Financing fee price brackets and how the fee is calculated

The financing fee is a percentage of the financed amount of an invoice. It is charged when the invoice is financed. The percentage depends on the invoice’s payment term, and you set it in price brackets: one bracket per range of days, each with its own percentage.

Where to set the brackets

1. Open the client at Registry > Clients and go to the Billing tab.

2. On the Financing fee row, press Price Brackets. The Price brackets window opens.

3. Set the percentages in the Timeline view or the Table view, and press Confirm.

Control	What it does
Timeline	A slider along the payment term, headed Adjust financing price. Each handle marks where a bracket ends, and each section between the handles has its own percentage. Turn on Wide view for long terms.
Table	One row per day, from day 0 to the last day, each with a percentage. Days next to each other with the same percentage are saved as one bracket.
No of days and Change days	Set the last day the brackets cover. The most you can set is 365.
30 day price and Re-calculate price	Fill every day with the 30 day percentage divided by 30 and multiplied by the day number, so the percentage grows evenly with the term.
Choose how to calculate the credit fee	Intervals or Actual days, see below.

Changes in one view do not show in the other until you save, so work in one view at a time.

Which days count

The fee is looked up with the number of days between the start date and the due date of the invoice. The start date is the invoice date, unless the client is set to use the purchase date. That choice is on the client’s Financing tab, under Rules: Please choose the date to be used for calculating the credit fee, with the options Invoice date and Purchase date.

How the fee is calculated

Quiddly finds the bracket that contains the number of days and calculates the percentage in one of two ways. The choice Choose how to calculate the credit fee belongs to the client. It never changes how the Timeline and Table views are filled in.

Setting	Percentage of the financed amount
Intervals (the default)	The percentage of the bracket, whatever the number of days within it.
Actual days	The percentage of the bracket divided by the last day of the bracket, multiplied by the actual number of days. The fee grows in proportion to the days, between the ends of the brackets.

On top of that, Quiddly adds base interest when it is switched on for the client (see below): the base interest rate divided by 360 and multiplied by the number of days. With Intervals the days are the last day of the bracket, with Actual days they are the actual days.

Example. A client has the bracket 31 to 60 days at 1.5 percent, and the base interest rate is 4 percent. An invoice has a payment term of 45 days.

Setting	Bracket part	Base interest part	Fee
Intervals	1.5 percent	4 / 360 x 60 = 0.67 percent	2.17 percent
Actual days	1.5 / 60 x 45 = 1.125 percent	4 / 360 x 45 = 0.5 percent	1.625 percent

Base interest

Base interest is added only when both of these are in place:

• The base interest rate for the invoice’s currency is set at Global Settings > Base Interest Rate.
• Financing fee from article price list is ticked in Use Base Interest on the client’s page.

Quiddly uses the rate in force when the fee is created. Changing the rate later does not change fees that were already created, so a fee can differ from a calculation made with a rate that was uploaded afterwards.

Recourse interest uses base interest in the same way, see Recourse and recourse interest.

Terms longer than the last bracket

A payment term that no bracket covers gets no financing fee. There is no bracket that goes on without end.

• When the invoice is financed, the rule engine stops it. The rule engine criterion that validates the financing fee fails when there is no bracket for the term or when the bracket’s percentage is 0. The invoice then cannot be financed, with the message “Invoice cannot be financed due to the invoice financing fee is not set.” See Configure The Rule Engine.
• When the credit time of a financed invoice is extended beyond the last bracket, no extra fee is charged.

Fix it by adding a bracket that starts on the day after the last one, with its own percentage. Do not raise the last day of the existing bracket. With Actual days the daily rate is the percentage divided by the last day of the bracket, so a later last day lowers the daily rate for every invoice priced from that bracket afterwards.

If a shorter payment term is the right answer, shorten the term on the invoice instead. If another criterion in your rule engine also limits the payment term, financing stays blocked until that rule allows the term as well.

Extending the credit time

When you extend the due date of a financed invoice, choose Edit expiry date and tick Recalculate financing fee. This applies to invoices of the product Invoice factoring sell.

1. Quiddly calculates the fee again for the new total term, from the bracket that covers it.

2. It compares the new fee with the fee already charged and charges the difference as an extended financing fee.

No extra fee is charged when:

• the new term falls in a bracket whose percentage is 0, or in no bracket;
• the new fee is not higher than the fee already charged. With Intervals this is the case when the new term falls in a bracket with the same percentage as the original one, for example in the same bracket. With Actual days the fee grows with every day, so an extension inside the same bracket does charge the difference for the extra days.

Your environment can also be set to charge the whole new fee on top of the old one instead of only the difference. Contact Quiddly support if you need that.

When the fee is not what you expected

What you see	Why	What to do
Financing is refused with “financing fee is not set”	No bracket covers the term, or the bracket’s percentage is 0	Add or extend a bracket, or shorten the term
No extra fee after an extension	The new bracket has 0 percent, no bracket, or (with Intervals) the same percentage as the first	Set the percentage of the bracket that covers the new term
The fee is higher or lower than a calculation by the day	Intervals charges the whole bracket percentage, Actual days a share of it	Check the choice Choose how to calculate the credit fee and the start date
The fee differs from your calculation by a small percentage	Base interest at the rate on the day the fee was created	Compare with the base interest rate of that day

For the prices of a new client, see Onboard Client.