How to Define Penalty

Define Penalty Rule

Follow the steps below to define the penalty and ensure they are applied to overdue invoices.

Login into your AltheaSuite account using your credentials.

Go to Sales and select Penalties.  To create a new penalty rule, click on the New button.

To define a penalty rule, fill in the following details :

Penalty Name : This is the name you assign to the penalty rule. Example: Monthly Rate, Overdue Charges.

Payment Term Days : This is the number of days allowed for the customer to make the payment after invoice date. If payment is delayed beyond these days, the penalty will apply. Example: 15 means the customer has 15 days to pay.

Interest : This is the interest on penalty that will be charged on overdue amount

Interest Period Segment : This defines how frequently the interest should be calculated – Whether Daily, Monthly or Yearly.

Interest Period : This is works with the Interest Period Segment to decide how often interest is added to the overdue amount.  Example: If interest period segment is ‘Month’ and interest period is 3, then interest will be added once every 3 months. But this only works if you tick the box that says ‘Is Compound Interest’.

Is Compound Interest : The checkbox decides whether the penalty interest is calculated as a simple interest or the compound interest.

Customer Group : You can choose whether the penalty rule applies to all customers or only to a specific customer group.

Note 

The 2% interest will be charged only if the payment is made after 15 days (payment term) + 1 month (Interest Period).

If you want to start charging interest immediately after 15 days, even for a few days (not waiting for the full month), must enable the option ‘Consider Fractional days in Penalty Calculation’ in the general settings.