Hi everyone, a year on from my last engagement we wanted to provide an update for you all here.
As many will be across we're in the midst of making a lot of iterations and improvements to new invoicing leading up to the retirement of classic invoicing in September (2024).
We have a fair amount of work lined up in the teams schedule over the coming months and to give an indication there isn't any committed plans around a function to add interest to invoices.
That said, we do have a team that have picked up and are considering how we might solve this with the technology in new invoicing - It's early days on this yet, but I'll share if there's any progress on this for you all here.
In the meantime, as has been shared by others over time there are a few ways you could accomplish this today;
Edit and add a new line to your invoice to add the late fee - you could make use of Xero's inbuilt calculator for this, or
Edit and add a 'mark up' to each line of your invoice - again Xero's inbuilt calculator could help with calculating the amounts
Explore Xero's app store to see if you can find an integration that works for your business needs
In an effort to prevent late payment of invoices Credit limits may help in being able to prevent customers raising too much debt with your business
We appreciate the options above don't automate the full process of what you're asking here, and we will share if there's any news. Thanks
Hi everyone, a year on from my last engagement we wanted to provide an update for you all here.
As many will be across we're in the midst of making a lot of iterations and improvements to new invoicing leading up to the retirement of classic invoicing in September (2024).
We have a fair amount of work lined up in the teams schedule over the coming months and to give an indication there isn't any committed plans around a function to add interest to invoices.
That said, we do have a team that have picked up and are considering how we might solve this with the technology in new invoicing - It's early days on this yet, but I'll share if there's any progress on this for you all here.
In the meantime, as has been shared by others over time there are a few ways you could accomplish this…
I'd like to propose that Xero develop a built-in feature for charging interest on overdue customer accounts that doesn't require creating sales invoices.
Current Limitation:
Currently, the only way to charge interest on overdue accounts is by creating an invoice, which records the interest as sales revenue. This creates accounting challenges because:
- Interest on overdue accounts is not sales revenue from our core business operations
It should ideally be classified as "Other Income" or "Finance Income"
- This affects the accuracy of sales reporting and financial analysis
- It requires workarounds or third-party apps from the Xero App Store (at additional cost)
Proposed Solution:
A dedicated interest charging feature that:
- Automatically calculates interest on overdue invoices based on user-defined rates and terms
- Posts interest charges directly to an "Interest Income" or "Other Income" account
- Maintains a clear audit trail linking interest charges to specific overdue invoices
- Allows customization of interest calculation methods (simple vs. compound, daily/monthly rates)
- Can generate separate interest statements or add interest to customer statements
Why This Matters:
Interest charging functionality is a standard feature in many accounting systems, and having to rely on manual invoicing or paid third-party apps for such a fundamental business need feels like a gap in Xero's core functionality.
This feature would benefit many businesses that need to manage late payments while maintaining accurate financial categorization.
Would love to hear if others in the community share this need and any thoughts from the Xero team on potential development of this feature.
MICHAEL JOHN SMITH
supported this idea
·
I'd like to propose that Xero develop a built-in feature for charging interest on overdue customer accounts that doesn't require creating sales invoices.
Current Limitation:
Currently, the only way to charge interest on overdue accounts is by creating an invoice, which records the interest as sales revenue. This creates accounting challenges because:
- Interest on overdue accounts is not sales revenue from our core business operations
It should ideally be classified as "Other Income" or "Finance Income"
- This affects the accuracy of sales reporting and financial analysis
- It requires workarounds or third-party apps from the Xero App Store (at additional cost)
Proposed Solution:
A dedicated interest charging feature that:
- Automatically calculates interest on overdue invoices based on user-defined rates and terms
- Posts interest charges directly to an "Interest Income" or "Other Income" account
- Maintains a clear audit trail linking interest charges to specific overdue invoices
- Allows customization of interest calculation methods (simple vs. compound, daily/monthly rates)
- Can generate separate interest statements or add interest to customer statements
Why This Matters:
Interest charging functionality is a standard feature in many accounting systems, and having to rely on manual invoicing or paid third-party apps for such a fundamental business need feels like a gap in Xero's core functionality.
This feature would benefit many businesses that need to manage late payments while maintaining accurate financial categorization.
Would love to hear if others in the community share this need and any thoughts from the Xero team on potential development of this feature.