Adding interest or a late payment fee to an unpaid invoice
This article explains how to add details of interest terms or a late payment fee to an unpaid invoice that has already been sent to a customer.
You can either add the terms as additional text and the amount as a comment line item, or edit the invoice amount.
Option 1: adding details of the terms and amount of interest due as additional text and a comment line item
To add details of the amount of interest or late payment fee as additional text and a line item, you'll need to follow the steps below:
- Add details of the late payment fee or interest terms within the default additional text box
- Add the amount as a comment line item
- Resend the invoice to your customer
- Split the bank transaction between the invoice payment and interest or fee
1. Add the interest or fee amount as additional text
Navigate to the relevant unpaid invoice.
Select ‘Make Draft’ above the invoice.
Select ‘Edit’ at the top of the screen.
Enter the details of the interest or late payment fee in the 'Additional Text' box.
Select ‘Save changes’ to complete this part of the process.
2. Add the interest or fee amount as a comment line item
You can also add the interest or fee amount that would apply to that invoice as a line item within the body of the invoice.
To do this, once the invoice is in 'Draft', select ‘Add invoice item’.
Select ‘Comment’ from the drop-down menu and enter the details of the interest or fee in the 'Details' box.
Select ‘Create and finish’ to complete this part of the process.
3. Resend the invoice to your customer
Finally, once you’re happy with the updated invoice, you’ll need to resend it to your customer by selecting ‘Resend by email’.
4. Split the bank transaction
When the invoice is paid, the amount received will be higher than the actual invoice value. This means you’ll need to split the transaction.
Navigate to the transaction related to the money received for the invoice payment and select 'More options'.
Select ‘Invoice Receipt’ as the ‘Type’, enter the value of the invoice only in the ‘Value’ field and choose the relevant invoice from the drop-down menu.
Select ‘Create New Explanation’.
FreeAgent will then automatically create a money in transaction for the amount of the difference. You can either explain this amount as ‘Type - Other Money In’ and ‘Category - Interest Received’, or using a new category if you’d rather create a category for the interest or fees.
Option 2: edit the invoice amount
Alternatively, you can follow the steps below to:
- Mark the invoice back to draft
- Add the interest or fee amount to the value of the invoice
- Resend the invoice to your customer
- Split the bank transaction between the invoice payment and interest or fee
1. Mark the invoice back to draft
Navigate to the relevant unpaid invoice.
Select 'Make Draft' above the invoice.
2. Add the interest or fee amount to the value of the invoice
You’ll then need to add another line to the invoice for the interest or fee. To do this, select ‘Add invoice item’.
Enter the details of the interest or fee in the 'Details' box and select the appropriate income category. You can create a category for the interest or fees if you wish.
Select ‘Create and finish’ to complete this part of the process.
3. Resend the invoice to your customer
Finally, once you’re happy with the updated invoice, you’ll need to resend it to your customer by selecting ‘Resend by email’.
4. Split the bank transaction
When the invoice is paid, the amount received will be higher than the actual invoice value. This means you’ll need to split the transaction.
Navigate to the transaction related to the money received for the invoice payment and select 'More options'.
Select ‘Invoice Receipt’ as the ‘Type’, enter the value of the invoice only in the ‘Value’ field and choose the relevant invoice from the drop-down menu.
Select ‘Create New Explanation’.
FreeAgent will then automatically create a money in transaction for the amount of the difference. You can either explain this amount as ‘Type - Other Money In’ and ‘Category - Interest Received’, or using a new category if you’d rather create a category for the interest or fees.