Skip to main content
M
Mimmy64
August 21, 2019
Question

How and when are the finance charges calculated?

  • August 21, 2019
  • 1 reply
  • 0 views

How and when are the finance charges calculated?  I would like to provide a written explanation to our clients. eg If I apply the finance charge on the 16th of the month, payment was due on the 15th.  How is the F/C charge calculated in QB?

Eg  Service Period July 15 - Aug 15 

Payment of $1000.00 due Sept 15. (Net 30)

31 days late @ 2% interest = $1.70?

1 reply

L
LauraAB
August 21, 2019

Hi Mimmy64,

 

Welcome to the QuickBooks community! QuickBooks Desktop is a versatile product to help you meet the needs of your business. I'm happy to go over the details of finance charges with you so you have a better idea of how this feature works.

 

I'm pulling the following information directly from QuickBooks Desktop's Have a Question? section. Feel free to pull it up at any time by using these simple steps.

 

  1. Go to the Help menu.
  2. Choose QuickBooks Desktop Help.
  3. On the Have a Question? window, click Help.
  4. Select the Search button.
  5. Enter keywords into the search bar to find related articles.

Here's the equation QuickBooks uses to calculate finance charges: (Number of days past due X balance due X rate)/365

 

Although the original article in the program doesn't include the parentheses, I've added them here to make the order of operations clearer. Trying out this calculation with your figures, the number you've arrived at is correct.

 

The beauty of the program is that it'll do this calculation for you based on the parameters you set up in your company settings. Here are those steps.

 

  1. Go to the Edit menu.
  2. Click Preferences.
  3. Choose Finance Charges from the left.
  4. Select the Company Preferences tab. 
  5. Set up the parameters for the finance charges, including rate, minimum charge, and grace period.
  6. Click OK to save.

Once it's all set up, you'll see a new icon on your Home window called Finance Charges. This'll be in the customer section. You can click that to see your customers with overdue balances, check off the ones you'd like, and select Assess Charges. This will create a new invoice for the customer that only has those charges on it.

 

I hope that helps clarify this feature. I encourage you to look into the other articles available through the program. You're welcome to get in touch if you have further questions or need a hand setting things up. The number to dial is 1-877-772-9158. Pro and Premier agents are available 24/7 as the lines are always open. Enterprise and ProAdvisor support agents can help from Monday to Friday between 9 a.m. and 8 p.m. ET. Here's more details about support: Intuit QuickBooks Desktop software support policies

 

Enjoy the rest of your day!

Terms & ConditionsAccessibility statement