Generate Finance Charges |
  
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ADVANTAGES OF USING FINANCE CHARGES
Finance charges are calculated on the overdue account balance amounts (must be 30 days or older) owed to you by your clients/patients. If a client/patient does not pay their account within an acceptable time frame, there will be less money available in your bank to finance your own expenditures. Finance charges are a way of recouping costs carried by you, due to overdue clients/patients.
Finance charges applied on the overdue accounts serve two functions: they remind the client/patient that the account is past due. Secondly, the charges help you recoup the cost of carrying the overdue balances.
Develop a policy for dealing with overdue accounts and clients who refuse to pay finance charges.
ALTERNATIVE 1
Adjust (write-off) any unpaid finance charges if the customer does not appear to be paying them. This approach is the "soft sell" method of collecting on the account. The intent of the finance charge is to remind the client of the lateness of the account. If some clients pay, it is considered unexpected revenue.
ALTERNATIVE 2
Leave the charges on the account until the client pays. This is the "hard ball" approach which in some cases, is justified. The intent is to push tardy clients into submitting payment faster to avoid finance charges which will NOT be written off their accounts.
WHEN IS AN ACCOUNT ELIGIBLE FOR FINANCE CHARGES?
All accounts except those with "NO FINANCE CHARGES" checked off in the PATIENT INFORMATION screen are eligible for finance charges. Accounts such as government institutions and third party funding sources will generally have the "NO FINANCE CHARGES" option checked as they won't generally pay financing charges.
WHEN IS AN INVOICE ELIGIBLE FOR FINANCE CHARGES?
The invoice MUST be overdue (the document date is older than the cut-off date) in order to be eligible for the finance charge calculation.
Example: Cut-Off date is 03/31/2009
Invoice 34555 Due 03/31/2009 will be skipped.
Invoice 34553 Due 03/30/2009 will be eligible.
Run this program to calculate finance charges on overdue accounts.
The screen prompts are:
CUT-OFF DATE - Enter the month end date. This becomes the date of the finance charge.
FINANCE CHARGE % - Enter the percentage of the finance charge. Enter 2% as 2.00.
MINIMUM FINANCE CHARGE - Enter the minimum amount for calculating finance charges, such as $1.00. If the finance charge calculated is below this amount, the minimum will be applied.
INTEREST ON PREVIOUS FINANCE CHARGES - When checked, interest will be charged on previous finance charges.
PRINT EDIT LIST - When checked, a report for editing will print. When unchecked, a report for editing will NOT print.
Next, click CONTINUE to generate your finance charges.