Late-Payment Interest Calculation
Late-Payment Interest Calculation lets you generate interest charges in bulk for customers who have overdue invoices, instead of creating each interest charge by hand. The system reviews your customers' overdue balances, calculates the interest using the rate configured for your company, and creates the corresponding documents through a background process.
What is it and what is it for?
When a customer falls behind on paying an invoice, many businesses charge late-payment interest on the overdue balance. Calculating and billing that interest invoice by invoice, customer by customer, is slow and error-prone. This feature automates the process: it identifies invoices overdue beyond the grace period you define, calculates the interest amount using your configured rate, and, with a single click, generates the billing documents for every invoice or customer you select.
The interest calculation is always the same: the overdue balance of the invoice (or the customer) multiplied by your configured interest rate, divided by 100. An invoice is only considered overdue for this calculation once its days past due exceed its normal payment term plus the grace period you configured.
Screens in this area
The feature offers two ways to generate interest, depending on how you prefer to bill it to your customers:
| Screen | What it does |
|---|---|
| Generate by Invoice | Lists individual overdue invoices beyond the grace period. When you generate, the system creates a Customer Debit Note for every invoice you select, automatically picking up that invoice's currency, subsidiary and customer. Use this when you want the interest to stay linked to the specific invoice that generated it. |
| Generate by Customer | Groups each customer's entire overdue balance (in the location and currency you choose) into a single line. When you generate, the system creates an Invoice for every customer you select, with the accumulated interest from all their overdue invoices in that currency. Use this when you'd rather bill the interest as a single, consolidated charge per customer. |
How to use it
- Configure the interest rate and the interest service. Before you can generate any charge, an administrator must set, in Settings > Administration > Company Preferences, the interest rate to apply and the service item to use on the generated documents. If either one is missing, both screens show an alert explaining what's missing and hide the Generate button.
- Pick the screen that matches how you want to bill the interest: Generate by Invoice or Generate by Customer. You can switch between them using the links at the top of the screen.
- Set the cutoff date. The system measures how overdue each invoice is by comparing it against this date (today's date by default).
- Apply any other filters you need: subsidiary (if subsidiaries are enabled), customer class, customer and, on Generate by Customer, the location and currency (required, since they determine where and in which currency the interest invoice will be created), plus project, if you use projects.
- Review the results table and check the boxes for the invoices or customers you want to charge. The header checkbox checks or unchecks every row currently visible on that page.
- Click Generate. The system queues a background process and takes you to the Processes screen, where you can follow its progress and result.
Key fields
| Field | What it's for |
|---|---|
| Cutoff date | The date each invoice's overdue status is measured against, and up to which interest is calculated. Defaults to today. |
| Location | Required on Generate by Customer. Only invoices from that location are considered, and the generated interest invoice is recorded there. |
| Currency | Required on Generate by Customer. The overdue balance is calculated in that currency and the interest invoice is created in it. |
| Subsidiary | Filters by subsidiary when your company has subsidiaries enabled. |
| Customer Class / Customer | Narrow the calculation to a group of customers or to a specific one. |
| Project | Only shown on Generate by Customer if your company uses projects; groups the overdue balance by project as well. |
| Past Due Days | On Generate by Invoice, shows in red how many days the invoice has been overdue beyond its normal payment term. |
| Last charge date | The last time interest was generated for that invoice or customer; helps you confirm you won't be duplicating a recent charge. |
| Balance | The overdue balance the interest is calculated on. |
| Cumulative Interest | The calculated interest amount: the overdue balance multiplied by your configured interest rate, divided by 100. |
Validations and behavior when generating
- Interest rate and interest service must be configured in Company Preferences; if either is missing, no charge can be generated.
- Only truly overdue invoices are listed: days past due (Aging) must exceed the invoice's payment term plus the configured grace period.
- Location and currency are required on Generate by Customer; without both, the results table comes back empty.
- A recent charge is never duplicated: if an invoice or customer already received an interest charge within the last month counted from the cutoff date, it won't show up in the list again until that month has passed.
- Generation runs as a background process; you can keep working while the documents are created and review the result (including any error) on the Processes screen.
- Only the checked rows on the current page of the table are submitted; if you change pages in the list before generating, the previous page's checkmarks are lost.
Availability and permissions
- This feature is only available on the Enterprise plan, and only when your company has the Accounting module active. It is not available on the Billing, Start, Basic, Standard, Premium plans or any of the Premium Plus variants.
- The Generate by Invoice screen requires the "Customer Debit Notes" permission (since it generates that document type).
- The Generate by Customer screen requires the "Credit Invoices" permission (since it generates invoices).
- In addition to the permissions above, both screens require the interest rate and the interest service to be configured in Company Preferences.
- With subsidiaries enabled, you can filter by subsidiary; with projects enabled, Generate by Customer also lets you filter and group by project.
Tips and common mistakes
Configure the rate and the interest service first. If opening either screen shows a red alert instead of the "Generate" button, it means the interest rate or the interest service is missing from Company Preferences.
Don't confuse the two screens. "Generate by Invoice" creates a debit note for every selected invoice (the interest stays tied to that invoice). "Generate by Customer" creates a new invoice per customer with the interest from their entire overdue balance in a specific currency and location. Using the wrong one can duplicate or mix up charges unexpectedly.
The system avoids charging interest twice within the same month for the same invoice or customer. If you don't see an invoice or customer in the list, check the "Last charge date" column: interest may have already been generated for it recently.
Generation is not instant. Clicking "Generate" takes you to the Processes screen; wait for the process to finish before assuming the documents already exist, especially if you selected many invoices or customers.