Understanding Fee and Interest Processing

If invoices remain unpaid after their due date or if you receive the payments late, you can assess fees on the invoices. These fees can be based on the invoice aging (the number of days past the due date) or a flat amount.

You can calculate interest on late payments in one of three ways:

1. Simple interest (per month or per year on outstanding balances).

2. Compound interest.

3. Interest on fees (simple or compound).

You set up bill codes and automatic accounting instructions (AAIs) that determine whether you charge a late fee or interest. This distinction is important because revenue collected from fees and interest is taxed differently than revenue received from rent. In some cases, you must differentiate the interest that you charge from the interest that you must pay on security deposits.

The system stores fee and interest information in the Fees and Interest table (F1525B).