16 Nov Calculating Finance Charges
Calculating Finance Charges
In addition to preparing statements, QuickBooks can also automatically calculate finance charges. The software will create an invoice for the finance charge amount that can be printed if desired. The creation of this invoice will place another line on the statement for any finance charge amount due.
It seems that most small businesses choose to not use this feature. The advantages of having a set credit policy and strictly adhering to it are many. For example, improved cash flow, potentially increased profit, better client relationships (since they are less likely to have payment problems), etc.
The first step is to set the preferences with the default calculation information. If additional information is required to determine the company policy and/or state legal limits, consult with an attorney. Prior to recording the transactions to show the amounts due from the customer, it is possible to change or remove the finance charges. The preference simply sets the default criteria.
The second step is to mark those customer:jobs and related invoices that will have finance charge amounts assessed. The software, based on the information entered in the preference, determines the amount of finance charges that should, in theory, be due to the business by the customer. This amount is shown in the column to the right of the invoice. The amount can be overridden or removed if necessary. For example, if a certain invoice is being negotiated, it may be that the business will not want to assess finance charges on it.
QBRA-2003: Customers > Create Statements > Finance Charges