Collect Finance Charges from Your Late-Paying Customers – QuickBooks

When customers pay late, you need to give them an incentive to send in the check! QuickBooks has the tools necessary to automatically charge finance charges to late-paying customers. QuickBooks also has the flexibility to allow you control over each individual transaction. Who gets charged and when.

One of the important parts of managing business is managing the receivables and getting those customer payments into the business as quickly as possible so that cash can be used to pay expenses now there quickbooks has a couple of tools that can aid in that task one is finance charges where you can set up a certain schedule where quickbooks will charge finance

Charges to those customers that are delinquent now let’s take a look at how we set that up in quickbooks i’m going to go to the edit menu to preferences then there’s a section here for finance charges i’m going to switch over to the company preferences tab so because it’s company preference you’ll have to log in as the admin user in order to make and save

Changes here and you can see there’s already some setup here in the quickbooks sample file the annual interest rate that’s going to be charged to the customers 10 percent you may want more than that but i’ll leave it as is for now minimum finance charge if quickbooks just does the math perhaps a small amount comes out to 50 cents or something and it’s not really

It’s not really worth the postage and the envelope and so forth if you’re mailing uh to do that so quickbooks lets you create a minimum here uh in this case they have five dollars uh grace period if you want to add that sometimes that’s a good idea you can make an invoice do in net 30 but actually if you’re hitting a 31 day month they could get a finance charge

Before their actual month was their first month was over and assessed finance charges on overdue finance charges i find that most people make that selection but you could uncheck that box if you wanted to and calculate the charges from the due date or the invoice state generally most people are using due date there all right you know there’s one last one here

I don’t know of anyone that checks this that wants a separate invoice in their file showing just the finance charges so so we will leave that one i’ll click ok so here’s what happens if you know one i’m going to click down here on this finance charge icon but before i do that let me look at a quick report one good way to kind of get a feel for how your customers

Are doing who’s delinquent uh how long are they delinquent how do you know just how many of them are there out there you can go to the customer and receivables selection of the reports menu and you can choose like let’s look at this ar aging summary report gives me a list of my customers and how current or delinquent are they you can see the different columns

For the different number of days they might be overdue and in the sample file everybody is pretty current we only have one customer down here at the bottom that’s falling into one of these columns that would look like they were delinquent so that’s just for information purposes when i want to actually create the finance charges i click on the finance charge

Icon and that one customer that we looked at on the report is here there’s his balance of seven hundred dollars and quickbooks calculates the finance charge that should be charged at eight dollars and 82 cents this this window gives you the opportunity to decide well you know i won’t charge them a finance charge after all or i want to change the amount make

It more or less whatever you would have the option to do that here now bear in mind that if you do that quickbooks is always looking from the due date of the invoice so if i only charge uh five dollars and eighty two cents as you know i knocked three dollars off of this amount then the next time quickbooks goes to um charge finance charges if the customer is

Still delinquent it’s going to add that three dollars back in so you’re going to have a much larger amount next time which might be fine but just be aware of that that that three dollars doesn’t just disappear if you give them that break on the finance charge quickbooks is always looking all the way back to the due date of the invoice calculating what the

Finance charge should be since then and then deducting anything that is charged already so i can click on assess finance charge and then if i go to that customer in the customer center now where their balance was seven hundred dollars before now at seven hundred and eight dollars and 82 cents that 882 of course being the finance charge so uh you might give

That a try might help get some of those customers to pay just a little quicker i hope that was helpful thanks for watching

Transcribed from video
Collect Finance Charges from Your Late-Paying Customers – QuickBooks By Lance Wilkins