To set up when and how finance charges are calculated for your customers, select the Finance Charges tab in the Customer Defaults window. Finance charges (also known as late fees or service charges) can be calculated and applied to your customers for invoices that are past due. These charges will appear in your customer statements.
Note: Finance (late) charges are not applied automatically in Sage 50. This is done from the Task menu by selecting Finance Charges.
Charge Finance Charges
To apply finance (late) charges, the Charge Finance Charges option must be selected in Customer Defaults. Once finance charges are activated, you can set conditions for calculating finance charges.
Charge Finance Charges ... On Invoices XX days overdue: Enter the point at which finance charges should be applied to overdue invoices. For example, a finance charge will be imposed on the balance due after a 30-day grace period. Finance charges are calculated from the first day the invoice becomes overdue, not from the beginning of this grace period.
On Invoices up to: Enter the balance amount over which the second interest rate will apply. On balances below this rate, the rate in the Annual Interest Rate field will apply. On balances over this amount, the second interest rate applies. This lets you offer different rates to customers depending on the balance their accounts carry.
Annual Interest Rate: Enter the annual interest rate for balances at or below the specified dollar amount.
Maximum Annual Interest Rate: Enter the annual interest rate for balances above the specified dollar amount. If you want to enter only one rate, enter the same amount in both boxes.
Minimum Finance Charge: Enter the minimum finance charge dollar amount that will apply when a customer is late with a payment. If the calculated amount is less than the minimum displayed here, the minimum amount will be used. The default minimum amount is 50 cents.
Charge Interest on Finance Charges: Select this check box if you want to compound late charges. In other words, do you want to charge late charges on late charges?
Note: This is not allowed by law in some states. Check your local regulations before choosing this option.
Finance Charge G/L Account: This identifies the G/L account that will be used when applying finance charges (for example, Finance Charge Income). This account is the category or "bucket" in your chart of accounts that will be updated when you apply finance charges. Amounts in this account are reported on your Income Statement.
Appears on invoices and statements as: Select how you want your finance charges to appear on sales invoices and customer statements. Choose Late Charge, Finance Charge, or enter your own label (for example Late Fee, Service Charge, Participation Fee, and so on). You can enter up to 20 alphanumeric characters. If the Charge Finance Charges check box is selected, then this field is required and cannot be blank.
Important! Some state regulations do not allow businesses to use the term "Finance Charge" on customer statements when billing for past due balances. Only banks are allowed to use this term in these states. Check with your accountant to ensure that this regulation does not apply to your area.
Print finance charge warning message (on invoices) as
Select this check box if you want Sage 50 to print a message on invoices that warns about incurring finance (late) charges. Enter the message you want to print on the invoice in the Finance charge warning message field below the check box. For example, "Overdue invoices are subject to late charges."
Tip: You can also use this message to display a standard thank-you message, advertising message, or company announcement on all invoices.