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Assessing Finance Charges

Many businesses assess finance charges on unpaid invoice balances. This encourages customers to pay in a timely manner and compensates businesses for the cost of extending credit.

QuickBooks can calculate finance charges for you based on criteria you enter. It can apply charges to customer accounts, thus increasing account balances.

This part of the chapter explains how to set up and assess finance charges with QuickBooks.

To set up finance charges

  1. If you have never set up finance charges, choose Customers > Assess Finance Charges ( Figure 2 ) and click OK in the dialog that appears ( Figure 64 ).
    03fig64.jpg

    Figure 64 This dialog appears the first time you use the Assess Finance Charges command if finance charges have not already been set up.

    Or If you have already set up finance charges but want to check or change them, choose Company > Company Settings ( Figure 65 ). Then choose Finance Charges from the Show pop-up menu in the settings dialog that appears.
    03fig65.jpg

    Figure 65 Choose Company Settings from the Company menu.

    QuickBooks displays Finance Charges settings ( Figure 66 ).
    03fig66.jpg

    Figure 66 Finance Charges settings.

  2. Set options as desired:
    • Annual Interest Rate is the annual interest rate you want to apply, stated as a percentage.
    • Minimum Finance Charge is the minimum amount of finance charge that should be applied, stated in dollars and cents.
    • Grace Period is the number of days between the invoice due date and the date on which finance charges are assessed. For example, if an invoice is due on the 15th and you allow a 3-day grace period, QuickBooks will not assess finance charges until the 18th.
    • Finance Charge Title is the text that appears on the customer statement to identify finance charges.
    • Calculate Charges from enables you to choose the date from which finance charges should be calculated. Due Date is the date payment is due as indicated on the invoice. Invoice/Billed Date is the date of the invoice.
    • Finance Charge Account is the account that income from finance charges should be recorded into. The pop-up menu ( Figure 67 ) lists all accounts in your Chart of Accounts. Choosing New enables you to create a new account.
      03fig67.jpg

      Figure 67 The Finance Charge Account pop-up menu includes all accounts created for your company.

    • Assess finance charges on overdue finance charges tells QuickBooks to include the balance of unpaid finance charges when calculating new finance charges due.
    • Mark finance charge invoices "To be printed" includes invoices for finance charges in a list of invoices to be printed.
  3. Click Apply.
  4. Click the Settings window's close button to dismiss it.

To assess finance charges

  1. Choose Customers > Assess Finance Charges ( Figure 2 ). The Assess Finance Charges dialog appears ( Figure 68 ). It summarizes overdue invoices on which finance charges should be assessed.
    03fig68.jpg

    Figure 68 The Assess Finance Charges dialog.

  2. Enter the date for which you want to assess finance charges in the Assessment box.
  3. Click in the Assess column to place a check mark beside each overdue invoice for which you want to assess finance charges.
  4. If desired, edit any of the calculated amounts in the Fin. Charge column to change the amount of the finance charge.
  5. To print finance charge invoices with other invoices you print, turn on the Mark Invoices "To be printed" check box.
  6. Click OK. QuickBooks creates finance charge invoices for each charge it calculated and adds the amount of the finance charge to the customer's account balance.
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