Interest / late penalties on invoices

[Derek Atkins]

Send them a Customer Report
That's what it's for.

-derek
Sent using my mobile device. Please excuse any typos.



On August 5, 2017 6:03:53 PM Macho Philipovich <macho.p at riseup.net> wrote:

> Thanks David.
>
> Since the goal is to make it as convenient as possible for clients to
> pay, I'd really like to present them with a simple document that clearly
> indicates the total outstanding amount owing, rather than a series of
> invoices they have to try to sum up.
>
> Perhaps the solution is to send all the invoices with a cover sheet
> listing the total, but that also seems unnecessarily complicated.
>
> If anyone has any further thoughts I'd be happy to hear them.
>
> Thanks,
>
> Macho
>
>
> On 2017-08-04 09:56 PM, DaveC49 wrote:
>> Macho,
>>
>> From an accounting perspective, the interest charge is not incurred until
>> the original invoice is overdue past the agreed date and should be recorded
>> as such at that time, while the original sale is recorded at the date at
>> which it occurred.
>>
>> On this basis, I think it would be most appropriate to issue an additional
>> invoice for the interest charges referencing the original invoice at the
>> date those charges become applicable and then forward a copy of the original
>> invoice along with the invoice for the interest charges to the customer. If
>> the invoice remains outstanding, then you would have to periodically e.g
>> monthly or quarterly send  new invoices for the accruing interest charges.
>>
>> In mananging this for low value sales, the additional cost of issuing and
>> mailing the additional invoice may outweigh any additional gain from the
>> interest charge, so it may be wise to have a threshold in the sale value,
>> above which you change the terms of sale to include the interest charge for
>> late payment, or more simply, not pursue the interest charges for sales
>> below an appropriate threshold while keeping the provision in the terms of
>> sale.
>>
>> You may also need to consider any constraints on policy imposed by any
>> consumer protection legislation which may apply.
>>
>> It would be interesting to compare the effectiveness of offering a discount
>> for early payment with the imposition of an penalty interest  (or using
>> both) in encouraging prompt payment of invoices. Carrot or stick cf carrrot
>> then stick?
>>
>>
>> David Cousens
>>
>>
>>
>> -----
>> David Cousens
>> --
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