Late Fees¶

Add a late fee to an overdue invoice with one click, based on rules you set up in advance.

FairBooks never charges a late fee automatically. You choose when to apply one, and it is added to the invoice as a separate line item so your customer can see exactly what was charged.

Turning on late fees¶

1. Go to Settings → Invoices.
2. Find the Late Fees section and tick Enable late fees.
3. Choose a fee type and enter the rate or amount (see below).
4. Optionally set a grace period and a maximum fee cap.
5. Save your changes.

Once enabled, an Apply Late Fee action appears on any invoice that has been sent and is past its due date.

The three fee types¶

How per annum interest is worked out¶

The per annum option charges interest for each day the invoice is overdue, based on the annual rate you set. It is simple interest, not compounding, so the amount grows in a straight line rather than snowballing.

As a rough guide, the daily rate is the annual rate divided by 365, multiplied by the number of days overdue. For example, at 10% p.a. an invoice that is 30 days overdue attracts roughly 10% ÷ 365 × 30, or about 0.82% of the invoice, as interest.

Interest is always calculated on the original invoice amount, never on a late fee you have already added. Adding a late fee never causes interest to be charged on a previous late fee.

Grace period and when interest starts¶

• The grace period is a number of days after the due date before a fee can be applied at all. If you set a grace period of 7 days, the Apply Late Fee action stays unavailable until the invoice is more than 7 days overdue.
• For per annum interest you can also choose whether it accrues from the due date (the common convention) or from the end of the grace period (more generous, since you are not charging for the days you granted).

The fee cap¶

You can set an optional maximum for percentage and per annum fees, so the charge never exceeds a set dollar amount no matter how long an invoice stays unpaid. Flat fees are a fixed amount already, so they are not capped.

Applying a late fee¶

1. Open a sent or overdue invoice, or use the invoice list.
2. Click Apply Late Fee.
3. Review the summary, which describes your configured fee and, for per annum, an estimate based on the days overdue.
4. Confirm.

A line item described exactly as Late fee is added to the invoice, and the invoice total increases accordingly. The line is always GST-free. You can edit or remove the line afterwards if you need to.

Applying a fee more than once¶

• Flat and percentage fees are one-and-done. If a fee of that type has already been applied, trying again is blocked.
• Per annum fees can be re-applied to refresh the amount as more days pass. When you do, the existing late fee line is replaced and the interest is recalculated on the original invoice amount.

What's next?¶

• Creating invoices
• Invoice appearance