I’m a bit confused with late payment fees calculations when customers have been late for more than one month.

Let’s say a customer has an outstanding of $10,000 with 10% late payment fees. Hence the balance due will be $10,000 + 10% = $11,000. No problem so far. However, when the customer is late for 2 months the balance due (from what I understand) should be ($10,000 + $1,000) + 10% = $12,100 whereas manager shows the amount of $12,200 in balance due. Can you help enlighten me on how the calculation works?

# Late Payment Fees Calculation

**Tut**#2

Your example does not seem to make sense. You have two different due dates. The first one, showing late fees of $1,000 has a due date of November 30th. The second one, showing late fees of $2,200, has a due date of October 31st. Thus, it appears these are not actually sequential examples of what Manager would produce.

Hi,

Yes I was simulating what happen if a customer were a month late and if they were 2 months late. hence I change the due dates. I am having the same problem with the actual invoice which I can’t show here.

**Tut**#4

Well, your 2nd screen shot does not simulate an invoice two months overdue. In fact, as shown, it is not even 1 month overdue, so it should not have any late fees at all. I don’t think anyone will be able to help unless they can look at what Manager actually produced. Of course, this does not have to be your real company. You could create a test company to avoid privacy problems.

Hi,

Customer A1 have an invoice overdue, Screenshot 1, invoice no 1 was issued on 1 Nov 2015 dues on 10 Nov 2015. Assuming all the invoice for this customer is due on the 10th every month therefore, as per 22 Dec 2015, this invoice is 2 months overdue. Late payment fees rate is set to 10%. In the screenshot the amount of late payment fees is $2,200. Can you help me understand where this number come from?

I ask this because if I calculate based on my understanding it is supposed to be $2,100 not $2,200.

If this is still confusing can you just let me know how the calculation is done for late payment fees? regardless my examples

Sorry If I make you confused

Thank you

**Abeiku**#6

Late fee charges

A late fee charge is a charge levied against a customer for not paying an invoice by its due date.

When creating new sales invoice, you can specify whether late fee charges apply and if they do, you can set monthly interest rate.

If sales invoice is not paid in full by its due date, Manager will automatically create a transaction to charge customer interest on the following date. *The interest is calculated on outstanding amount which can include past late fee charges.*

[Copied from the Guides on the home page]

**Tut**#8

@Sebastian_Angga, I agree with your math. It seems to me that what is happening is that Manager has correctly calculated the total late fee for the first month the invoice is overdue. But for the second month, it appears to have multiplied the new late fee (which should be $1,100) by the number of months late to derive the total late fee of $2,200. What it should have done is add the new late fee to the old total, including the first month’s late fee.

I can only guess what it would do for the third month. I suspect it would take 10% of $12,200 and multiply that by 3, in other words: $1,220 x 3 = $3,660 for a total balance due of $13,660. Of course, the actual amount due at that point should be $10,000 x 1.1 x 1.1 x 1.1 = $13,310. The formula should be TOTAL x (1 + INT) ^M, where TOTAL is the original sales invoice total, INT is the decimal value of the penalty rate, and M is the number of months late.

Now remember, I am only speculating on how things were calculated. I don’t know, because I’m just a user like you. But there does seem to be a bug that @lubos should check out.

**success127**#9

The above test invoice overdue for 4 months. Based on the 10% late payment fee, it should be $14,641 in my calculation.

Big picture how the late payment fee being calculated by the system