Understand automatic late fees in QuickBooks Online

Understand how QuickBooks Online applies automatic late fees to overdue invoices.

Apply automatic late fees to overdue invoices to encourage your customers to pay on time. You set the fee amount and when to apply it to the invoices. Then, let QuickBooks calculate the late fees and automatically apply them to overdue invoices as a line item.

QuickBooks only calculates and applies late fees to overdue invoices the day after you turn on the late fee setting. To apply late fees on older invoices, add them as a line item.

Important: There may be limits on the amount and type of fees you may charge your customers. Double-check the requirements in your jurisdiction and how they relate to you.

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Late fees and accounting

After you add late fees, QuickBooks automatically creates an “Other Income” account named “Late fee income” to track them.

• Late fees are only applied if you were subscribed to QuickBooks Online when the invoice became past-due. If you weren’t subscribed then, but then you renew the subscription, a missed late fee won’t be applied again after.
• Late fees apply only to transactions that become overdue after being created.
• Make sure that late fees are turned on not only for your account but for the specific customer or customers that are late. 
• If you change the automatic late fee settings later, all new late fees added to invoices use the new settings. However, fees applied to older overdue invoices remain the same.

Questions about automatic late fees

Related links

• Turn on automatic late fees in QuickBooks Online
• Send invoice reminders automatically or manually in QuickBooks