Hello PASC,

Thank you for connecting to the QuickBooks Community! For this situation, you would need to manually add this interest as a line item on the older invoices. Regarding getting the compound interest charge, that would also need to be calculated separately. Please use the steps link below to assist with creating a line item.

1. Go to Lists, then select Item List (for Windows) or Items (for Mac).
2. Select Item then New (for Windows) or plus + (for Mac), then select New Item.
3. Select the type of item you want to create.
4. Fill out the item fields.
5. Use Custom Fields to add your own customized fields.
6. Select Save.

Let me know if you have additional questions. I'm more than happy to help. See you soon. 

@SashaMC  RE: For this situation, you would need to manually add this interest as a line item on the older invoices.

That is not right. Changing your old invoices and adding interest to them is not a correct thing to do. It's a terrible practice. Where do you get ideas like this?

@PASC 

Don't change older invoices to do this.

Instead, interest can be added to the customer's balance using finance charges (which are really invoices) and the finance charge feature built into QuickBooks.

The finance charge feature includes the option to either charge finance charges on just the original invoices or to include past finance charges in the calculation - which is what you want. The option to calculate finance charges including past finance charges is essentially compound interest - interest charged on the prior interest.

Thank you for taking out the time to reply, but your answer did not address my question.

I did find the answer:  QB DESKTOP CANNOT COMPOUND INTEREST, YOU MUST HAVE ENTERPRISE VERSION FOR THAT, SO INTUIT CAN GET $3K A YEAR, INSTEAD OF $1500.

THIS GUY THINKS YOU SHOULD ONLY COMPOUND INTEREST ON CURRENT INVOICES!?????

In QuickBooks Accountant Desktop 2024, you'll need to manually calculate compound interest since it doesn't have a built-in feature for it. Use a spreadsheet or an online calculator, applying the interest rate to the overdue balance based on the compounding frequency.

QBO literally prompted to create an interest charge for overdue invoices. Based on new Legislation here in CA, freelance workers protection act (FWPA), invoices not paid within 30 days are charged a 10% per annum charge until paid. I set it up in QBO, my bookkeeper told me it looked correct, yet it fails to actually tally the interest…wtaf?!

oh QBO you are such a waste of money and time…