Assessing finance charges is a routine part of the Accounts Receivable workflow in QuickBooks. You assess “finance charges” when you have late fees, or there are some due balances. Below, we will explain how to assess finance charges in QuickBooks Desktop.
What is the finance charge?
The finance charge is taken from the company that helps you in managing your company invoices, accounts, files, etc. QuickBooks is such software that helps you in managing your financial files, issuing invoices, issuing checks, etc., and with the help of QuickBooks, you can manage your company account from your office easily. You don’t need to take any headache; all will be done swiftly by QuickBooks.
Before you start the assessing procedure, Require to fix your “Finance Charges Preferences” in QuickBooks
- Open the QuickBooks Company file and Sign in as Admin
- Navigate to the “Edit” menu, and choose “Preferences.”
- Pick the “Finance Charge” and proceed to the “company preference” tab
- Enter the “Annual Interest Rate,” “Minimum Finance Charge,” & “Grace Period (days).”
- In the “Finance charge account” dropdown, pick the account you managed to track benefits from the finance charges.
- (optional)In case, you do not want QuickBooks to assess the finance charges on overdue finances charges; you can clear the “Assess overdue finance charges” checkbox.
Note: Then laws differ on whether you charge interest on overdue interest payments. You need to verify with the proper authority that you follow that jurisdiction’s lending rules.
- Choose the proper “radio button” for “due date” or “invoice/billed date to confirm when you require QuickBooks to calculate finance charges.
- (optional) Tick the “Mark finance charge invoices as –‘To are printed’,” if you require to print all your finance charge invoices at one go.
- Choose OK
How to Assess Finance Charges in QuickBooks Desktop?
- Navigate to the Customers menu.
- Select “Assess Finance Charges.
- Select the appropriate A/R account
Note: QuickBooks shows the A/R account entries “only” when your COA contains has more than on Accounts Receivable.
- Now set the “Assessment date.”
- Pick “the customers & jobs” you need to assess finance charges for.
- Choose “Assess charges.”
Note: When you assess “finance charges,” QB makes a “Finance charge Invoice” per customer. You have the choice to either print it or leave it cleared to be added to your further statements.
How finance charges get calculated?
The small businesses get more timely payment by the finance charges and statements and obviously, that helps those small businesses. If you want to take the facility of finance charges you need to follow some steps.
- First, you need to navigate your Preferences.
- Then go to Finance charges.
- Then go to Company preferences.
You can also check finance charges to be assessed on an “Invoice. There are a couple of solutions for this if you want an invoice to be omitted from a customer’s balance while assessing finance charges. The two options are:
- Build a task that is not a part of “finance ”
- Create a secondary “Accounts Receivable” that can be excluded from “finance charges.
In the first field, you need to put the percentage rate (annually), this rate will be used for computing the finance charge. QuickBooks will compute the finance charge only in annual form, then it will divide the finance charge for the appropriate period, usually this is a monthly period. You need to fill another important field about the minimum amount that QuickBooks should charge. Be sure of filling this field, this is very vital. If you do not fill this field this amount will be lesser, something which can be even smaller than the fee. The account of the finance charge always allows selection from the chart of account. Your finance charge earning will be posted in this account. If you want you can use a different account for the finance charge, even this will be better.
Importance of QuickBooks in managing account of your company
QuickBooks plays a vital role in managing the account for your company. With the help of QuickBooks software you can create or issue invoices, you can issue checks; also you can void the issued check online if necessary, from your office. Calculating finance charges is another vital task that QuickBooks does very swiftly. You don’t need to take any pressure, QuickBooks will do finance charge calculation for you. You just need to follow the above steps that are discussed in this article, and you need to provide the required data for calculating the finance charge. QuickBooks issues an invoice regarding the finance charge, you can print this for your record. Many small businesses are gaining by using the easy and effective features of QuickBooks. Calculate the finance charges in QuickBooks is one of the most important features of QuickBooks software.
To run the account of your company clearly and rightly you can use the QuickBooks software. From issuing invoices to calculating finance charges QuickBooks takes an effective part. So, follow these above steps to know how QuickBooks calculates finance charges.