Skip to main content
View our latest release notes here

Search

Enable and Configure Penalty Interest

Daniel Martin
  • Updated

Overview

Penalty Interest allows your firm to automatically calculate interest on overdue accounts receivable (ARs) using consistent, practice-wide rules.

In OneLaw, Penalty Interest is off by default. Firm administrators must enable it and configure how it behaves before it can be applied anywhere in the system.

This article explains how to enable Penalty Interest and configure each available setting to ensure the feature behaves as intended across your firm.

Note This article covers enablement and configuration only. Applying Penalty Interest to ARs, running bulk processes, and using Debtors are covered in later articles.

Who can do this

  • System administrators.

Before you start

Before enabling Penalty Interest, make sure you understand the impact of each configuration choice:

  • Penalty Interest settings apply practice-wide.
  • Penalty Interest is always compounding. This is not configurable.
  • Configuration choices directly affect AR balances, reporting, and downstream workflows.

Note If you are unsure how a setting will affect existing or future ARs, review this article fully before enabling the feature.

Steps

  1. Open Penalty Interest settings

    • In OneLaw, go to the Administration tab on the navigation ribbon.
    • Click Practice Settings.

      OneLaw application window showing the Administration tab selected on the navigation ribbon, with Practice Settings highlighted under System Settings.
    • In the Billing, Invoices, Credit notes & Accounts Rendered section, select the Penalty Interest Settings cog.

      Practice Settings screen displaying the Billing, Invoices, Credit Notes & Accounts Rendered section, with the Penalty interest settings option indicated by a cog icon on the right-hand side.
      Result: The Penalty Interest Settings window will display

      Penalty Interest Settings window showing the option to allow penalty interest on outstanding ARs, the interest rate charged per annum, minimum AR amount and age thresholds, transaction code and description fields, default narration, and the option to automatically create a credit control note.

  2. Enable Penalty Interest

    • Select Allow penalty interest on outstanding ARs.

      Penalty Interest remains inactive across OneLaw until this setting is enabled.

  3. Configure interest calculation rules

    Configure how and when interest can be calculated on eligible ARs when Penalty Interest is applied:

    • Enter the Penalty Interest to be charged at rate.
      • The rate is expressed per annum.
      • This rate is used for all Penalty Interest calculations.
      • Interest always compounds; you cannot switch to simple interest.

    Note
    This is the firm’s default Penalty Interest rate. In some cases, a different rate may be applied at a Party or Matter level. Those rates are managed outside these settings.

    • Set the Minimum AR amount.
      • Penalty Interest can be charged only on ARs with an invoiced amount more than this value.
      • The amount is inclusive of GST.
      • You can enter 0 to include all ARs regardless of value.
    • Set the Minimum AR age.
      • Penalty Interest can be charged only on ARs that are more than this number of days old.

  4. Configure accounting and narration details

    • Enter the Code used for Penalty Interest transactions. This will default to PI but can be edited to meet your firms' requirements.
    • Enter the Description shown for Penalty Interest entries. This will default to Penalty Interest but can be edited to meet your firms' requirements.
    • Enter the Default narration.

    These values are used consistently wherever Penalty Interest is generated.

    Note
    If your firm already has an Expense Type using the same code or name, OneLaw will display a warning that a duplicate has been detected. The duplication must be resolved before the settings can be saved.

    Note
    If your firm is integrated with Xero, OneLaw allows Penalty Interest to be mapped to a general ledger account in Xero. This configuration is managed as part of the Xero integration and is covered in a separate article.

  5. Configure credit control behaviour

    • Select whether a credit control note is created by default when Penalty Interest is applied.

    This setting controls whether a note is automatically added as part of the Penalty Interest process.

    Note Credit control notes can affect how AR activity is reviewed by staff. Ensure this setting aligns with your firm’s internal credit control practices.

  6. Save your configuration

    • Review all settings carefully.
    • Select Save & Close.

    Penalty Interest is now enabled and configured for the entire firm.

Result

Penalty Interest is enabled at a practice level and configured according to your firm’s rules.

Once enabled, Penalty Interest can be applied to eligible ARs using OneLaw’s available workflows, which are covered in separate articles.

Recommended articles

Related to