Late Fees

Late fees charge interest on an invoice that is past its due date, plus statutory compensation where the jurisdiction has it. Nothing is charged automatically and nothing reaches a client until a person raises the fee.

Setting the policy needs finance:manage_settings. Previewing, assessing, waiving and raising the fee invoice need finance:manage_receivables.

The policy

The policy belongs to a billing entity, so an organisation with entities in more than one country can hold a different one for each.

Setting	What it does
Enabled	Off by default. Nothing is assessed while it is off
Annual rate	Your contractual rate, in basis points (1,250 is 12.5% a year)
Grace days	Days after the due date before interest starts
Interval days	The length of a charging interval, 30 by default
Minimum fee	An interval that works out below this is not charged
Day count basis	Actual/365, actual/360 or 30/360
Prefer statutory	Use the jurisdiction’s statutory basis ahead of your own rate. On by default
Compensation	Include statutory compensation where the jurisdiction has it. On by default
Contract reference	The clause you are relying on, recorded with each assessment
Tax rate	The rate the fee line carries, if the fee is taxable where you are

How an interval is worked out

Interest runs from the due date plus any grace days. Runnit charges whole intervals only, so with the default 30 day interval nothing is chargeable until 30 days have passed, and then it charges one interval at a time.

Interest is the overdue amount multiplied by the rate, for the days in the interval, over the day count basis, rounded once.

Each interval is charged once and once only, however many times the nightly pass runs, and the day on the boundary between two intervals is never counted twice. Statutory compensation, where it applies, is charged once for the debt rather than once per interval.

Preview before you charge anything

Ask any overdue invoice for its next chargeable interval and Runnit answers either with the assessment it would make (the period, the days, the rate and the basis it used, the interest, any compensation, and the total) or with the reason there is nothing to charge:

Reason	Meaning
Late fees are off	The billing entity’s policy is disabled
The invoice is not open	It is a draft, paid, voided or written off
It is disputed	Disputed invoices are never assessed
It has no due date	There is nothing to run interest from
It is a fee invoice	A late fee invoice cannot itself accrue a late fee
A payment plan is active	See Payment Plans
The interval is not complete	Some days have passed, but not a whole interval
No rate	No rate could be worked out. See below
Below the minimum	The interval is chargeable, but under your minimum fee

Always read the rate on the preview before you raise a fee. It tells you which basis was actually used, which is the one thing worth checking.

The rate, by jurisdiction

The rate can come from your own contract or from the jurisdiction’s statutory basis, and which one wins depends on prefer statutory, which is on by default.

Australia has no statutory interest rate. Set a contractual annual rate in the policy. Until you do, the preview answers “no rate” and nothing is chargeable.
The United Kingdom uses the Bank of England base rate plus 8 percentage points, with fixed compensation of GBP 40, GBP 70 or GBP 100 depending on the size of the debt.
The European Union uses the ECB reference rate plus 8 percentage points, with a minimum of EUR 40.

Raising the fee

An assessment is a record, not a charge. The nightly pass records assessments; it never issues anything and never contacts a client.

Raising the fee creates a separate invoice. It goes through the ordinary drafting and issuing path, so it takes its own number, obeys your approval policy, respects a closed period and renders its own document. The original invoice is untouched: its number, its total and its frozen document stay exactly as issued, which is the whole point of raising the fee separately.

Raising the same assessment twice returns the invoice the first one made.

The fee line carries the billing entity’s out of scope tax rate unless you set a rate in the policy. Interest is not payment for a supply, so no GST or VAT applies, but the line still names a tax identity so that a tax-registered entity can issue it: “considered, and none applies” is a different statement from silence.

Waiving an assessment asks for a reason and stops it there. Once a fee has been invoiced it can no longer be waived; credit the fee invoice instead. See Invoices.

Nothing is debited without notice

Raising a fee invoice does not collect it. If you later collect from a stored bank account, that debit needs its own advance notice, naming the exact amount, currency and date, delivered before the money moves. Change the amount or the date and it becomes a different debit and needs a new notice. See Online Payments.

Next step

Chase what is owed from the ageing in Getting Paid, or offer terms instead with Payment Plans.

Help from Ru

Ru can explain an assessment and carry out a permitted, authorised fee action, such as raising its separate invoice or waiving it. Statutory applicability confirmations still require your own review. See Finance with Ru.