Late Fee Grace Amount Configuration

Overview

The late fee grace amount settings allow you to control when and how late fees are assessed on overdue invoices. These settings help you avoid unnecessary late fees while ensuring consistent collections practices.

Accessing Late Fee Settings

Navigate to: Utilities > Set Company Header

All late fee configuration options are located in this section.

Late Fee Settings Explained

1. LATE FEE (Balance Below Minimum)

This is the flat dollar amount applied to late amounts less than the Minimum Balance you have set.

Important: If you want ONLY a flat late fee to be applied to past-due amounts (no percentage ever assessed), set your Minimum Balance at a very high level.

2. MINIMUM BALANCE

The Minimum Balance determines whether a Late Fee or a Late Rate is assessed.

Example:

• Your normal Late Rate is 18% (1.5% per month)
• On a $100 past-due amount, this generates only $1.50 monthly
• You decide a $5.00 minimum late charge should apply
• $5.00 is 1.5% of $333.33
• Set your Minimum Balance at $333.33
• Late amounts less than $333.33 are charged the flat Late Fee
• Amounts greater than $333.33 are charged the 1.5% Late Rate

3. LATE RATE (Balance Above Minimum)

This is the annual percentage charge applied to any past-due amounts in excess of the Minimum Balance. See the example in section 2 above for clarification.

4. NET TERMS (Recurring / Product)

The number of days after the invoice date that the invoice is due.

Options:

• Set Net Terms separately for Recurring Invoices (billing in advance)
• Set Net Terms separately for Product Invoices (for services rendered)
• For Product Invoices, you can set them to print "Due Upon Receipt" rather than printing a due date

Note: The Delta Button will update Customer records with the Net Terms entered.

5. LATE FEE GRACE

The number of day's grace period between when the invoice is due and when the late fee will kick in.

Recommendation: Add at least 15-20 days so that a late fee does not generate when you run the next batch of recurring invoices. Instead, it waits until the following recurring invoice batch. This avoids unnecessary forgiving of late fees because a payment and a new invoice or statement cross in the mail.

Important Rule: The Recurring Net Terms + The Late Fee Grace Days must be greater than 31 days. We recommend closer to 40-45 days to avoid generating late fees too quickly.

6. LATE FEE GRACE AMOUNT

Allows you to establish a floor amount for which a late fee is assessed.

Default: $0.99 - No late fee will be added to any amount less than or equal to $0.99

Customization: You can edit this amount to match your business needs.

7. LATE PERIOD

Should always be set in the 28-31 day range.

Options:

• 28 days = charges calculated on a 13-period year
• 30+ days = charges calculated on a 12-period year

8. CYCLE DAY OF MONTH

This is the day of the month that Cornerstone generates your invoices. This field is used to warn users when they enter a Next Date in the Recurring Charges for a service period/cycle that has been processed.

Important Notes About Late Charges

Late Charges on Reprinted Invoices:

• Late charges do appear on invoices that you reprint

Showing Total Due:

• To show a total due for more than one invoice, print a statement instead

Automatic Generation:

• The generation of an automatic Recurring Invoice or Statement will generate late fees if the terms are met

Invoice Processing:

• When Cornerstone runs invoices, we extract the invoice information to our invoice software
• Unpaid invoices appear as "Outstanding Invoices"
• Invoice numbers are listed with the total due (including Late Charges) for all those invoices

Best Practices

1. Set Late Fee Grace period to 15-20 days minimum
2. Ensure Net Terms + Grace Days equals 40-45 days total
3. Use Minimum Balance to avoid insignificant percentage-based late fees
4. Set Late Fee Grace Amount to prevent fees on minimal balances
5. Review settings periodically to ensure they match your collections policy

Recommended Configuration Example

• Net Terms (Recurring): 20 days
• Late Fee Grace: 20 days
• Total before late fee: 40 days
• Late Fee Grace Amount: $0.99
• Minimum Balance: $333.33
• Late Fee (below minimum): $5.00
• Late Rate (above minimum): 18% annually (1.5% monthly)

Need Help?

Still have questions? Contact Cornerstone Holding Co. 847-405-9517 or email us customer.success@alarmbills.com