Related topics
Creating individual interest invoicing routines for specific debtors enables you to optimize the handling of issuing interest invoices to debtors who have paid their debts too late.
The interest invoice proposal functionality allows you to handle all details related to interest invoicing routines in an easy way. Most information driving an interest invoice routine is contained in the interest rule which must be set up first and assigned to the debtor.
This panel presents an overview of all existing interest invoice proposals. After the interest proposal is updated it disappears from the view. The invoices created and updated can be viewed via the Interest invoicing history routine.
The interest invoicing function
If an Interest rule is entered on the Business partner file maintenance, A/R basic data panel for a business partner, it denotes that interest is (is to be) charged for the business partners’s overdue documents amount. The interest rule defines the interest amount calculation method as well as some interest invoice related data.
Calculation:
- Interest handling
- Interest calculation
- Year base
- Grace days
- Base % deviation
Interest invoice data:
- Stop code
- Interest text code
- Terms of payments
- VAT handling code
- Cost centre document level
The interest rates that should be charged are defined for the business partner’s country in the Work with countries file.
It is possible to exclude a document from interest calculation by assigning an interest stop code to the document in the Work with A/R invoices routine. It is also possible to define a document type in the Document types table in a way that excludes transactions entered with this document type from interest calculation.
Interest rates
The Work with countries file holds the interest rates and the interest year base, deciding whether interest is calculated based on a year with 360 days, or a year with 365 (366) days. Note: Interest year base entered in Work with countries can be overwritten by a value defined for the applied Interest rule. The interest rate entered in Work with countries can be adjusted (decreased/increased) with the deviation percentage defined for the applied Interest rule.
The Work with currencies program holds the values for minimum interest amount total and minimum interest amount per line. The Interest invoice texts file holds the texts in the different languages.
It is defined per document type in Work with document types whether or not interest should be calculated on open items, and whether the document should be handled as an invoice or a payment at interest calculation.
The basis for separate interest calculations
When you calculate interest for an invoice the total invoice amount is split into two parts:
- Remaining amount
- Settled amount
These are the basis for separate interest calculations, and they are independently controlled on document type level by values you can define in Interest/Paid and Interest/Open items.
Interest based on Remaining amount is charged for the non-settled amount of the invoice at the calculation day and for the time period starting from the day after the invoice due date and ending with the interest calculation date.
Note: This interest will not be calculated if the document type of the invoice has the Interest/Open item field value set to NO in Work with document types.
Interest based on Settled amount consists of interest amounts charged for each payment that partly settle the invoice after its due date. The period for the interest amount calculation starts with the day after the invoice due date or after the last updated interest calculation date. It ends with the payment date or the calculation date if the Interest handling code in the Interest rule file is 2 or 3 and the payment date is after the calculation date.
Note: This interest will not be calculated if the document type for the invoice has the Interest/Paid value set to 0 in Work with document types.
The calculation of interest can be per started day, started week, started month or be a fixed rate. The calculation per started day can be done based on a year with 360 or 365 (366) days, but all other methods use 365 (366) days.
Automatic issuing
The first interest invoice that is issued for a document will be for the period between the day after due date until payment or calculation date. If interest is charged per started week or month, the system calculates the number of started periods for this time span. If interest is issued at regular intervals before payment is done, the next interest invoice will be for the time period from the day after last calculation date (if charged per day) or from the day after the ending date of the last period for which interest was charged with the first interest invoice (if charged per week or month).
The exchange rate used when calculating the interest amount is according to the time period and level defined in the A/R control file, based on the calculation date. If documents are inactivated and activated during maintenance of the proposal, the exchange rate will be recalculated based on the actual date. If the exchange rate is missing, an error message will be printed on the control list, and you will not be able to update and print the interest transactions.
The process steps
The processing of interest invoices is done in three steps:
- The system makes a proposal of interest invoices to be issued according to your selections. A control list can at all times be printed. At this stage, the interest invoices are preliminary, changes are made in the next step.
- You make changes in the proposal, and print new control lists until you are satisfied with the proposal.
- The interest invoices are issued and printed, and the A/R and G/L are updated with the new transactions.
Depending on where in the interest calculation process you are, you mark one of the alternatives on the panel. When you start the routine you can only choose Add. Note: If a proposal already exists, you can choose Change, Print invoices and update or Delete, but not Add.
Options
| Change | Note: This option cannot be used to change the selection criteria defined for a proposal. If necessary, you would have to delete the proposal and create a new one.
Select this option to:
|
| Delete | Select this option to delete a record from the proposal. |
| Display | Select this option to:
|
| Original selection | Select this option to view the selection criteria and specification values entered when the interest invoice proposal was originally created. Note that once you have created a proposal, the entries cannot be changed. If necessary, you would have to delete the proposal and create a new one. |
| Print control list | Select this option to print a control list in order to analyse the interest invoice proposal. You can print a complete or partial list as many times as you wish. The entered selection criteria and specification values are saved in the Template file and defaulted the next time you want to print a control list. Also note that printing a control list does not change the proposal status. |
| Print invoices and update | Select this option if the interest invoices included in the proposal should be printed and posted (Interest invoices will be updated in the A/R transactions and General Ledger files). When this option is selected a dedicated update panel is displayed and the user is prompted to complete certain data required for the transactions’ update. |
Selection fields
- Proposal no
- This column displays the number of the interest invoice proposal.
- Description
- This column displays the description of the interest invoice proposal.
- Status
- This column denotes the status of the proposal. Valid statuses are CREATED and CHANGED.
- Crt date
- This column displays the date when the proposal was created.
- Inv
- This column displays the number of the invoice documents which will be created/updated in the transaction file when the proposal is updated. The number of interest invoices included in the proposal is displayed under the No of interest invoices column, which is activated via the Edit columns feature.
Example: At proposal creation, three invoices (“proposed invoices”) are created/proposed and all three are created as “active invoices”. In this case, 3 is displayed under both this Inv column and the No of interest invoices column. If you manually inactivate one of the invoices, then 2 will be displayed under this Inv column, and 3 will be displayed under the No of interest invoices column.
- Last user
- This column displays the User ID of the person who last maintained the proposal.
- Calculation date
- This column displays the calculation date indicated at Interest invoicing proposal creation.
- Created by user
- This column displays the User ID of the person who created the proposal.
- No of interest invoices
- This column lists the number of interest invoices for the proposal.