What Are the Different Types of Charges?
When defining a finance charge code, you define a monthly/daily finance rate. This rate is used to calculate the finance charges, late payment fees, or both depending on how you defined your customer's finance options. Finance charge codes are global, meaning they can be used by all companies and customers.
Finance Charges
Finance charges are a fee assessed to your customers because they have past due invoices.
Daily Finance Charges
Daily finance charges are fees assessed to your customers using a daily rate on a daily basis for past due invoices. This method is used primarily in European countries.
Late Payment Fees
Late payment fees are an additional finance fee assessed on invoices that were paid after the due date and are no longer open on the customer's account. You can think of it as a way to recoup a partial month's finance charge for transactions that have been fully paid.