Turning on Finance Charges in QuickBooks
QuickBooks gives you an option to impose finance charges on overdue amounts as an incentive to get your customers to pay on time. To use this option in QuickBooks you decide the rate and circumstances under which finance charges are assessed. In the Finance Charge preferences dialog box you must specify an interest rate to charge, a minimum finance charge, the grace period you permit before finance charges are assessed, the posting account, and which date to begin calculating finance charges from. Additionally, you can choose to issue a finance charge on overdue finance charges and to have QuickBooks automatically mark the invoices “To be printed”. To enable and establish finance charges for your customers in QuickBooks you must do the following:
- Choose Edit | Preferences from the QuickBooks menu bar.
- Click the Finance Charge icon on the left pane and then click the Company Preferences tab.
- Fill in the Annual Interest Rate (%) field with the rate you want to charge annually (this means that if you want to charge 1.5% per month, you enter 18% in this field).
- Fill in the Grace Period (days) field with the number of days of lateness you permit before finance charges are assessed.
- Enter the income account you want to use to post finance charges (usually an income account).
- Specify whether to calculate the finance charge from the due date or from the invoice date in the Calculate Charges From field by clicking either the Due Date or Invoice/Billed Date option.
- Click OK to save your settings after you have filled out the window.