Late Fees

A late fee is an additional amount charged for an invoice that is paid after the due date. Implementing late fees in your business can help reduce overdue payments and encourage proper cash flow. You can either charge your customers based on a percentage of the invoice’s total amount or set a fixed amount. You can also exclude your loyal customers from being charged. Learn how to use this feature in Zoho Books.

Enable Late Fees

To charge a late fee for your overdue invoices, you must enable it first. Here’s how:

Field Description
Apply Late Fee Based On Choose if you want to charge late fees based on:

Percentage - A percentage of the invoice’s due amount will be calculated as late fees.

Fixed Amount - A fixed amount will be collected irrespective of the invoice’s total amount.
Invoice Overdue By Enter the number of days after the due date when a late fee should be charged.
Percentage / Fixed Amount Enter the late fee percentage or the fixed amount you want to charge.
Generate late fee invoices as drafts Check this box if you want the late fee invoices to be generated in the Draft status. You can review and send them or mark them as Sent.
Would you like to apply taxes on the late fees amount? Choose the taxes that you want to apply to the late fees amount:

1. Don’t Apply Taxes
2. Apply taxes
3. Apply Custom Rates - You can choose a custom tax rate that you want to apply.
Default Account for Late Fees By default, the late fee amount will be tracked in the Late Fee Income account. You can edit the account if needed.

Send Late Fee Invoice

The late fee invoice will be generated and sent to the customers by default. You can also change the preferences to review the draft before sending it.

To send the late fee invoice manually:

The late fee invoice will be sent to your customer.

Late Fees Payment

Your customer can pay for the late fee amount in two ways:

1. Pay only the invoice amount
2. Pay the late fee amount along with the invoice amount

Pay Only the Invoice Amount

Once the payment option is enabled and the late fee invoice is sent, your customer can pay from the customer portal or the late fee invoice link that you’ve sent.

To do this, your customer should:

The late fee invoice payment will be made successfully.

Pay the Late Fee with the Invoice Amount

If you’ve sent an invoice payment link that includes a late fee, your customer will need to pay both the invoice amount and the late fee together. If the customer has already paid the late fee, it won’t be included on the payment page and its details will be displayed in the invoice details page.

Exclude Late Fee for Customers

You can exclude your loyal customers from paying late fees. Here’s how:

Once it is disabled for this customer, they will no longer be charged late fees.  

Other Actions

Edit Preferences

To edit the late fee preferences in your organization:

Disable Late Fees

To disable late fees:

The feature will be disabled.

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