How to setup interest charges

1. Select Names, Client Info and choose the client
2. In the Bills, Charges selection enter the Annual interest rate
3. Choose Type of interest, Charge interest at the number of days and Grace period as desired
4. Last bill date is the date used for determining accrual of interest and is populated using the billing date of the last approved bill 

An example of Simple interest being charged is shown here:

Bishop’s last bill was approved on July 1st. Their current overdue balance is $2,000; of this balance, $30.00 was interest from past billings.

You charge simple interest with an annual interest rate of 18 percent after charges become one month overdue. On Bishop’s August 1st bill, interest is calculated as follows:

Determine the number of days overdue.

= [Billing and aging date] – [Last bill date]
= 31 days

Determine the part of one year that has passed since the last bill.

= [Days overdue] / [Number of days in a year]
= 31 days / 365 days
= .0849315 years

Determine the part of the annual interest rate to be charged.

= [Part of one year that has passed] x [Interest rate]
= . 0849315 x .18
= .0152876

Multiply the calculated interest rate by the amount overdue to determine the interest due. Remember, when using simple interest, Timeslips does not charge interest on overdue interest.

= [Calculated interest rate] x ([Amount overdue] – [Interest overdue])
= .0152876 x ($2,000.00 - $30.00)
= .0152876 x $1970.00
= $30.1165

 Timeslips rounds the calculated interest due to $30.12 and charges it on the bill.

An example of Compound interest being charged is shown here:

Bishop’s last bill was approved on July 1st. Their current overdue balance is $2,000; of this balance, $30.00 was interest from past billings.

You charge compound interest with an annual interest rate of 18 percent after charges become one month overdue. On Bishop’s August 1st bill, interest is calculated as follows:

Determine the number of days overdue.

= [Billing and aging date] – [Last bill date]

= 31 days

Determine the part of one year that has passed since the last bill.

= [Days overdue] / [Number of days in a year]

= 31 days / 365 days

= .0849315 years

Determine the part of the annual interest rate to be charged.

= [Part of one year that has passed] x [Interest rate]

= . 0849315 x .18

= .0152876

Multiply the calculated interest rate by the amount overdue to determine the interest due. Remember, when using compound interest, Timeslips also charges interest on overdue interest.

= [Calculated interest rate] x [Amount overdue]

= .0152876 x $2,000

= $30.5752

Timeslips rounds the calculated interest due to $30.58 and charges it on the bill.

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