New Feature: Interest and Finance Charges
- Added: May 25, 2018
- Platform: Web
Centerbase now includes the ability to assess interest charges on overdue bills. Rates and options are set at the system level, and can be modified by client and matter. Charges will be calculated during the bill posting process.
“Charge Interest” and related settings added to the Billing page. The interest settings are Matter/Client/System settings. This means, on System Settings, you can find interest under Billing. On Matters and Clients, go to the Billing tab.
- “Charge Interest” is the setting that drives the others. If it is off, the others are disabled.
- Tax was already under System Configuration > Advanced Billing as “Collect Tax”. It is only a system setting.
- The “Use Default Settings” checkbox in the Billing Codes section governs if the matter/client is using default interest settings. This must be unchecked on the matter/client to start changing interest settings.
- All invoices calculate interest automatically by default, but you can edit an invoice to “Specify Interest”
- For tax to calculate in the UI, some of the line items on the invoice need to be marked IsTaxable=true. If none are, you can put numbers in the Tax Rate field but no total Tax will ever be calculated.
- View of interest section on a bill summary in Edit Mode. This allows manual entry or changes to interest charges during bill editing. Unless recalculate interest is specified when unposting / reposting a bill, the manual amount entered will remain.
- View of interest section on a bill summary in View Mode:
- Even if “Charge Interest” setting is false for the invoice, Interest will show in the UI if there is a value stored. For example, if the invoice manually set interest as $220.00, but then “Charge Interest” was set false on the matter, the invoice still has interest that will affect its total. In order to understand how the total is calculated, interest is displayed in the UI.
- Same for tax. If “Collect Tax” is off but the invoice has a stored tax value, tax will show in the UI.
- The first invoice on a matter will never have interest (unless it’s specified manually)
- Interest amount gets locked down on Post
- When you unpost the invoice, you can decide to “Recalculate Interest”. When checked, this sets IsInterestManual to false and actually sets interest and interest balance on the invoice to 0 so they are ready to recalculate next time you look at the invoice. If “Recalculate Interest” is NOT checked, IsInterestManual gets set to true (even if it wasn’t before) so the interest amount currently associated with the invoice is not lost.
- Payment Allocations use new logic to incorporate interest and tax.
- Tax can never be edited manually.
- When auto-applying, interest is the first to be paid to and then fees/expenses (depending if this is a Payment or Credit distribution). This order can now be set in system settings.
- Allocation Order has two sortable lists in system settings. Tax is not sortable but is there to demonstrate that it will always be first. “Reset to Default” is a button that will put the list back in the order you see in the image
- Allocations to interest and tax are put under two new protected accounts by default. They are “Sales Tax Liability” for tax and “Finance Charge Income” for interest. As always, default accounts like this are matter/client/system settings.
- On the account register, a tax allocation is labeled Tax Allocation and an interest allocation is labeled Interest Allocation