Can a school charge interest on overdue fees?
Whether a school can charge interest on overdue fees in Achekam, what credit control does instead, and how to add a charge the agreement allows.
By Achekam · · 4 min read · For Education businesses in South Africa, Nigeria, Kenya
By the middle of the second term, the overdue list at most fee-paying schools has a familiar shape: a handful of families who pay late every time, a few who have fallen into real difficulty, and one or two who seem to have decided that fees are optional. The board asks whether the school should charge interest. The bursar wants to know whether the system will do it automatically.
In Achekam, the short answer is no: nothing adds interest to a family's account by itself. This article explains why, what credit control does instead, and how to add a charge properly if your fee agreement allows one.
What the fee agreement says
Before any question of software, there is a question of contract. A school may charge interest or a late-payment fee only if the family agreed to it, which usually means a clause in the enrolment contract or fee agreement that sets out the rate or amount and when it starts.
Read your current agreement and check:
- whether it mentions interest or a late fee at all;
- whether it states a rate or amount, or just "interest at the prescribed rate";
- when interest begins to run, such as from the due date or after a notice;
- whether every family signed the version that contains the clause.
The law in your country also sets limits on what a school may charge and how it must disclose it, and those limits differ between South Africa, Nigeria and Kenya. If the agreement is silent or unclear, take advice before charging anything. A charge with no contractual basis is easily disputed, and it sours the relationship with a family you may be trying to keep.
Credit control reminds and never charges
Achekam's credit control is switched on for new workspaces. Once a day, it e-mails overdue reminders and a monthly statement to customers with a balance, and it records whether each e-mail went out. By default, reminders go at 7, 14 and 30 days overdue, with the invoice PDF attached. It needs working e-mail settings to send anything.
What credit control does not do is charge. It never adds interest, never adds a late fee, and never takes money: Achekam has no saved cards or debit orders, so it cannot collect from a family automatically, and the reminder e-mails carry no pay link.
That is a deliberate line. A reminder is a fact (this invoice is overdue). A charge is a decision, and it needs a person who has checked the agreement, the family's history and any arrangement already made.
Adding a charge as its own invoice
If the agreement allows interest or a late fee and the school decides to apply it, raise it as its own invoice to the family, not as a change to the original fee invoice.
- Work out the charge from the agreement: the overdue amount, the period and the rate or fixed fee.
- Create a draft invoice to the family with one line describing the charge, the fee invoice it relates to and the period it covers.
- Have a second person check the calculation and the clause it relies on.
- Issue the invoice, which takes the next number in the sequence and posts to the ledger.
- Send it with a short letter explaining the charge and how to settle it.
Do the calculation the same way for every family. A charge applied to some accounts and not others, without a recorded reason, invites the complaint that the school is picking on particular parents.
Keeping the charge separate means the original fee stays intact and easy to reconcile, the family can see exactly what was added and why, and the charge can be reversed with a credit note against its own invoice if the board decides to waive it.
Statements and ageing
Two reports keep overdue fees in view.
The ageing. Receivables are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals. Review it every month with the head or the finance committee. The families in the older bands are the ones to speak to personally; the 0-30 band is mostly late habits that reminders will fix.
The statement. Achekam's server produces a customer statement of account as a PDF that can be e-mailed, and the screen says whether it was sent. A statement shows the family every invoice, payment and charge in one place, which is far more persuasive than a series of separate reminders. Healthcare practices use the same tool for patient balances, as described in patient account statements.
Talking to families before it escalates
Interest is a blunt instrument. It rarely makes a struggling family pay sooner, and it can turn a temporary problem into a permanent dispute. An early conversation often does more.
ICAEW's practical helpsheet on chasing debtors and dealing with an unpaid invoice recommends checking your own processes first, chasing informally, and only then choosing next steps. For a school, that translates into:
- a phone call from the bursar when an account first reaches the 31-60 band;
- an offer of an instalment plan for families in genuine difficulty, recorded so that each payment reduces the same fee invoice;
- a formal letter, citing the agreement, only when calls have not worked;
- interest or late fees, where allowed, as a later step rather than the first.
Instalment arrangements are covered in fee instalments and part payments. Before the next board meeting, find your fee agreement, read the interest clause aloud, and decide as a board whether you will ever use it.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
