Billing calculates late fees when the invoice remains unpaid after the due date plus grace days. The process for assessing late fees on overdue payments is configurable through Finance Groups. Finance groups let you apply different methods for computing fees for a specific set of customers. Finance groups are set up in Admin Console > Data Management. Your customers are then assigned to the applicable finance group when you create or edit the customer account.
Finance groups set the following rules to establish how late fees are applied for customers assigned to the group:
Whether to calculate the late fee as a percentage of the amount past due, as a flat fee, or a combination of both.
Ensure a minimum or maximum amount is assessed in place of the calculated amount when the calculated amount is too large or too small.
The minimum balance to incur a late fee.
The number of days an account is allowed to be overdue before a late fee is applied (grace period).
Whether to exempt certain charges from late fees on an invoice category basis. Invoice categories are also set up in Admin Console > Data Management.
In addition to setting up finance groups, there are several other settings available in IDI Desktop Client/Customer Care and Admin Console you should consider when configuring finance charge functionality in your system. These settings are covered in this article as applicable and include:
Exempting individual customer accounts from finance charges.
Excluding unpaid finance charges (e.g from the last bill period) from the current bill period finance charge calculation.
By default, late fees are waived when the invoice is not paid on time, but is paid by the next due date. You can configure the system to also assess late fees in this scenario.
Prioritizing late fee payments by ordering how payments are allocated – first by invoice category, then by invoice number or vice versa.
Setup
Preliminary Setup for Invoice Categories
If you need to exempt certain charges from late fees, set up invoice categories before you set up your finance groups as they will be part of the finance group setup. All revenue-generating items in the IDI platform, including catalog items and usage types, are assigned an invoice category as a means of determining how payments and adjustments are allocated. They can also be used to exempt certain charges from late fees.
Invoice categories are set up via Admin Console > Data Management. Refer to the online help topic in IDI Desktop Client Online Help. With invoice categories in place, assign all revenue-generating charges to their respective invoice categories. With all this in place you can associate invoice categories to their finance groups as covered in Setting Up Finance Groups below.
Setting Up Finance Groups
Finance groups are set up and maintained in the Finance Groups table in Admin Console > Data Management:
Double-click Finance Groups to display the Finance Groups form.
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This form lets you edit existing groups and create new groups as needed via right-click menu options. In either case, the Add/Edit Finance Group form is displayed.
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Use this form to establish finance charge rules as described below.
Finance Group ID (read only) | System-generated number that identifies the finance group.
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Description | Description of the finance group. |
Finance Method | Method by which the charge is calculated. Available methods:
Examples of how finance charges are computed for each of these methods are provided in Calculation Examples below. |
Grace Days | This is the number of days the account is allowed to be overdue before a charge is applied. The account is not considered past due until the grace period has elapsed. |
Rate | This is entered as a percentage of the amount past due to be applied as a late fee. This field is available for Per Period and Per Period Next Due Date. |
Fee | This is entered as a dollar amount to be added to the amount due. Fee is required when Finance Method = Flat Fee and optional for the other two finance methods. |
Minimum Charge/Maximum Charge | These fields let you set a minimum or maximum late fee to ensure a minimum or maximum amount is assessed in place of the calculated amount when the calculated amount is too large or too small. These fields are optional. Values are entered as dollar amounts.
|
Minimum Balance | This is the smallest balance amount that will incur a finance charge.
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Finance Group Details – Exclude Charges from late Fees by Invoice Category
Finance Group Detail configuration is an optional part of finance group configuration. This lets you exempt certain charges from late fees for the group on an invoice category basis. Note: Invoice categories must be set up in the Data Management > Invoice Categories table beforehand. You’ll also need to assign revenue-generating items to their respective invoice categories, but this can be done before or after you configure the finance group details.
To exclude invoice categories from late fees:
Right-click on the appropriate Finance Group row and select View Detail. This displays the Finance Group Details form.
Then right-click on an empty row in the Details form and select New (or click on an existing detail and select Edit). This displays the Add/Edit Finance Group Detail form.
Use the Invoice Category Excluded drop-down menu to select an invoice category to exempt and click Save.
Add as many invoice categories to the Finance Group as needed.
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Note:
You can use this to exclude finance charges assessed in previous bill periods from late fee calculations in a subsequent bill period. This requires you to add a finance charge invoice category in Admin Console Data Management and then associate finance charges to that invoice category. IDI platform users cannot associate finance charges to an invoice category on their own. This requires assistance from an authorized IDI associate through a service request.
Exempting Individual Customer Accounts
When you add or edit a customer account in Customer Care or IDI Desktop Client you can specify whether to exempt the account from finance charges.
In Customer Care, this is done in the Billing Information section of the New Customer form.
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This same setting is available when you edit an existing account via the Account > AccountDetails menu item.
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In IDI Desktop Client, the setting is on the New Customer form and the Additional Info tab when you edit an existing customer.
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Avoiding Late Fees on Minimum and Maximum E-Pay Charges
IDI platform Accounts Receivable Management (Applications > Accounts Receivable Management > Accounts Receivable Settings) lets you defer invoicing on accounts for minimum and maximum E-Pay charges:
If the amount due is less than the Minimum E-Pay Charge, it will be rolled into the next month’s invoice.
If the amount due is more than the Maximum E-Pay Charge, the E-Pay account is not charged.
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If you are set up to impose finance charges on overdue payments, E-Pay subscribers may be assessed a late fee whenever a minimum or maximum E-Pay charge defers invoicing. Follow these guidelines to avoid assessing late fees in these scenarios:
Use the Minimum Balance setting on the finance group to avoid imposing a finance charge due to minimum E-Pay charge, while preserving overall finance charge capability. Set the Minimum Balance to greater than or equal to the Minimum E-Pay Charge.
For example, if the Minimum E-Pay Charge = 10.00, set the Minimum Balance to 10.01. In this case a late fee will not be assessed as the deferred balance of $10.00 due to the Minimum E-Pay Charge is less than the Minimum Balance.
There is no equivalent setting to avoid assessing a late fee due to a Maximum E-Pay Charge. To avoid this, you must have a process in place to track and manage accounts where invoicing is not occurring due to Maximum E-Pay Charge.
Overdue Amount is paid in later Bill Period
By default, late fees are not charged in this scenario. You can have the system configured to charge late fees in this scenario via the Enable Finance Charges for Paid-Off Overdue Invoice setting in Admin Console > Business Rules > Backoffice Settings > Billing. It applies to Per Period and Per Period Next Due Date methods where late fees are based on a percentage of the past due amount.
Note:
This setting is not available to IDI platform users and requires a service request to change it.
When enabled, amounts that became due in the previous bill period and are paid off after being overdue receive finance charges. Example:
April invoice (invoice date = 4/1, due date = 4/20) – Invoice not paid.
May invoice (invoice date = 5/1, due date = 5/20) – Finance charges are incurred from April invoice.
Full payment for April+ May is made on 5/10.
June invoice – Includes finance charges for April.
When disabled (default condition), amounts that became due in a previous bill period and are paid off prior to the due date in the next bill period do not receive finance charges. Example:
April invoice (invoice date = 4/1, due date = 4/20) – Invoice not paid.
May invoice (invoice date = 5/1, due date = 5/20) – Finance charges are incurred from April invoice.
Full payment for April+ May is made on 5/10.
June invoice – Includes no finance charges.
Note:
If you choose to have this setting enabled to assess late fees on overdue balances paid off by next due date, you can exempt certain customers from this behavior using the Per Period Next Due Date finance method.
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Note:
The Enable Finance Charge Tracing setting also available on this form may be used by IDI personnel on an as-needed basis to troubleshoot finance charge issues. It generates a log showing the logic that determines if an account gets a finance charge and how much the finance charge should be.
Prioritizing Late Payments by Invoice Category or Invoice Number
This can be configured through Accounts Receivable Groups in Admin Console > Data Management. You can specify payments be allocated first by Invoice Category, then by Invoice Number or vice versa. You can also establish the order by which Invoice categories are paid. Customers are assigned to an Accounts Receivable Group when you create a new customer account or edit an existing account. Refer to the online help topic in IDI Desktop Client Online Help.
Calculation Examples
Finance Charge as a Percentage of the Overdue Amount
Set Finance Method to Per Period and enter the percentage in the Rate field. The finance charge is applied once an amount is overdue.
If the customer pays a partial amount after the grace period has elapsed, the finance charge is calculated against the original overdue amount.
If the customer pays a partial amount within the grace period, the finance charge is calculated against the original overdue amount minus the partial payment.
If minimum and/or maximum charges are set, the values may supercede the calculated charge, depending on the amount.
If a flat fee is specified, that amount is tacked on to the calculated percentage.
If a revenue-generating item is assigned to an invoice category designated as exempt from finance charges, the charge for that item is excluded from the finance charge calculation.
These examples illustrate each of the above scenarios. In each of these examples:
Billing occurs on the 20th of the month.
Payment is due the 1st of each month.
Grace Period = 5 days
Rate = 10%
Example 1 – Partial Payment After Grace Period:
Bill Period 1
Previous total amount due = $50.00
Partial payment applied on the 6th = $20.00
Balance= $30.00
Amount due after late fee calculated:
Late fee = $50.00 * 10% = $5.00
Total amount due = $35.00
Bill Period 2
Previous total amount due = $35.00
Partial payment applied = $30.00 on the 6th
Balance= $5.00
Amount due after late fee computed:
Late fee = $35.00 * 10% = $3.50
Total amount due = $8.50
Bill Period 3
Previous total amount due = $8.50
Full payment applied on the 2nd = $8.50
Balance= $0.00
Amount due after late fee computed:
Late fee = $0 * 10% = $0.00
Total amount due = $0.00
Example 2 – Partial Payment Within Grace Period:
Bill Period 1
Previous total amount due = $50.00
Partial payment applied on the 4th = $20.00
Balance= $30.00
Amount due after late fee computed:
Late fee = $30.00 * 10% = $3.00
Total amount due = $33.00
Bill Period 2
Previous total amount due = $33.00
Full payment applied on the 2nd = $33.00
Balance= $0.00
Amount due after late fee computed:
Late fee = $0 * 10% = $0.00
Total amount due = $0.00
Example 3 – Flat Fee in Addition to Rate & Minimum & Maximum Charges Apply:
Flat Fee = $12
Minimum Charge = $15
Maximum Charge = $25
Bill Period 1
Previous total amount due = $200.00
No partial payment
Balance= $200.00
Amount due after late fee computed:
Calculated late fee = $200.00 * 10% + $12 = $32.00
Actual late fee = $25 (Maximum Charge)
Total amount due = $225.00
Bill Period 2
Previous total amount due = $225.00
Partial payment applied = $200.00 on the 3rd
Balance= $25.00
Amount due after late fee computed:
Calculated late fee = $25.00 * 10% + $12 = $14.50
Actual late fee = $15 (Minimum Charge)
Total amount due = $40.00
Example 4 – Charges exempt from finance charges through invoice category
In this example, invoice category A is designated as finance charge exempt in the account’s finance group detail configuration, and product X is assigned to invoice category A.
Bill Period 1
Previous total amount due = $50.00
Charge for product X = $10.00
Partial payment applied on the 6th = $20.00
Balance= $30.00 + $10.00 = $40.00
Amount due after late fee computed:
Late fee = ($40.00 – $10.00) * 10% = $3.00
Total amount due = $43.00
Exempting Certain Customers from Late Fees on Overdue Amounts Paid by Next Due Date
As covered earlier, this may apply when your system is configured to charge late fees in this scenario via the Enable Finance Charges for Paid-Off Overdue Invoice setting in Admin Console Business Rules.
Set Finance Method to Per PeriodNext Due Date and enter the percentage in the Rate field. This method uses the same formula as Per Period, except that the finance charge is applied only on that portion of the past due balance not paid by the next due date.
Example:
Billing occurs on the 20th of the month.
Payment is due the 1st of each month.
Grace Period = 5 days
Rate = 10%
Bill Period 1
Balance= $50.00
Amount due after late fee computed:
Late fee = $50.00 * 10% = $5.00
Total amount due = $55.00
Bill Period 2
Previous total amount due = $55.00
Partial payment applied on the 3rd = $25.00
Balance= $30.00
Amount due after late fee computed:
Late fee = $30.00 * 10% = $3.00
Total amount due = $33.00
Bill Period 3
Previous total amount due = $33.00
Full payment of balance prior to late fee assessment of $30.00 applied on the 3rd.
Finance charge of $3.00 waived
Balance= $0.00
Flat Fee
Set Finance Method to Flat Fee and enter the amount in the Fee field.
Example:
Billing occurs on the 20th of the month.
Payment is due the 1st of each month.
Grace period = 5 Days
Fee = $15
Bill Period 1
Total amount due = $50.00
Payment #1 made on the 7th = $20.00
Balance = $30.00
Late fee = $15.00
Payment #2 made on the 18th = $30.00
Balance = $0.00
Late fee = $15.00
Bill Period 2
New charges = $45.00
Total amount due = new charges + $15.00 finance charge = $60.00
Payment made on the 4th = $60.00
Balance = $00.00
Late fee = $00.00
Excluding Previous Finance Charges in a New Calculation
Set up a Finance Charge invoice category for this purpose as described in Set Up – Finance Group Details – Exclude Charges From Late Fees By Invoice Category.
Bill Period 1
Previous total amount due = $200.00
No partial payment
Amount due after late fee computed:
Late fee = $200.00 * 10% = $20.00
Total amount due = $220.00
Bill Period 2
Previous total amount due = $220.00
Partial payment applied = $100.00 on the 3rd
Balance= $120.00
Amount due after late fee computed:
Late fee = ($120.00 – $20 finance charge from previous bill period) * 10% = $10.00
Total amount due = $130.00
Assessing Surcharges Through Paymentus Integration
If Paymentus is your payment vendor, you can set up Paymentus integration to handle surcharges (fees) on bill and installment payments according to your specific requirements for different customer groups. Customer groups are established through finance group configuration. The following table illustrates how you might use this functionality.
Finance Group | Surcharge Scenario |
A | Apply surcharge for bill payments and installment payments |
B | No surcharge for bill payments or installment payments |
C | Apply surcharge for bill payments No surcharge for installment payments |
D | No surcharge for bill payments Apply surcharge for installment payments |
Before you can use this functionality, you’ll need to coordinate with Paymentus to establish payment type codes Paymentus will use to apply surcharge rules per your requirements. For complete details on applying surcharges in Paymentus, refer to the Paymentus article in the IDI Knowledge Center.
Triggering Actions on Finance Group Changes
The Finance Group on the Customer Created and Customer Modified triggers let you listen for and act on Finance Group changes.
FinanceGroupID is available in the parameter selector when you add a condition to the Customer Created trigger. Both FinanceGroupID and FinanceGroupID_Old are available in the Customer Modified Trigger. Below shows an example of sending an Email to a subscriber on changing the Finance Group from 1.5% Finance Charges to Finance Exempt.
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Reports
IDI platform Report Explorer provides several standard reports on finance charges and other activity related to finances in the system. Refer to the Report Matrix in the IDI Knowledge Center.