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Assessing finance charges

From: QuickBooks Pro 2010 Essential Training

Video: Assessing finance charges

Finance charges are additional charges you add to what your customers owe when they don't pay on time. They are a small incentives to keep your customers from falling behind on payments. You have to tell QuickBooks about your finance charges, like the interest rate you charge and when you want finance charges to kick in. But you can also tell QuickBooks to skip finance charges on a customer's overdue balance, if you decide to give them a little more time. Before you can add finance charges to what your customers owe, you have to set up QuickBooks finance charge preferences.

Assessing finance charges

Finance charges are additional charges you add to what your customers owe when they don't pay on time. They are a small incentives to keep your customers from falling behind on payments. You have to tell QuickBooks about your finance charges, like the interest rate you charge and when you want finance charges to kick in. But you can also tell QuickBooks to skip finance charges on a customer's overdue balance, if you decide to give them a little more time. Before you can add finance charges to what your customers owe, you have to set up QuickBooks finance charge preferences.

On the Edit menu choose Preferences. Then in the Preferences window, click Finance Charge and then click the Company Preferences tab. You have to have administrator privileges to set up finance charge preferences. The preferences apply to everyone who works in the company file. In the Annual Interest Rate box, type the interest rate for the entire year. Many companies make the rate quite high, 15%, 18% or more.

QuickBooks prorates the charges based on the number of days that balance is overdue. If you charge a minimum finance charge regardless of the balance, to cover the effort and cost of sending out additional invoices, for example, type the minimum amount in the Minimum Finance Charge box. The Grace Period box is for the number of days you give a customer past a due date before you consider a payment late. In the Finance Charge Account dropdown list, choose the account you use to track finance charges.

You can create an income account specifically for our finance charges. QuickBooks leaves the Assess finance charge on overdue finance charges check box turned off. That's because it's illegal in some places to add finance charges to late finance charges. So be sure to check your local regulations before you turn this check box on. QuickBooks selects the Calculate charges from due date option. This is more common and starts charging finance charges only from the due date on, when a balance is actually late.

To be tougher on your customers, you can select invoice/billed date. Finance charges won't kick in until a balance is overdue. However, with this option QuickBooks calculates the finance charges from the invoice day, which could be many days earlier than the due day. To tell QuickBooks to add finance charge invoices to a print queue, turn on the Mark finance charge invoices "To be printed" check box. After you've set your finance charge preferences, click OK to close the dialog box.

To assess finance charges on the homepage click Finance Charges. You can also assess finance charges while you're preparing statements, by clicking Assess Finance Charges in the Create Statements window. In the Assessment Date box choose the day when you plan to send statements or finance charge invoices. For example if you generate statements for the end of the month choose the last day of the month. QuickBooks selects all the overdue balances as of that assessment date.

To skip finance charges for a customer, turn off the check mark cell for their balance. For example you might skip finance charges if a customer has a credit that you haven't yet applied to the balance. You can click Mark All or Unmark All to turn all overdue balances on or off. To add the finance charge invoices to a queue to print, turn on the Mark Invoices "To be printed" check box. Then when you're ready to create the finance charge invoices, click Assess Charges.

After you create finance charge invoices, you can send them to your customers on their own or bundled with other invoices or you can add them to a statement, as you learned in the chapter Invoicing.

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This video is part of

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QuickBooks Pro 2010 Essential Training

69 video lessons · 21879 viewers

Bonnie Biafore
Author

 
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  1. 8m 19s
    1. Welcome
      52s
    2. Editions of QuickBooks
      3m 24s
    3. QuickBooks bookkeeping basics
      2m 46s
    4. Using the exercise files
      41s
    5. Disclaimer
      36s
  2. 9m 12s
    1. Opening a company file
      2m 4s
    2. Using the QuickBooks menus and home page
      2m 49s
    3. Touring the Customer, Vendor, and Employee Centers
      2m 32s
    4. Navigating between QuickBooks windows
      1m 47s
  3. 10m 50s
    1. Gathering the information you need
      2m 4s
    2. Creating a company file
      5m 33s
    3. Converting from another program
      3m 13s
  4. 8m 19s
    1. Naming and numbering accounts
      3m 36s
    2. Creating an account
      2m 26s
    3. Making an account inactive
      2m 17s
  5. 14m 50s
    1. Creating a customer profile
      3m 40s
    2. Adding customer information
      4m 33s
    3. Creating a job
      2m 18s
    4. Making customers inactive
      1m 39s
    5. Creating a vendor
      2m 40s
  6. 43m 35s
    1. Why use QuickBooks items?
      2m 59s
    2. Creating a service item
      4m 26s
    3. Setting up time tracking
      2m 53s
    4. Entering time
      4m 19s
    5. Tracking mileage
      4m 34s
    6. Creating an inventory item
      6m 7s
    7. Creating a non-inventory item
      3m 34s
    8. Setting up sales tax
      6m 59s
    9. Setting up discounts and charges
      3m 46s
    10. Creating a group of items
      2m 16s
    11. Making items inactive
      1m 42s
  7. 30m 46s
    1. Creating a purchase order
      3m 8s
    2. Entering a bill
      4m 37s
    3. Recording inventory you receive
      3m 47s
    4. Paying bills
      4m 5s
    5. Handling a credit from a vendor
      5m 2s
    6. Writing a check for expenses
      3m 17s
    7. Paying with a credit card
      1m 40s
    8. Paying with cash
      2m 53s
    9. Paying sales tax
      2m 17s
  8. 35m 5s
    1. Understanding invoices, statements, and sales receipts
      2m 23s
    2. Creating an invoice and filling in header fields
      2m 55s
    3. Adding items to an invoice
      5m 7s
    4. Adding billable time and cost to an invoice
      5m 57s
    5. Using subtotals, discounts, and other charges
      3m 6s
    6. Creating an estimate
      2m 49s
    7. Handling a customer credit
      4m 57s
    8. Creating a statement charge
      3m 7s
    9. Producing a statement
      4m 44s
  9. 14m 44s
    1. Setting up print options
      4m 13s
    2. Aligning forms with printer paper
      3m 0s
    3. Printing one or more forms
      4m 29s
    4. Emailing a sales form
      3m 2s
  10. 14m 8s
    1. Receiving a payment
      3m 49s
    2. Assessing finance charges
      4m 9s
    3. Creating a sales receipt for a cash sale
      2m 39s
    4. Depositing payments
      3m 31s
  11. 10m 37s
    1. Preparing to reconcile a bank account
      1m 50s
    2. Reconciling transactions to your bank statement
      3m 14s
    3. Correcting discrepancies
      5m 33s
  12. 9m 51s
    1. Using the Report Center to find reports
      3m 0s
    2. Running a report
      3m 45s
    3. Printing or saving a report
      3m 6s
  13. 6m 8s
    1. Why use journal entries?
      3m 3s
    2. Creating a general journal entry
      3m 5s
  14. 13m 39s
    1. Creating a new user
      4m 58s
    2. Backing up your company file
      6m 10s
    3. Restoring a company file
      2m 31s
  15. 27s
    1. Goodbye
      27s

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