Unpaid invoices are never fun to deal with, but they occur more frequently than you might like. Do some of your invoices remain unpaid even after two or three reminders? If that’s the case, you can undertake some steps to add interest and late fees to the invoice.
In this article you will read about:
- How to set up your interest and late fees
- How to charge your interest and late fees
- How to add the fees automatically to your invoice using automatic reminders
- How to remove your interest and late fees again
- The influence of interest and late fees on bookkeeping
1. Set up interest and late fees
You can set the interest rate and late fees within your company info:
- Click on Settings and select Company information
- Click on the pencil next to your company entity
- Choose the option 'Payment information'
- Fill in the interest rate, the late fee and the minimum late fee
The additional invoice costs will be calculated based on these values. You'll see how this works in our next step.
2. Charging interest and late fees
To charge these fees you have to start with an overdue invoice.
In our example this is definitely the case: the invoice is 29 days overdue. Even after three reminders, the invoiced amount remains unpaid. It’s about time to start charging interest and late fees.
To do so, click on the ‘Incasso’ button on the detail page of the invoice. This button will only become clickable if the invoice is actually overdue. We’ll see a pop-up in which we can add the interest and late fees.
Our late fee is already filled in. If the amount based on the percentage you have set is lower than the minimum fee you have set, the latter will be charged by default. If the late fee surpasses the minimum fee, the amount will be based on the percentage you have set in the settings. Of course, you can always adjust this manually.
If we want to charge the interest as well, an extra amount will be charged, also based on the percentage you’ve set earlier. The percentage is calculated on an annual basis: the longer your invoice remains unpaid, the higher the fee.
For example, when the invoice is 13 days overdue, the interest is calculated as follows: Total amount incl VAT x 13 / 365 days x 20% interest.
When you click ‘Save’, you’ll see that the interest and late fee will be added to the invoice. Make sure the customer gets them by sending another reminder.
3. Automatic reminders
(This feature is available in our Move package or higher)
If you’re using automatic reminders when sending invoices, you can also add the interest and late fees automatically. To do that, navigate to Settings > Invoices and pick ‘Automatic reminders’.
When editing or creating a new reminder, you’ll see the option to charge these fees. Just choose after how many days you want to send the reminder, plus the template you want to use, and you won’t have to worry about it again.
4. Remove interest and late fees
If you were to change your mind and you want to delete these fees from the invoice, it’s easily done. Go back to the detail page of the invoice and click ‘Incasso’ again. Just deactivate the interest and remove the late fee. Click ‘Save’ and you’ll see those two fees disappear from the invoice.
5. Influence on bookkeeping
In reality, interest and late fees are often not paid by the customer. Mostly, they merely act as an extra persuasion to pay the original amount of the invoice. That is why Teamleader Focus does not include these fees in the export to bookkeeping software. Otherwise you have the possibility to book a higher amount in your bookkeeping than you’ve actually received. If your customer does pay those fees, you’ll have to add them manually to your bookkeeping software.