How To Add Finance Charges In Quickbooks Online

Creating Statement Charges in QuickBooks - FredCo Accounting Services, Inc.

As a business owner, ensuring you get every dime of your profit and money owed is always important. Unfortunately, if customers are late in payment, there are finance charges that need to be applied to their invoices. Fortunately, with the help of QuickBooks Online, you can easily create and track statement charges for outstanding balances to make sure your customers don't delay paying your invoices. Here is a step-by-step guide to help you add statement charges in QuickBooks Online.

Creating Statement Charges in QuickBooks Online

Before you can enter charges to an outstanding invoice in QuickBooks Online, you need to set up the customer's profile to include a Finance Charge Item. To do this:

Go to the Customers menu.
Select the customer profile you want to create the item for.
Click Edit near the credit and finance tab.
In the Finance Charge Item field, select the item.

Now you're ready to add the finance charge. To do so, open the invoice or credit memo for the customer and click Edit at the bottom of the page. The next window will give you two options for adding the finance charge item to the invoice or credit memo. Select Add New in the Items tab to add the finance charge item.

When the statement charge is added to the invoice, you can enter information about the charge. This includes the name of the item, the rate, and the amount. Depending on the customer, you may also be able to enter a relevant discount for the charge. Enter this information and click Done.

Applying a Finance Charge to an Invoice

Once you've created the finance charge item in the customer's profile, you can apply it to an invoice by opening the invoice you wish to add the finance charge to. Select Edit in the top right of the page, and choose Add New in the Items tab. Then, select the finance charge item from the Item Name column.

You can then enter information about the charge in the Rate and Amount fields. Depending on the customer, you may also be able to enter a relevant discount for the charge. Enter this information and click Done.

Editing Finance Charge Information on the Invoice

If you need to make changes to the finance charge information that is already added to an invoice, you can do that by selecting the item in the Item column. You can then edit the item rate, amount, or discount as applicable. When making changes to the rate or amount of the item, you may have to adjust the discount applied to the item so it reflects the total invoice amount.

Modifying the Default Charge Details

If you need to modify the default charge details for the finance charge item, you can do that by going to Lists > Finance Charge Item List and selecting Edit on the entry for the finance charge item.

You can modify the Finance Charge Item Name, Rate, and Description fields as applicable. Note that you can only make changes to the item if it hasn't been used in any invoice or credit memo.

Applying Prepayment to an Invoice with a Finance Charge

If you need to apply a prepayment to an invoice with a finance charge, you can do this by selecting the Payment icon. Enter the amount being paid and select the correct method of payment. Then, select the Exact Amount box next to the Payment field, so the amounts match the due total amount.

Once the payment is applied to the invoice, select OK. This will close the window and show a screen where you can review the payment and satisfaction of the finance charge.

Setting Up a Recurring Finance Charge Rule

To save time, you can also set up a Recurring Finance Charge Rule in QuickBooks Online. This will allow you to automatically apply the same finance charge item to invoices that fall outside the payment terms set up for each customer profile. To set up a rule:

Go to Settings > Recurring Transactions.
At the top right, select New.
Choose Finance Charges from the Transactions list.
Enter the details for the rule, including the finance charge amount, payment terms, and customer profile.
Save the rule.

With the rule in place, QuickBooks Online will automatically apply the finance charge item to any invoice with a due date that falls outside the payment terms set up in the rule.

Reconciling Customer Accounts

When a customer pays an invoice with a finance charge attached, you need to select the Bank Account to which the payment should be deposited. Once the payment is recorded, the program will display a screen that shows the customer account balance. From there, you can choose to apply the payment to the invoices or to the finance charge item.

Customer accounts with a negative balance can also be reconciled. To do this, open the customer profile and select the Transactions tab. Then, select Apply Credits. Here, you'll be able to apply the credits to the invoices included in the customer's account.

Final Thoughts on How to Add Finance Charges in QuickBooks Online

Adding statement charges in QuickBooks Online can help you ensure timely payment from your customers. By setting up the customer profile to include a finance charge item, you can easily track outstanding invoices and apply finance charges to any invoice due beyond the due date. On top of that, you can also set up a Recurring Finance Charge Rule to automate the process.

At this point, you should have a good understanding of how to add finance charges in QuickBooks Online. With this information, you can easily get paid what you are owed while also staying organized with your finances.