Create Interest Invoices

Interest is charged according to the rate of your choice and is accumulated during the period in between the moment when a customer has an overdue invoice and until it is paid in full. This interest can then be charged to the customer in the form of an Interest Invoice.

In order to use the functionality Interest Invoicing, you must first enable the feature. Go to Settings - Invoicing- Interest Invoicing. Click on the radio button On to enable interest invoicing.

Before using the functionality you need to make sure the settings for the feature are as you wish to have them. In the same view complete the information on each row:

• Interest Receivable: Enter the interest rate you want to charge when creating your interest invoices (invoice total * interest receivable). Note that the interest receivable are being printed on the invoices regardless if interest invoicing is activated or not.
  
  
• Calculate interest from: Choose in the drop down menu whether to calculate interest as from the invoice date or the due date.
  
  
• Interest free period: Specify how many days, if any, should be free of interest after the invoice date or the due date. The day the invoice falls due is not counted in these interest-free days.
  
  
• Grace period: Specify how many days should elapse before interest is charged on the invoice, That is to say, by how many days must the invoice payment be delayed for interest to be charged. This date is always counted from the due date. If you allow, for example, two days late payment, then interest will be charged on the payment of an invoice with due date 31 / 1 only if it is paid after 2 / 2.
  
  
• Administration fee: Specify what amount should be added to the Interest invoice in the form of an administration fee. This fee replaces the usual invoice charge.
  
  
• Minimum invoice amount: Specify the minimum amount a late invoice should be for, for an interest invoice to be created. 
  
  
• Minimum interest amount to invoice: Enter the minimum interest amount an interest invoice should be created for. In the list for interest invoices, you can select to filter the invoices based on the amount that has been specified here. For example, If you choose 3€ as minimum invoice amount, you can then select in the list to only show invoices that are at least or less than 3€. See below.
  
  

• Interest invoices payment terms: Enter the payment terms the interest invoices are to have.
  
  
• Our reference: Specify here the reference that should appear on the interest invoices. If you do not specify a reference, the reference will be retrieved from the customer invoice.
  
  
• Remember to Save.

Note!
So that your interest invoices are posted correctly, check the correct default account is used for interest receivable under Registry - Chart of Accounts - Default accounts - Other.

Note!
Interest invoicing is as default activated on all customers when the functionality is turned on. Note that you can select if interest invoices are to be created or not on a specific customer. You specify this in the customer register, under Additional Information. Select No if you do not want Interest Invoices to be created for this customer. 

Create interest invoices

When a customer invoice is paid in arrears, an invoice for the accumulated interest is created according to the settings above. Go to Invoicing - Interest Invoicing to view all the interest invoices that has been created. Note that an interest invoice only can be created if the original invoice has been fully paid.

Choose what you want to do with your interest invoices via the options in the drop down menu in the Action column. Choose Create invoice and click on Execute when you want the interest invoice to be created. See picture below.

You can choose to select all the invoices by checking the box in the top rightmost column. To change the action for a number of invoices only, you tick them in the list and then select an option from the dropdown menu. Then click on Change Action and the Execute button. See below. If you have selected several invoices from the same customer, only one interest invoice is created where each invoice appears as an individual item row. 

When interest invoices are being created, they appear in the regular invoice list as Unposted and with type INI for interest invoice.

How to calculate the interest amount:

(invoice total * rate of interest receivable/ 360 * number of interest days).

Other actions

Following options are possible for your interest invoices:

Void- When you do not want the interest invoice to be created at all, and instead want to remove it.

Save- If you want to wait until a later date before creating an interest invoice.