Quickbooks: Finance Charges for Late Payments

This video is a tutorial mapping out the steps to set up and implement late payment finance charges in Quickbooks.

Hi this is dave myers with paper trail financial with a new video regarding how to assess and bill finance charges to customers who have let their accounts become past due past due accounts are driven by the fact that we’ve established a due date with our customers so first i’ll review the terms assigned to each customer to do that we’ll just go to the report menu

Customers and receivables and i’ll choose the phone list and to add the terms we click modify here and on the display tab we can scroll down and add a column for terms i’ll just put a check mark here we wanted more information on one of them we could just drill down on a customer and on the additional info tab we can see there is a drop down here for terms in

This case it’s net 30. if we wanted to add delete or edit any terms we can go to the list menu customers term list and here we can make any modifications or create new terms if we wanted to assign those to a customer to make sure that we set up finance charges correctly we can review them by going to edit preferences on the left hand side there’s a selection for

Finance charges and we’ll just want to choose the company tab here you can see we’ve set the annual interest rate for 10 percent the minimum finance charge is three dollars regardless of how much the actual finance charge is it won’t be less than three grace period is very important whether or not you want to let your customers slide before they start incurring

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Uh extra expenses for being past due in this case we have it set for 30 days we need to assign an income account for the additional charges to be credited to in this case we’re using other income we can choose whether or not to let the finance charges accrue if the account continues to go past due and we get a warning message about that from quickbooks we want to

Make sure that we are calculating finance charges from the due date not the invoice date and don’t mark the finance charges to be printed box i’ll show you why in just a moment before we assess any finance charges on customers there’s a couple of reports that we should review i’ll go up to the report menu choose customer and receivable and ar aging summary this

Report shows that we have two customers that are more than 30 days past due so they exceed our 30-day grace period which means that they would be assessed finance charges i’ll minimize this report and i’ll bring up the second one the same way customer receivable this time the open invoice report we want to make sure that there are no unassigned credits and we’re

Not assessing late charges to customers erroneously to create the finance charges for the past two accounts we’ll go up to the customer menu and assess finance charges and this window gives us several options starting with the date and the invoice type it’s preset to finance charges which is fine it’s only going to be used internally we’re not going to send it to

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The customer which i’ll explain in a moment we have the mark all or unmark all buttons in this case i’ll unmark all and we’ll just assess the finance charge against chile’s for now the settings button opens the preferences dialogue which we already looked at collection history will open up the collection report and this report will show outstanding balances for

The customers on this list and also give contact information you can see the phone number listed there in case you want to make a phone call to them before they incur the charges so i’ll close this and the only thing left to do now is to go ahead and press assess charges i’ll go ahead and assess the charges so now they will post to both accounts receivable and the

Other income account i’ll show you the reason why we didn’t want to print this if we go to the customer center and for this customer you can see the invoice fc3 and i’ll open it up and you can see how quickbooks created an invoice for the finance charges only and none of the original charges that were on the invoice which really doesn’t do us any good instead

What we want to do is to send the customer a statement that includes the original invoice amount so we’ll go to customers and create statement we want to make just a few changes here first we want to make sure that we include all open transactions as of the statement date so we select that option we only assessed one customer so we’ll choose one customer and

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We’ll select it from the list and we want to select show invoice details on the statement and then i’ll hit preview and now on the statement we can see both the detail of the original invoice and the detail of the finance charges together and at the bottom of the dialog box we can choose to either print and mail to the customer or email it to them

Transcribed from video
Quickbooks: Finance Charges for Late Payments By PaperTrailFinancial