Sales and posting
Late payment penalty
Reduce commission when the customer pays an invoice late: grace days, a flat and per-day penalty, a cap, and what happens when a payment is unapplied.
updated: applies-to: 2.0.0.0
A payment after the grace days reduces the commission by a penalty percentage.
The late-payment penalty reduces a salesperson's commission when the customer pays an invoice after its due date. It is off until you turn it on, and it never changes sales posting.
Turn it on
On Commission Setup, in the Late Payment Penalty group:
| Field | What it does |
|---|---|
| Late Payment Penalty | Turns the penalty on for the company. |
| Penalty Grace Days | How many days after the due date the customer may pay before any penalty applies. |
| Late Penalty % | The share of the commission taken back once the customer pays later than the due date plus the grace days. |
| Late Penalty % per Day | A share taken back for each day late beyond the grace days, added to Late Penalty %. Leave it at 0 for a flat penalty. |
| Max Late Penalty % | The largest share a penalty can take back. Leave it at 0 for no cap. |
Turn on Late Payment Penalty and set the grace days and percentages on Commission Setup.
The penalty is: Late Penalty % + Late Penalty % per Day x (days late - Penalty Grace Days), up to Max Late Penalty % and never more than 100%. A payment on the due date, or within the grace days, is never penalized.
Which commission it applies to
Only commission whose Pay When is When Fully Paid or As Customer Pays. Commission paid On Posting becomes payable before the customer pays, so it is not penalized.
Lateness is measured from the invoice's Due Date to the date of the latest payment applied to the invoice. A credit memo applied to the invoice is not a payment.
How it is posted
The penalty is worked out when the commission is released, by the release job or Release Payable Commission. See Release commission.
- The release posts a Late Penalty detailed entry. It lowers the earned commission, dated the date of the late payment.
- The same release then makes the lower amount payable. Nothing has to be clawed back.
The penalty is a share of the commission after returns and netted credits. Releasing the same invoice again posts only a change, never the penalty twice.
Example
Penalty Grace Days is 5, Late Penalty % is 10, Late Penalty % per Day is 1 and Max Late Penalty % is 25. An invoice due on 31 October earns 200.00 commission, payable When Fully Paid.
| Customer pays on | Days late | Penalty | Payable commission |
|---|---|---|---|
| 4 November | 4 | 0% (within the grace days) | 200.00 |
| 15 November | 15 | 10% + 1% x 10 = 20%, so 40.00 | 160.00 |
| 31 December | 61 | 10% + 1% x 56 = 66%, capped at 25%, so 50.00 | 150.00 |
When the payment is unapplied
If you unapply the late payment, the next release works the penalty out again. When no late payment is left, it posts a Late Penalty entry that gives the penalty back, with the description Late payment penalty removed. If another payment is applied later, the penalty follows that payment's date.
See the penalty
- On Commission Ledger Entries, choose Detailed Entries. The Late Penalty entry shows the days late and the percentage in its Description.
- The Commission Trace of the entry shows the penalty under What happened after.