NetLoan - Receivable Missed & Late Payments
Use Case: NetLoan puts all payments to a clearing account, which is then reversed and coded to AR when invoices are generated. Thus missed or late loan payments are not inherently accounted for in the loan schedule. We provide a couple different options for dealing with the fees associated with the missed and late payments.
Best Practice: Use NetSuite's Native AR Finance Charges
NetSuite has robust AR functionality that includes the ability to charge late fees on outstanding invoices. This functionality is called Finance Charges in NetSuite. Since NetLoan creates native invoices in NetSuite, this functionality can be fully utilized.
Note: This is set up on a global level for ALL invoices in NetSuite (not just NetLoan invoices). The late fees can be overrode at the customer level when charging them.
STEP BY STEP PROCESS
- Set up the global Finance Charges settings by navigating to Setup > Accounting > Finance Charge Preferences.
- Choose the global settings appropriately:
| Field | Description | Example |
|---|---|---|
| Annual Rate | Annual rate charged on unpaid invoices. | 12.5% |
| Income Account | GL account to be credited again AR as additional income from late fees. | 8015 Finance Charge Income |
| Tax Code | NetSuite currently leaves this as blank. | Blank |
| Grace Period | Number of days before the fee starts accruing. | 5 |
| Minimum Finance Charge | NetSuite will bill the higher of this amount or the percentage calculated on the invoice. | $25.00 |
| Assess on Finance Charges | Check this box to have system accrue finance charges on prior unpaid finance charges. | Checked |
| Assess From | Select Transaction Date to start accruing from the date of the transaction. Select Due Date to start accruing from the due date on the transaction. | Due Date |
| Custom Form | Select the form to be used when creating the Finance Charge invoice. Can customize based on preferences. | Standard Finance Charge |
- Navigate to Transactions > Customers > Assess Finance Charges. Select the relevant Subsidiary. The list of customers with late payments will show at the bottom of the screen.
- Select one or many customers to be invoiced late fees. The dollar amount for the fees are calculated based off the preferences set before. These can be overrode in the Amount To Assessboxes to the right.
- In the example below, you can see the different charges calculated and override entered.
- Click Save to create invoices for the finance charges.
- Click on the Invoice Number on the screen to open the new invoice.
- The created Finance Charge Invoice will be included on all NetSuite Customer reports.
Alternative Option: Modify the Loan
If it is not feasible to use Finance Charges to charge late fees, the loan schedule can be modified using the standard modification process.