How do late fees work

codiek1 · ‎October 05, 2025

Rusimyhr

Late fees in QuickBooks work by allowing you to automatically or manually add a charge to overdue customer invoices to encourage timely payment, Codiek.

When your customers don’t pay on time, you can automatically add late fees to the overdue invoice, rather than doing it manually. This way, you can set a standard late fee in advance, without having to apply it on a case-by-case basis. QuickBooks only calculates and applies late fees to overdue invoices the day after you turn on the late fee setting.

To manually apply late fees on older invoices, add them as a line item. Here’s how:

Go to the Gear icon and select Products and Services under All Lists.
Click New and create a service item named “Late Fee.” Link it to the appropriate income account.
Open the overdue invoice.
Click Edit Invoice and add the “Late Fee” as a new line item. Enter the fee amount.
Click Save and resend the updated invoice to your customer.

Feel free to reach out if you have additional questions or need further assistance with QuickBooks.

NMarns

I recently switched over from QuickBooks desktop. We has the ability to assess a finance charge which would create a new FC invoice on the date assessed and it would calculate the amount of FC based on the balance due and the last time the FC was assessed.

Based on what I am seeing that is not how the "Late fee" in QBO works. If I am understanding correctly the automatic "Late Fee" is added to the original invoice, and for manual it is suggested to add a line to the original invoice after it was issued. I don't want the original invoice changed, that make little sense to me, especially when the invoice is in a prior period.

I don't think QBO understands accounting

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How do late fees work

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