Late Fees

Welcome to the Community, intelivant consulting!

I do appreciate the detailed steps you've provided. The system thinks that the $1,600.00 you applied to the payment already includes the late fee. When you pay the remaining balance of the invoice, QuickBooks will still think that it includes the late fees which will automatically be assigned to the said accounts. 

You can manage the affected accounts through the transactions journal. I'll show you how:

1. Open the payment you created.
2. In the Receive payment page, click More at the bottom menu.
3. Select the Transaction journal option. 

From there, you'll see the account and amounts affected by the payment you created. If you need more help with managing your late fees, you can check ou this article: Set up and apply automatic late fees to invoices.

We also have Community Help articles that will give you more details in any section with QuickBooks you need assistance with. 

Feel free to leave a reply below or post again. The Community is always available 24/7. You take care and have a great day!

Hi @Catherine_B,

Thank you for your response.  It was very helpful, as I did not think about the Transactional Journal.  That said, now the plot thickens...

I clicked on the invoice.  As expected, in the upper right-hand corner it shows "1 Payment Made ($1600)".  I click that link which open the Received Payment.  I think click more and go into the transactional journal.  The transactional journal shows all $1600 going to Account Receivable - no mention of the Late Fee Income anywhere to be found.

That said, when I go to the Transactional Report, it only shows $1523.81 going to Accounts Receivable.  If I then run a report on the Late Fee Income Chart of Account - it shows the remainder of $76.19.

Very strange!  Thoughts?

Thanks!

I've replicated your concern, Intelivant consulting. The amount wasn't divided on my end.

I suggest reaching out to our customer care support so an agent can take a better look at this. They have more tools, like screen sharing, than can help you. Here's how:

1. Click Help inside QuickBooks Online.
2. Select Contact Us.
3. Enter "Late fee concern" in the description field, then click Let's talk.
4. Select either Get a callback or Start messaging.

Once it's fixed, you can open the Transaction journal report again. Then, check if the amount is no longer divided. 

You can always visit the Community if you have other concerns. Take care!

Thanks @Kristine Mae,

I will give that another shot.  I actually completed a chat before my original post.  The representative never mentioned that screen share was an option.  I was basically told this is how the system processes the partial payments and nothing I can do on my end.

That said, I will give it another go - and request a screen share.  Will update if we find a resolution.

Thanks!

Thanks @Kristine Mae,

I will give that another try.  I actually completed a support chat before my original post.  The representative never mentioned a screen share.  I was basically told this is how the system processes partial payments and not much I, or they, can do to fix it.

That said, I will give it another shot and request a screen share.  Will update the post based on what we find.

Thanks!

@Kristine Mae @Catherine_B 

I spent 2 hours on the phone with Support today - all to no avail.

That said, I AM able to duplicate this on the QBO Demo Site.  I have found the issue.  It has to do with Cash vs Accrual Account Basis.  But I don't understand why.  I am cash based, which shows the odd split on partial payment.  If I choose Accrual, it shows correctly.  To recreate please try the following and share your results if you have time.

Opened QBO Demo Site:  Go to Account and Settings/Advanced and Select Cash Accounting.  Go to Sales in Account and Settings and turn on Late Fees (so that it auto creates the Chart of Account for Late Fee Income)

I created a new Project "Test Project" with a new Company "Acme Company" and saved the project.  I then go into the Project and add a new Invoice (ensuring that the Customer says "Acme Company : Test Project")  and add a line item with a value of $1600 (no tax applied) and then save the invoice.  I then add the "Late Fee" line item with a value of $80 and no tax.  Total Invoice is not $1680 and save.  I then click "Receive Payment" within the invoice and enter a Check amount of $1600 and save.  If you then go to Project and click on your project you will see TWO amounts within the Project where it split the $1600 into $1523.81 and $76.19.  If you then go back to accounts and settings/advanced, change to accrual, and then go back to the project it shows $1600/$80.

I need to be Cash based, so I will not be changing to accrual, but can you help me understand why it splits the value?  Were either of you able to duplicate?

Thanks!

Hi there, @intelivant consulting. 

Thanks for updating us here in the Community. I'm here to add more ideas about how the accounting method (cash and accrual) affects your revenues and expenses. 

In the cash method, the revenue and expenses are immediately recognized, while the accrual method focuses on anticipated revenue and expenses. Hence, this is the reason the late fees split up with the amount of the transaction. 

As explained by my peer @Catherine_B above, the system thought that the $1,600.00 you applied to the payment already includes the late fee. This is why it showed correctly in the accrual-based. 

For more insights about the difference between the two accounting methods, read through this article: Cash vs. accrual accounting. 

To make sure your transactions are properly recorded, I'd recommend you consult with an accountant. They can give you a better idea to ensure that your books are accurate. 

For future reference, you can also find an accountant with expertise in QuickBooks. 

Feel free to message again if you have additional concerns. We're always here to help. 

I am having the same problem and in addition it applies partial payments pro rata to sales tax also so my sales tax payable is wrong due to some of the payment being applied to finance charges that the customer did not pay.  Help!!

Hello, Adcpa. 

I can help clear the confusion and fix the issue with the payment and late fees.

The system may think that the money you applied to the payments includes the late fee. When you pay the remaining balance of the invoice, QuickBooks will still think that it includes the late fees.

The fees will then be automatically assigned to the accounts affected. 

The affected accounts can be managed through the transaction journal.
Here's how:
1. Open the payment you made.
2. Select the Receive payment.
3. Click the More button below.
4. Choose and click the Transaction journal.
Once done, the affected accounts and amounts by the payment you made will show.

For us to know why your sales tax payable is wrongly due, could you tell us the amount applied to the finance charges that your customer did not pay?

If you want to learn about how you can manually apply late fees as a line item on older invoices, you can read through this article: Add product and service items to QuickBooks Online.

Click the Reply button below if you have questions about late fees and invoices. I'm always here to help. God Bless.

@Bryan_ I hope you can help us with our late fee problem. We issue an invoice in April, we have late fees activated so that they are issued if a balance is past due with a 5 day grace period. When a late fee is calculated in May, it adds the late fee to the invoice, a retroactive transaction to April! Why is that? 

Thanks for joining the thread, @ingrid388. Allow me to chime in and share ideas about why the late fees are applied to the invoice in April.

QuickBooks only calculates and applies late fees to overdue invoices the day after you turn on the late fee setting. Since the late fees apply to the April invoices we can review its settings. This way we can verify the exact dates and apply the late fee.

In case you need to edit the default late fee settings, follow the steps below:

1. Go to the Gear ⚙, then choose Account and Settings.
2. Select Sales, then, in the Late Fees, click Edit ✎.
3. Make the changes you want, then hit Save.

After you edit the default late fee settings, all the new late fees added to invoices will use the updated setting for their calculation. Any fees applied to previous overdue invoices will remain the same.

For other details, on how to manage your late, open this article: Apply late fees to overdue invoices automatically in QuickBooks Online.

 In case the late fees are added incorrectly after changing the settings, you can delete and recreate the invoices. For the steps, follow this article: Create invoices in QuickBooks Online

You may also check these articles for tips on how to handle customers that can't pay their invoices in QBO: 

• What to do if customers can't pay their invoices online.
• Set up Invoice Reminders

 Reach out to me if you need some help while working with your late fees or any QuickBooks concerns. I’m always ready to lend a helping hand. Have a good one.

Hi @JoesemM 

Unfortunately, this does not answer my original question, but I will rephrase. Why does the late fee apply on the original invoice from a past month rather than a new invoice in the current month? My closed month financial statements are impacted by having the late fee added to the original invoice.

Thanks for following up with the Community, ingrid388. I appreciate your detailed information.

The feature for applying automatic late fees to invoices only applies to overdue invoices. It will always apply to your original invoice, if it's overdue. This can happen for up to six months with the setting activated.

The feature won't apply late fees to invoices which aren't overdue yet.

I'd recommend reviewing our article about using this feature to learn more about how it works: Apply late fees to overdue invoices automatically

Please don't hesitate to send a reply if there's any additional questions. Have an awesome day!

hello @ZackE But how can QBO allow a closed, reconciled month to be changed with late fees? This impacts my historical financials

Did you ever get an answer to this? I am having the same issue, and it is causing my previously paid sales tax accounts to be off. 

Thanks