How Do I Configure Automatic Interest Rate Calculations for Invoicing?
| How Do I Configure Automatic Interest Rate Calculations for Invoicing?|
This feature is intended for firms wanting to charge their clients a fee for failing to pay according to the payment terms agreed upon. The interest rate is calculated as simple interest using the grace period and interest rate specified for each client in conjunction with the payment terms specified for each project. Please see the image below.
In addition to specifying the payment terms, you have an option to include a grace period during which a client has the time to send in the payment. The interest starts accruing on the day after the terms and grace period number of days, if specified, added together have passed. For example, if the terms are "Net 15" and the grace period is 10 days, the interest will not apply until 26 days after the invoice date.
Please note that the payment terms specified for a client are not actually used for the calculation but are default for the value specified for each project.
Please follow the steps below to get the interest calculation turned on in your Timesolv account.
Interest calculation needs to be turned on at the firm-wide level. This is accomplished by going to Administration / Firm Settings where you need to check the box next to "Use Interest Rate Calculations" as well as specify the default interest rate and grace period, as shown below.
These firm-wide values are used on defaults when a new client is created.
The interest rate and grace period will now appear on each client’s "Terms" page where you can change both values. If you do not wish to charge a particular client interest, please specify 0 (zero) value in the Interest Rate field.
The interest is calculated from the "Invoice Date", which is the date that will appear on the invoice and may not necessarily be the date on which the invoice was created.
Please note that the invoice date can be changed at any time on the invoice edit page.
For the purpose of interest calculation the date on which an invoice was actually sent is not important. By the same token, the dates on which payments are entered or allocated are not important but rather the payment post dates are used for interest rate calculations.
Once a new invoice has been generated, the interest charge will appear as a separate line item on the invoice edit page. You have the option of overriding it or not charging any interest at all.
Once the invoice has been sent, all invoices that have an interest charge included on them will have a new link right below the invoice amount.
Note: An interest charge may be generated from unpaid invoices and from invoices which have been paid in full but the payment post date indicates that the payment is late. Timesolv will only look for interest charges from the last invoice generated to the present date. While the interest is calculated as simple interest, any outstanding interest balance is compounded on each invoicing cycle.
By clicking on the "Interest" link, the details of the interest charge will appear.
The Invoice Summary report, available under Reports / Tracking Work and Collections offers a summary by client of all interest-related charges billed to clients.
Document name: interest_unpaid