Under Setup>Offices>Office Setup>Advanced is where Finance Charges for the office can be set up for charging patients a fee for overdue balances.
Fields to be completed:
Annual Fin. Charge % - This is the annual percentage rate to be charged out
Minimum Balance - The minimum balance the patient can have due to incur a finance charge
Minimum Finance Charge - The minimum finance charge that can be applied to a patient. If the percentage calculation generates a charge less than this amount, this amount will be charged instead.
# of Days Before Applying Fin. Charge - How aged an account must be to incur finance charges. Typically 30, 60, or 90 days.
The most common question regarding finance charges is "I entered a finance charge percentage of 10%, why was the patient not charged for 10% of their balance this month?"
The Answer to this is that the finance charges are calculated with an annual percentage. That means the Finance Charge of 10% will be divided by 12 months.
Formula for Calculation:
Patient Balance $100 X Finance Charge 10% / Months 12 = Finance Charge $0.83 per month
OR
Patient Balance $100 X Finance Charge 10% / Months 12 BUT Minimum Finance Charge $1 = Finance Charge $1 per month.
Also Consider:
Patient Palance $100 X Finance Charge 10% / Months 12 BUT Minimum Balance $200 = No Finance Charge.
If the patient pays off some of their balance, the next charge will calculate based on their new remaining balance.