balance during the overdue period — and you use the Receive Payments/Customer Payments window to apply the payment — the finance charge amount that's calculated will be based upon the remaining overdue balance.
Finance charges are calculated when you print customer statements. Finance charge amounts can be printed on customer statements by choosing Add Finance Charges to Amount Due in the Forms Selection window of Print Statements. Finance charges do not automatically show on invoices and are not added to the customer's outstanding balance. This gives you the freedom to decide how you want to deal with finance charges. You can, however, track finance charges yourself in a few ways.
To book and collect finance charges, you can do one of three things:
- When you're entering a customer payment in the Receive Payments/Customer Payments window, enter a finance charge payment in the Finance Charge field in the Receive Payments/Customer Payments window.
- Create an entire invoice for the finance charges in the Sales window, then use the Receive Payments/Customer Payments window to enter payments against the invoice.
- Add the finance charge amount to the outstanding balance of the open sale, then use the Receive Payments/Customer Payments window to enter payments against the open sale.