Interest on overdue invoices

# Interest on overdue invoices

Open Overdue interest under Sales.

Set the rules

• Rate. A percent, for a year or for a month. A yearly rate counts 365 days and a monthly rate counts 30.
• Grace days. Days after the due date before interest starts.
• Minimum. A customer whose interest adds up to less than this is left for a later run.
• Income account. Where the interest is booked. Leave it empty and Pop Books makes an account called Interest income.

Interest is simple interest on what is still owed, for the days late after the grace days:

owing x rate x days / 365 (or 30 for a monthly rate), rounded to the nearest cent, with half a cent going up.

Example: 1,000.00 owing, 18% a year, 30 days late and 5 grace days. That is 25 chargeable days, so 1,000.00 x 18% x 25 / 365 = 12.33.

Preview, then post

Choose a date under As at and press Preview. The table lists each overdue invoice with the days late, the days charged by this run and the interest. Nothing changes until you press Post this interest.

Two ways to post:

• Raise an invoice for each customer. Each customer gets one ordinary invoice with a line for every overdue invoice, saying how many days were charged. It is issued straight away and shows in their balance.
• Only record it for the statement. Your books stay as they are. The customer's statement shows a line, Interest to date, under the balance.

Running it again

Each invoice remembers the date it was charged up to. A later run charges only the days after that date, so posting twice on the same day charges nothing the second time. Invoices raised for interest are marked and never earn interest themselves. A customer who pays part of an invoice is charged on what remains for the new days.

Customers who are never charged

Use Exempt a customer for people you will never charge. Their late invoices leave the preview. Choose Charge again to remove the exemption.

Who can do what

• Seeing the preview and history needs the permission to see the books.
• Changing the rate and rules needs the permission to change setup.
• Posting needs the permission to make and issue invoices.
• Marking a customer exempt needs the permission to change contacts.

A credit limit never stops an interest invoice, since customers who are late are often the ones over their limit. Every post is recorded in the history with who did it.

What has not been tried

Interest counts invoices in your own currency. A foreign currency invoice counts at its stored amount.