How do I Charge Interest on Late Payments?

Set Up Interest

1. Select Firm Settings from the drop-down menu beside your avatar.
   
   
   
   
2. Then select Billing & Accounting from the menu bar and Billing Options from the expanded menu.
   
   
   • In the bottom right-hand side a checkbox appears beside an option to Charge interest by default for invoices that are paid late.
     
     
3. Select the checkbox to view options to customize how the interest accrues.
   
   
   
   Your options include:
   • Sliding the toggle to the right will automatically Enable Interest on all New Matters.
     
     • This will not retroactively update your existing matters
   • Entering a % and selecting either the Simple or Compound radio button.
     • Simple - Interest continues to accrue on the existing fee total,
     • Compound - Interest accrues on top of the fees and interest charges.
     • Enter how often interest should accrue past the due date of the invoice.
     • Note: Percentage is calculated on an annual basis (365 days or 366 days for leap years)
       • If you are looking to charge 1.5% annual rate, you would set it at 18% (i.e., (30/365)×18%=1.48)
         
   • Enter a number to designate day grace period.
     
     • Grace period charges them that number of days less. For example, if interest accrues every 30 days with a 5 day grace period, the client is only charged for 25 days worth of interest.
       
   • Select the checkboxes to include Expenses and/or Tax in the interest charges.
   • Configure the language on the narrative in the Name of Interest Charge field. For example, by default the narrative will say "Interest on past due invoice (invoice #)". You can change this to a different label such as "Late Fee on past due invoice".
     
     
4. Click Update.

For New Matters

For Existing Matters

Navigate to the Matter you are looking to establish interest for, then select the Matter No to open the Matter details and select the Options tab.

Scroll down to Interest Options under Billing Options.

Select the checkbox beside Charge interest by default for invoices that are paid late, then fill in the details specific to this Matter.

Click Update and the system will begin accruing interest automatically based on the percentage established. The interest will accrue at midnight on the date designated past the due date. It will be visible under the Interest tab in the Time Section.

 Interest is considered billable activity, but cannot be edited from the Interest list. It will pull onto your next billing cycle.

Interest after setup

• Interest will only accrue on invoices created after the feature is enabled in Firm Settings and Matter Options.
  
  
• If you delete an interest entry, that invoice will never generate interest again.  However, if new invoices are created for the matter and they are past due, they will generate interest.
  
  • Recommended best practice would be to leave the interest charges in Unbilled Activity, or write off the line item once it has been invoiced.
    
    
• Interest is one of the four types of activity that will generate an Invoice: Time, Flat Fees, Expenses, and Interest.  
• The Interest Period is different from the billing period. This makes it possible to have interest earned that doesn't match the day of the billing.  You can review all the Interest entries under the Time > Interest Tab to see what has been generated in the last period. Therefore you can "payoff" an invoice, but have Interest payment since Interest was created during that time.