Late fees can be used to provide an incentive for customers to not pay you late, less they incur a penalty. Generally late fees are not used for the revenue they produce, but as a situation your customer would want to avoid. In some cases late fees might be useful as a bargaining chip with a past due customer. In exchange for an immediate payment you might agree to waive the late fee.
You can configure Invoiced to assess late fees on your invoices for you automatically.
Setting up late fees
These instructions can be followed to setup late fees on Invoiced for all of your past due invoices:
- Go to Settings → Late Fees.
- Click New Schedule.
- Enter in the details of your late fee, including the name of your schedule, late fee amount (flat amount or %), make it recurring, grace period, and start date. You can assess a percent or flat amount for a late fee. The recurring setting will allow you to assess the same late fee repeatedly every Y days. The grace period will assess a late fee X days after the invoice is past due. The start date will only assess late fees for invoices with a date on or after the start date.
- Click Create to save your late fee schedule.
Assigning late fee schedules
A new late fee schedule is not assigned to any customers. Next you must assign the late fee schedule to customers in order to start assessing late fees.
These are the different methods to assign late fee schedules:
- Edit a customer to enable late fees in the customer options.
- On the late fee settings page you can assign to select customers.
- Make the late fee schedule the default. It will be automatically assigned to any new customers from that point forward.
- Assign the late fee schedule to customers through a spreadsheet import. The "Late Fee Schedule" field requires the name of the schedule. You'll find step-by-step instructions here.
Assessing late fees
Late fees will be assessed on your past due invoices automatically as they age beyond the past due grace period. Any assessed late fees will be added as a separate line item with a type equal to late_fee.
If you have a recurring percentage late fee, the calculation used is compounding. A flat amount late fee will be non-compounding because it is not a percentage.
Late fee criteria
Only invoices that meet the below criteria will have late fees applied:
- The customer has a late fee schedule assigned.
- The invoice has late fees enabled.
- The invoice date is ON or AFTER the late fee schedule start date.
- The invoice has a specific due date and is not due on receipt.
- The invoice number of days past due is equal to or greater than the grace period.
- The invoice is not in draft, paid, voided, or marked as bad debt.
- The invoice does not have a payment plan attached.
Assessing late fees immediately
The process that assesses late fees runs once per day. If you want to assess late fees sooner then you can follow these steps:
- Go to Settings → Late Fees.
- Click Run Now next to the schedule you want to assess late fees for.
Disabling late fees for an invoice
Invoices have late fees enabled by default. You can disable late fees for a specific invoice by following these instructions:
- Open the invoice you want to have disabled late fees.
- Click the Edit button.
- Click the Options button.
- Turn off the Late Fees toggle.
If you wish to remove an already assessed late fee for a particular invoice then you can edit the invoice and remove the line item. Once the late fee line item is removed, late fees will not be re-added to that invoice.