How to Apply Finance Charges in QuickBooks Online

If you're looking to apply finance charges in QuickBooks Online, you've likely encountered a roadblock. Unlike QuickBooks Desktop, the Online version doesn't have a built-in feature for finance charges.

But don't worry - you have two options to fix this. This guide will show you two ways to add finance charges: manually or automatically using Paidnice, an accounts receivable automation tool.

Finance charges, essentially late fees (or interest added to overdue amounts owing), are a crucial tool for encouraging (or more discouraging) timely payments and maintaining healthy cash flow.

Let's dig into how you can implement them in QuickBooks Online:

Why doesn't QuickBooks Online's have Finance Charges?

QuickBooks Online doesn't have a native finance charge feature. This is a significant difference from QuickBooks Desktop, where finance charges can be set up and applied automatically. However, this doesn't mean you're out of options.

Solution 1: The Manual Workaround

You can manually add finance charges to your invoices in QuickBooks Online. Here's how:

1. Open the overdue invoice you want to add a finance charge to.
2. Click 'Add lines' at the bottom of the invoice.
3. In the new line, enter a description like "Finance Charge" or "Late Fee".
4. Input the charge amount.
5. Select the appropriate income account for the finance charge.
6. Save and send the updated invoice.

Alternatively, you can create a new invoice specifically for the finance charge:

1. Create a new invoice for the customer.
2. Add a line item for the finance charge.
3. Enter the description, amount, and appropriate income account.
4. Save and send the invoice.

While this method works, it's manual, time-consuming and because of that, it's prone to (human) errors, especially if you have many overdue invoices to manage.

✅ Solution 2: Automate Your QuickBooks Online Finance Charges (with Paidnice)

Paidnice is an official QuickBooks app that mimics (and enhances) the functionality of the finance charges you are familiar with (from QuickBooks Desktop).

How do you add finance charges to QuickBooks Online? You can use Paidnice to add finance charges to QuickBooks Online invoices automatically. The Intuit listed QuickBooks App integrates seamlessly with QuickBooks Online to automate finance charges and streamline your accounts receivable process.

Here's how to set up automated finance charges using Paidnice:

1. Sign up for a Paidnice account and connect it to your QuickBooks Online company.
2. In Paidnice, setup a 'Late Fee Policy'.
3. Select your preferences:
   • Choose between percentage-based or flat-rate fees.
   • Set the grace period before fees apply.
   • Determine the frequency of fee application (one-time or recurring)
4. Save your settings.

Once set up, Paidnice will automatically calculate and apply finance charges to overdue invoices based on your specified rules. These charges sync back to QuickBooks Online, keeping your books accurate and up-to-date.

Why you should use Paidnice for Finance Charges

Paidnice is a popular app on the QuickBooks App store before it not only automated Finance Charges, but does a lot more:

Automated Finance Charges: Once set up, finance charges are applied automatically, saving you time and reducing errors. Paidnice also applies these consistenly and ensures all overdue invoices are treated equally based on your rules, maintaining fairness across your customer base.‍

Fully Customizable: Paidnice allows flexible rules to match your business policies, including percentage-based or flat-rate fees.‍

Get paid on time, every time with other AR automation. Paidnice goes beyond just finance charges. It offers:

1. Advanced reminders via email and SMS reminders.
2. Automated customer statements.
3. Quote expiry reminders.
4. Escalation workflows for persistent late payers.

These features create a comprehensive accounts receivable system, ensuring no invoice falls through the cracks.

Comparing Manual vs. Automated Methods

While the manual method offers a quick fix, it has several drawbacks:

• Time-consuming, especially for businesses with many invoices.
• Prone to human error in calculations or application.
• Lacks consistency in application across all overdue accounts.
• Doesn't provide additional accounts receivable features.

In contrast, the automating Finance Charges with Paidnice offers:

• Time savings through automation.
• Accuracy in calculations and application.
• Consistency across all accounts.
• A suite of additional features to improve overall accounts receivable management.

Make the right choice for your business

When deciding how to apply finance charges in QuickBooks Online, consider your business needs:

• If you're dealing with a high volume of invoices, AR automation becomes increasingly valuable.
• Automated systems ensure all customers are treated equally and consistently.
• Manual methods can be time-consuming, taking you away from other important tasks.
• If you're looking to improve your overall accounts receivable process, a comprehensive solution like Paidnice offers more than just finance charges.

While QuickBooks Online doesn't have a built-in finance charge feature, you have options. You can manually add finance charges to invoices, which works for businesses with low invoice volumes.

However, for most businesses, we recommend using Paidnice to automate finance charges and enhance your accounts receivable process.

Paidnice not only solves the finance charge limitation in QuickBooks Online but also provides a robust set of tools to streamline your entire accounts receivable workflow.

By automating finance charges, reminders, and follow-ups, you can save time, reduce errors, and improve your cash flow.

Effective accounts receivable management is about more than just applying fees.

It's about creating a system that encourages timely payments while maintaining positive customer relationships. With the right tools and approach, you can achieve both.

Ready to streamline your finance charges and accounts receivable process?

‍Try Paidnice today and experience the benefits of AR automation for QuickBooks Online.