Why and How to Add Late Payment Fees to QuickBooks Invoice
It doesn’t matter what industry you’re in, or how big or small your business is. Regardless of the specifics, there’s one thing that virtually every business struggles with. We’re talking about unpaid invoices.
By some estimates, nearly half of all net 30 invoices are paid late. Late payments prevent SMBs from hiring new employees, instituting pay raises, and investing in new equipment.
Late payments can be incredibly frustrating. You offer a valuable service or product, and you’ve fulfilled your end of the bargain. Now, it’s your customer’s turn. You’ve created an invoice in QuickBooks and forwarded it to them via email. But rather than paying it promptly, days, weeks, and sometimes even months go by -- and you still haven’t received a payment.
Setting up automated invoice reminders can help encourage customers to pay on time while saving you the hassle of following up with them manually. But for some customers, a series of email reminders isn’t enough. And, of course, chasing down payments can create a negative experience for your customers while having a negative financial impact on your business.
Particularly for small business owners who maintain close relationships with their clients, following up repeatedly to ask for payment of an invoice isn’t just uncomfortable -- it can damage a valuable relationship with a long-standing customer.
But we’ve got great news: you can encourage your clients to pay on time without having to rely on invoice reminders alone, all while avoiding the awkwardness of following up with clients personally. How? By setting up late fees in Biller Genie!
Why Late Payment Fees Are a Good Idea
Charging a late fee for overdue invoices is a good idea for a number of reasons:
- Late fees contribute to customer perception. By charging a late fee, you signal your business’ seriousness and legitimacy to your customers.
- Charging late fees will encourage customers to pay their invoices on time. If a customer has a stack of invoices to pay and can’t manage them all at once, they’ll prioritize the ones with late fees. Meanwhile, customers who would otherwise ignore an invoice reminder will be more likely to pay when faced with a potential penalty.
- Late fees can provide an additional revenue stream for your business, helping to offset the inevitable odd invoices that never get paid (and which are too small to warrant further action).
Can You Charge Late Payment Fees?
Before you add late payment fees to your invoices, it’s a good idea to take note of certain considerations.
First off, it’s important to let your clients know that they’ll be assessed a late fee if their invoice remains unpaid. When you enable late fees in Biller Genie, we’ll automatically add a notice to your invoices informing your clients that a late fee will be charged for past due payments. It’s also a good idea to remind your clients ahead of time about an impending late fee. Biller Genie’s “Upcoming Late Fee” reminder makes this easy (more on this below).
Additionally, some states place a limit on the late fee percentage that you can charge. If in doubt about whether or not you can charge a late fee (and, if so, how much you can charge), seek expert legal advice.
How to Add Late Payment Fees to QuickBooks Invoices with Biller Genie
Of course, calculating and attaching late fees to invoices manually would be a job unto itself. And for QuickBooks users, there’s no built-in functionality that allows you to set up automatic late fees.
Fortunately, though, Biller Genie makes this process easy! With Biller Genie, you can set up automatic late fees (and upcoming late fee reminders) for your invoices.
To get started, just log in to your Biller Genie account and activate the Late Fee tool. Biller Genie will then add custom messaging to your QuickBooks invoices and automated reminders, ensuring that customers understand your late fee policy.
When an invoice exceeds the late payment time threshold, Biller Genie automatically calculates the fee amount that you’ve set and adds it to the invoice. The invoice is simultaneously updated in QuickBooks. Additionally, Biller Genie creates a separate fee account in QuickBooks so that the revenue associated with late fees can be tracked independently of your income from invoiced goods and services. Meanwhile, your customers are updated via email to let them know that a fee has been assessed.
Biller Genie also includes an “Upcoming Late Fee” reminder. With this option enabled, you can specify a number of days ahead of time to remind customers that a late fee will be assessed if an invoice remains unpaid. This sort of invoice reminder can be extremely effective when it comes to encouraging customers to pay their invoices on time.
Ready to add automated late fees to your QuickBooks invoices? Log in to your Biller Genie account now to get started.
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