How to Apply and Track Customer Late Fees
In a perfect world, every invoice would get paid on time. But the reality is that things happen and invoice due dates get missed. We offer a few ways to handle applying and tracking late fees. I am going to walk you through how I would go about setting up and tracking late fees in my site.
I want my late fees to be generated automatically, and I want to use special invoices rather than the fees being added to the original invoice. I like having my fees set up this way because they get created automatically (which means I don’t have to remember to add them), and adding them to a special invoice means the original invoice value doesn’t change (which in turn means my customers are clear on what they are being invoiced for). Follow the steps immediately below to set up your late fees like I am setting up mine. If you are interested in adding late fees directly to the invoice, or adding fees/charges manually to an invoice, scroll down to the bottom of this page.
The Named Invoice Charges page is where you actually set up your invoice charges (including late fee rates). On this page, you can create a new charge type that is specifically for late fees. In the add/edit popup, you can configure the fee how you like, including choosing from a percent charge or flat fee, and the frequency of the fee.
Here is the late fee that I have set up in my system. The fee happens monthly as long as the invoice has not been paid off, and is for 5% of the invoice total.
Create your invoices like normal. If everything goes according to plan, you won’t need late fees. But, if a few customers are overdue on their payments, you can sit back, relax, and watch your system create special invoices for late fees automatically.
Go to the Billing > Invoices search page to find your late fee special invoices. The special invoices that are created will always have an invoice note starting with ‘Automated late fees for the month of’ followed by the appropriate month and year the fee was generated. So, an easy way to find these invoices is to type ‘automated late fees for the month of....’ into the ‘memo/notes’ search field.
In my site, ‘Sam’s Company’ has consistently been late on their payments (yikes!). Here, you can see a special invoice generated for each month that their invoices were past their due dates.
If you edit the invoice, you can see additional details about the late fee. The notes field shows which month the late fee is for, and under the ‘Charges/Fees Applied’ section, you can see all of the invoices which were late in the month, as well as the fee applied to each invoice. For this special invoice for Sam’s Company, they were late paying two invoices.
You can see the same information on the invoice PDF. The ‘Item’ special invoice element shows the same information as the invoice note on the search page. If the ‘note’ element is present on the invoice, it will display the same information as the ‘item’ field. The ‘Payment History’ element includes a list of fees and charges, which breaks down which invoices the late fees are for, as well as the charges applied to each one.
If you don’t want late fees to be automatically generated, and just want to add them when needed, or supplement your automatically generated fees, then follow these steps:
You will still need to create a named invoice charge. Check your invoice charge types by going to Settings > Billing > Named Invoice Charges.
Since you will be adding fees manually to your invoices, you probably want to set up the fee to be one-time. Something like this for example:
Go to the invoice search page and find the invoices you want the fees added to. Edit the invoice. In the edit popup, you will see the Add Charge/Fee dropdown. Choose your charge type from the list, and click save once you’ve added your fees.
You will see the charges applied and the invoice due amount will now reflect the added charges.
