Hello, the new Late fee is computing interest when you use % as compounding which is illegal. Meaning you can not charge interest on the prior late fee.

A pleasant day to you, @brokersrealtyinc.

Late fees are calculated based on the balance due. This will be inclusive of sales tax, shipping, and discounts. The fee type that you select during set up will also vary on the computation.

To get this sorted out, let's make sure that the fee type is correct.

Here's how:

1. From the left menu, select Sales.
2. Click on Customers.
3. Choose the customer you would like to customize. Then hit on Late Fees from the table.  
4. Select on the Customize button.
5. Verify if the Type is correct.
6. Press on Save.

If the fee type is incorrect, you can waive the late fees and enter the correct amount. Here's an article that contains more details about this process: Setting up and applying automatic late fees. 

Reach back out to me if there's anything else you need. Wishing you all the best.

Only a few QBO users had the option to turn on automatic late fees from the Gear settings. At this time, it's on hold or discontinued, I believe.

Did QBO answer your question?  We are about to turn on automatic late fees using a percentage.  I have concerns that the late fee will be considered in calculating the 2nd late fee, compounding.  How did you solve the issue?

Yes. The second late fee will be considered, saplingdata.

As previously shared, the calculation of late fees depends on the balance due of the invoices. However, if don't wan't that QuickBooks will automatically add the second late fee, you can manually modify the invoice.

You can do it by opening the invoice, and then add another line item for the second late fee.

You can always browse this article to know more about late fees: How late fees work.

I'm just click away to help you!

HI, 

Is there still no solution to that? Compounding fees are in many cases illegal. The desktop version is set up, that you do not have compounding fees. Are there plans to change that in the online version? It is hard to believe, that I have to go invoice by invoice and put the correct percentage manually.

Thanks for looking into that.

Great idea you have there, @Rita02. I'll share some updates about the late fees in QuickBooks Online (QBO).

At the moment, there's no change to the late fee setup in QBO. I'd suggest sending a feature request directly to our Product Development team. They are always open to any suggestion as this can help us make QuickBooks better. 

Here's how:

1. Go to the Gear menu and then select Feedback.
2. Type in your feature request in the description box.
3. Once done, click on Next.
   
   
   

You can also track the feature requests through the Customer Feedback for QuickBooks Online website.

In the meantime, you can set up and add late fees to overdue invoices automatically. The charge can be a flat fee or a percentage of the overall invoice amount. To learn more about this feature, kindly refer to this article: Set up and apply automatic late fees to invoices.

In case you need help with other tasks in QuickBooks Online, you can visit our general help topics page. Just type your concern in the search field and this page will route you to the related help articles, Community discussions, video tutorials, and more.

Should you have QuickBooks-related questions, feel free to place a comment below. I'm here to help you. Have a good one!