If you want to charge a late fee, penalty or interest charge to your customers, and want only a single invoice created for each customer, then you can use the statement late fees feature in Paidnice to create a single late fee, interest or penalty invoice for each customer on a weekly or monthly schedule.

For example if you have 3 overdue invoices for a customer, one 64 days overdue, one 34 days overdue and one 27 days overdue, then you could schedule a monthly or weekly calculation to apply a late fee, or interest calculation based on how overdue each unpaid invoice is and raise a single late fee invoice. The invoice would itemize each late fee calculated like this:

There are many ways to configure how the charge is calculated and applied. This article covers these options in detail.

💡 If you are trying to create a single late fee or charge for each overdue invoice, check out invoice late fees here.

To start click the statement interest charge button when you are viewing the group you wish to apply a late fee to.

You can read more information about how policies and groups of customers work here

You'll then need to configure your new late fee, first select the main configuration options.

In Xero, you can choose to send an approved invoice, or a draft invoice. Depending on your preferred business process you may wish to review and approve late fees. Please note: QuickBooks does not have the concept of a draft invoice so all invoices created are final.

There are 3 types of statement late fee you can use in Paidnice:

A late fee of interest rate per annum will calculate the selected annual interest rate on each overdue invoice balance and apply it pro-rata since the due date, or since the last time the late fee was charged if the late fee policy is repeating.

This can be used to apply interest to overdue or late invoices or calculate a finance charge.

For example an interest rate of 12% p.a. applied to a $1000 invoice that is 1 month overdue, would give a late fee of $10 because it's 1% per month pro-rata if the same customer had another invoice that was 2 months overdue (meaning a $20 fee), then a single late fee invoice would be created for both charges totalling $30.

A percentage late fee applies the same percentage amount regardless of how long the invoices are overdue and will apply the same amount each time it repeats on your chosen weekly or monthly schedule.

This can be useful for charging specific late fees for each overdue invoice.

For example an invoice of $1000 that has a 3% percentage late fee applied would incur a late fee of $30. An invoice of $2000 would incur a $60 fee, and both would be charged on a single late fee invoice totalling $90.

A fixed late fee will charge the same amount regardless of the balance of the overdue invoice

This is often used to apply a simple fixed administration fee or late fee. For example an invoice of $1000 with a fixed late fee of $50, would always incur a $50 fee. if there are 3 overdue invoices for a single customer, then there would be

When Paidnice sends the late fee invoice to your accounting system you can control what ledger account (Xero) or item (QuickBooks) is used on the invoice line for the late fee.

For example you may have a separate revenue account or item for late fees, so that you can easily track the amount of revenue you are deriving from late fees in your financial reports.

You can choose a specific tax rate or you can choose to use the account default (Xero) or the item default (QuickBooks).

You can choose to run the calculation either weekly on any chosen day of the week, or monthly on any day. you can also choose when the resulting late fee (if any) would be due for each customer. If you choose end of the calculation period, then the invoice will be due immediately after the calculation completes.

If you are using a Interest Rate Per Annum Pro-rata calculation type, you can choose which period the interest should calculate for using these options:

The period can start from the invoice due date or the invoice issue date. The period can end when the calculation is run, or up to the end of the previous month.

You can choose to include or exclude invoices that are either not yet overdue by the minimum age, or are more overdue than the maximum age. This option provides a way to delay charging late fees on invoices that are only a few days overdue - which can be helpful if you need to allow time for any bookkeeping and bank reconciliation processes to take place to ensure the invoice really hasn't been paid before applying late fees.

Notifying the customer by email

Select a template from your email template library to send to the customer or if you don't wish to notify the customer you can select not to send an email notification.

The option to 'include previous charges' will determine if the late fee is compounding or not. If you choose to include the previous charges, then the late fee can apply to previous late fees in a compounding fashion. If not then any previous late fee invoies are excluded from future calculations.

This option determines if Paidnice will deduct any unallocated credit memo amounts before calculating the charges. For example if a customer has an unallocated credit memo should it offset an overdue balance that would otherwise be charged a late fee.

Note: If any credits are allocated then they'll offset the individual balance of any invoice(s) they are allocated to, which will mean they are included in the calculation already.

To see what late fees are scheduled for your customers by this policy you can view the actions screen, the late fee will be scheduled to apply based on your configured schedule (weekly/monthly). For example you may see statement charges scheduled like this:

If you don't see a late fee action pending for a customer, you can use the 'Applicable Policies' tool on the contact page to determine which policies do and do not apply to the customer, and why:

You can test the policy by clicking on the scheduled action, and then clicking 'Action Now' to force the policy to run immediately:

(note: this will apply the late fee even in safe mode).

This can be useful for testing late fees, you can even create several small test invoices, issued to yourself or a test customer in your accounting system, back date the issue and due dates in the past so the invoices are overdue and then apply the late fee calculation to it using the action now button.

Once the main configuration is complete, you can also select special configuration on the More Options tab, you can select multiple options and then configure each one.

Each of the options will change the way the late fee policy works, below is a detailed summary of each one:

Minimum Fee Amount

Use this option to ensure the fee will be over the minimum amount. If the calculated amount is below this minimum an adjustment line is added to the invoice to bring the invoice total up to the minimum.

Exclude invoice lines

These accounts (Xero) or items (QuickBooks) will be excluded when determining the total of the invoice for the percent or pro-rata calculations. If an invoice is completely excluded then no late fee is charged based on the amount.

Fixed Amount

This is the fixed charge amount - it can be the only amount if you chose a fixed calculation type, or it can be added to a percentage or interest rate charge.

Action time

This determines when in the day the late fees are calculated. You may wish to set this to the very start or end of a day to allow time for any bookkeeping the day prior or during the day.

Include Invoices with Reference

This will filter the invoices to only those with a matching reference - any non-matching invoices will be excluded.

Use Branding Theme

This option relates only to Xero. You can determine which Branding theme to use when creating a new invoice as the late fee.

Use custom invoice numbers

This options is for QuickBooks only. By default QuickBooks will generate sequential invoice numbers 1001, 1002, 1003... etc. If you wish your late fees to have a different invoice sequence you can choose this option and the invoice numbers will be set to use the prefix: PN-L- followed by a sequence number.

Only apply to parent customers

For QuickBooks users - if you have parent/child related customers - this policy will only apply to parent customers.

If enabled a customer that has a parent-level customer, will not have a late fee applied. Parent customers that have a calculation when this setting is enabled will also include any invoices for the child-level customers.