Finance Charges

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The Finance Charges add finance charge button function in Design Manager is used to create a Finance Charge Invoice for existing Client Invoices that have not been paid on a timely basis.  You can indicate which Clients to charge, at what rate, and how many days overdue an Invoice is permitted to remain unpaid before it accrues a Finance Charge.


Configuring Client for Finance Charges

You can configure how Clients receive Finance Charges individually on the Client Window.  However, if all Clients will use the same Finance Charge Percentage and Finance Charge Days, you can skip to the Generating Finance Charges section below.  To configure Clients for Finance Charges individually, select Project - Clients to open the Client Glossary Window. Select the desired Client and click the Edit button.  The picture below displays the lower portion of the Client Window:

client glossary - client tab - finance charges

Fill in the rate you want to use for this Client and the number of days until an Invoice becomes past due.  Click the OK button to save the changes.  The Client will now be included when Finance Charges are generated for overdue Invoices.


Generating Finance Charges

To generate Finance Charges, select Accounting - Client Invoices / Finance Charges to launch the Client Invoices / Finance Charges Window.  Click the Finance Charges ("Fin. Chgs.") button to open the Generate Finance Charges Window shown below:

generate finance charges window

You can select one of two ways to use this window:

1.Generate for Clients with an overdue balance and a percentage/days filled in on the Client Glossary within the range of codes above.: This is the default option and will use the Client Window for Finance Charge Percentage and Finance Charge Days for each Client individually.  A Finance Charge  will be generated for Clients that have both the Finance Charge Percentage and Finance Charge Days filled in and have a past due balance on at least one Client Invoice.  All other Clients will be ignored.
2.Generate for all Clients with an overdue balance within the range of codes above.  Use the following Percentage and Days overdue . . : The second option will ignore the settings on the Client  Window.  Selecting this option will allow you to enter a Finance Charge Percentage and Finance Charge Days to use for all Clients.  Finance Charges will be generated for all Clients who have past due balances according to the designated Finance Charge Days.


The Aging Date defaults to the last day of the current month and is used to determine if an Invoice is past due.  To determine if an Invoice is past due, Design Manager examines the Client Invoice Date versus the Aging Date.  If the Invoice Date is earlier than the Aging Date less the Finance Charge Days, then the Invoice is considered past due and a Finance Charge Invoice will be generated.


When you click on the OK button, the Finance Charge Invoices will be generated as unposted Client Invoices on the New Tab of the Client Invoices / Finance Charges Window.  The Finance Charge Invoice will be the sum of the balances of all overdue Client Invoices for a given Client multiplied by the Finance Charge Percentage.  You should review the charges that have been created then print and post.  The Finance Charge Invoice will list each past due Invoice and the total Finance Charge all past due Invoices.  Upon posting the Finance Charge Invoices, Design Manager will create an Item in the corresponding Project showing the amount of the Finance Charge and the Invoices that were past due.

Accounting: When the Finance Charge Invoice is posted,  Design Manager will debit the Accounts Receivable Account and credit the Finance Charge Account. No sales tax is calculated for the Finance Charge Invoices. To set the Finance Charge Account, select File - Company Information.  On the Company Information Window, click on the Other Accounts Tab.  The Finance Charge Account is in the  Accounts Receivable section and is usually designated as a Revenue Account.