> For the complete documentation index, see [llms.txt](https://docs.rmhpos.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.rmhpos.com/store-manager/configure-pos-and-store-manager/accounts-receivable/setting-up-finance-charges.md). # Finance charges You have the option of applying finance charges to AR accounts. 1. Click **Setup**. 2. Expand **Customer**. 3. Expand **Account Receivables**. 4. Click **Finance Charges**. 5. Do one of the following: * To add a new finance charge, click **New**. * To edit an existing finance charge, select it and click **Edit**. * To copy an existing finance charge, select it and click **Copy**. 6. Enter information about the finance charge.

Field	Description
Code	A unique code that identifies the finance charge.
Name	The name of the finance charge.
Inactive	Select this option to deactivate the finance charge.
Apply Charges on Fin. Charges	Select this option if you want Store Manager to include any previously unpaid finance charges, along with the current outstanding balance, when calculating the current billing cycle's finance charges. In some states is it against the law to include any previously unpaid finance charges when calculating new finance charges. Check your state laws before selecting this option.
Min. Finance Charges	Enter the minimum amount that the AR account holder must pay if there is an outstanding account balance. Store Manager compares this amount with the computed finance charges for the current billing cycle and charges the higher amount.
Annual Interest Rate	Enter the annual finance rate for AR accounts. Store Manager uses this rate to calculate finance chargers for each billing cycle for accounts that have an outstanding account balance. The finance charge on each AR account is calculated as: `(daily interest rate) * (days overdue) * (chargeable balance)` Where: `(daily interest rate)` = (annual interest rate / 100) / 365 `(days overdue)` = either the number of days overdue or the number of days since the last closing of the billing cycle. Store Manager uses the lower number for the calculation. `(chargeable balance)` = zero if paid in full before the grace period ends or the average daily account balance during the billing cycle. Example: The AR account holder is charged an 18% annual finance rate. There are two unpaid balances: AR1 is $140 which is 15 days overdue and AR2 $352 which is 45 days overdue. (daily interest rate) = (18% / 100) / 365 = 0.000493 The finance charge for AR1 is (0.000493) * (15) * (140) = 1.035 The finance charge for AR2 is (0.000493) * (45) * (352) = 5.206 The total finance charges are 1.035 + 5.206 = 6.241, rounded to 6.24.

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