If it’s done incorrectly, you will hear from your customer’s service Businessaccountings. QuickBooks, of course, performs all of the required calculations in the background. But it must first know what specific date you plan to actually assess the charges so that it can determine the number of late days that should be included. This may not be the current date, so be sure the Assessment Date is correct before proceeding.
How do I add or set up finance charges in QuickBooks?
All you have to do here is make sure there’s a check mark in front of every finance charge that should be invoiced (they’ll probably already be there, but you should verify this). If you send statements, clear the box in front of Mark Invoices “To be printed.” The finance charges will appear on the next statement.
Set up finance charge rules in QuickBooks 2020
To set up the finance charge rules, choose the Edit→Preferences command. When QuickBooks displays the Preferences dialog box, click the Finance Charge icon and then click the Company Preferences tab. The Preferences dialog box at this point should look like the one shown.
You may hate to have to do it, but assessing finance charges for late payments may improve your overall cash flow.
Before you can start, you will need to tell QuickBooks how you would like your finance charges to work. It’s at this stage that we recommend you let us work with you. There’s nothing overly difficult about understanding finance charges in theory: you apply a percentage of the dollar amount that’s overdue to come up with a new total balance. But setting up your QuickBooks file with the finance charge rules you want to incorporate may require some assistance. If it’s done incorrectly, you will hear from your customers.
How to set up finance charges in QuickBooks desktop
There are a myriad of ways to bring in customer payments faster and improve your cash flow. You can:
Get a merchant account and let customers pay you electronically
Offer a discount for early payments
Shorten the payment due cycle (21 days instead of 30 days, for example)
Be more aggressive about collections
Before you can start adding finance charges to tardy payments, you’ll need to let QuickBooks know how you want them handled. Open the Edit menu and select Preferences. Click the Finance Charge tab in the left vertical pane, then the Company Preferences tab in the window that opens. You may hate to have to do it, but assessing finance charges for late payments may improve your overall cash flow.
How to remove finance charges in QuickBooks
Maybe you don’t want to do this because it seems like a less-than-friendly way to treat customers – especially valued ones. But you’re not in the business of lending money, which is what you’re doing when you continue to let your accounts receivable slide. So here’s how to do add finance charges to your payment policies.
Applying the Rules
QuickBooks does not automatically add finance charges to your customers’ invoices. You will need to administer these additions yourself, Calculating Finance Charges in Quickbooks Set Up though QuickBooks will handle the actual calculations. Open the Customers menu and select Assess Finance Charges to open this window.
QuickBooks does the hefty lifting as far as calculations are concerned, but it’s very important that you set your finance charges up correctly. Customers will be annoyed by mistakes, and it’s much easier for us to help you get this tool set up right from the start than to have to go in and untangle errors. Let us know if you plan to start assessing finance charges, and we’ll help make it work for you.
We Can Help
As always, the Accounting Resources Practice of Elliott Davis Decosimo can provide guidance to help you maximize your accounting system. Reach out to your Elliott Davis Decosimo advisor or contact us directly at Businessaccountings.