Tip #022 – Finance/Re-Billing Charges

Tip #022
Finance/Rebilling Charges

At least once a month I get a call from some flowerSoft user complaining that not all the accounts that should have gotten a statement got one.

The reason almost always is that they either forgot to run the “Calculate Finance Changes” option or they thought they did not have to because they do not charge their customers a finance charge.

You MUST run the “Calc. Finance/Re-Billing Charges” option found in the Pre-Statement Account Maintenance menu even if you do not charge finance or re-billing charges.

If you fail to do this, accounts that owe you money from a previous month that had no transactions for the current month WILL NOT receive a statement!

I’m sure you all know the difference between a finance charge and a re-billing charge, but just in case…

A finance charge applies a percentage to the outstanding amount of an invoice if over 30 days past the delivery date.

A re-billing charge applies a pre-set charge to the account if it has balances over 30 days old.

In other words, a re-billing charge is always the same whether the customer owes $10 or $1000. A finance charge would be different for both accounts in that case.

A finance charge usually produces more revenue than a re-billing charge if the outstanding balance is large, but the re-billing charge produces more revenue if the outstanding balances are generally small.

However, maybe most of you did not know that you can have the best of both worlds.

You can have a finance charge associated with a minimum charge. So, for example, if the finance charge for an account is calculated at $1.25 for the month, you can tell flowerSoft to make the minimum finance charge $5.00.

In that scenario, no finance charge would be less than $5.00 but it certainly can be well over $5.00 for accounts that have large outstanding balances.

Like I said, the best of both worlds.

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