Peachtree unpaid invoices11/15/2023 This means that if the interest is charged in month two, it’s added to the balance due. Interest fees usually compound to serve as a more substantial disincentive for late payments. So, a 10 percent annual interest rate would be 0.83 percent each month. But since it accrues monthly, the amount charged is that annual rate divided by 12. The interest rate usually is displayed as an annual rate, for example, 10 percent. The interest rate is a percentage of the unpaid balance that accumulates every month the invoice remains unpaid. What are interest fees?Īn interest fee is additional money the client owes you over and above the original invoice amount if they pay late. It also incentivizes clients to pay on time to avoid paying more for their procrastination.Įditor’s note: Need a collection service for your business? Fill out the below questionnaire to have our vendor partners contact you with free information. These charges help alleviate cash flow problems and reimburse you for collection efforts. The answer is making late payments painful for the client by charging late fees or interest on unpaid balances. How can you collect past-due invoices effectively and prevent late payments in the future? You’ve sent second notices, statements or demand letters, but nothing is working. It’s an unpleasant situation with implications for your cash flow, accounts payable process and customer service. However, your client is ignoring the invoice. You held up your end of the deal by rendering services or delivering goods.
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