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Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

How to add a penalty item that is compounding for each outstanding invoices? We bill our tenants monthly for association dues.

9 REPLIES 9
Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

I add this on the current invoices to show how much penalty the tenants have compounded over their outstanding invoices.

KhimG
QuickBooks Team

How to add a penalty item that is compounding for each outstanding invoices?

Good day, @Arzini.


You can create a penalty item to charge the customers for outstanding invoices.  Here’s how:

  1. From the Lists menu, choose Item List.
  2. Click the Item drop-down arrow and select New.
  3. Pick Other Charge under Type.
  4. Name the item.
  5. Provide an Amount or % and Account.
  6. Hit OK to save the item.

Once done, create an invoice for the item. You may have to manually calculate the penalty amount depending on the guidelines provided for charging late payment fees. Follow these steps:

  1. From the Customers menu, select Create Invoice.
  2. Select the penalty item.
  3. Enter the penalty amount and the description.
  4. Hit Save & Close.

Check out these article for the details: 

Leave a comment if you need anything else. I’m more than happy to help. Have a fantastic day!
 

Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

Yes, I already know these steps. These are the steps in creating a new item particularly to creating a penalty item. But what I meant is creating a compounding penalty. For example, one tenant has one outstanding invoice. On the current invoice, I added a 3% penalty due to the outstanding invoice. But on the situation when a tenant has two or more outstanding invoices, we use penalty compounding monthly (interest). Meaning, it's more than 3% (or 3% per outstanding invoice). 

 

We are condominium association billing our tenants monthly for association dues. If unpaid more than two months, they get penalty compounding monthly.

John C
QuickBooks Team

How to add a penalty item that is compounding for each outstanding invoices?

Hi Arzini

 

Are you using the desktop or online product?

Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

I'm using the desktop product. I have activated the Finance Charges but it doesn't accumulate or compound the interest/penalty for each outstanding invoices.

EmmaM
QuickBooks Team

How to add a penalty item that is compounding for each outstanding invoices?

Hello Arzini

 

To look at this further for you could you provide a screenshot of the edit>preferences>finance charge page and alos the customer information page showing the invoices in your example

 

Thank you

 

Emma

Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

Sure! Here they are. Capture1.PNG tempsnip.png

Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

tempsnip.png

Arzini
Level 3

How to add a penalty item that is compounding for each outstanding invoices?

Compounding penalty is, for example, when Invoice A remains outstanding with an amount of $100, we will show the penalty of 3% on the current invoice B which is $3. If on the next Invoice which is Invoice C (now the current invoice), Invoice A & B is still unpaid, Invoice A has now a compounded penalty of $6 and Invoice B has the penalty of $3 both shown on the current Invoice C. Remember that these are Invoices billed on a monthly basis for each tenant.

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