Enter or Modify Interest Template

Explanation

This activity is used to enter and change interest templates to be used for interest proposals.

Each customer/supplier should be linked to an Interest Template. When a new customer/supplier is entered, a default template is proposed. This can be changed to another template. Interest and fine applies to invoices when payments are delayed. The Interest and Fine at Payment tab of the Interest Templates window specifies the interest and fine rates and the number of tolerance days that will be used to calculate interest and fine. An interest calculation method is specified, which will determine how the interest rate is used to calculate interest for late payments. When a payment is delayed, the rates specified in the interest template connected to that customer/supplier is defaulted to the invoice. 

The information entered in the Interest Invoicing when Due/Paid tab of the Interest Templates window is used to calculate interest for customer payments by creating a separate interest proposal.

When creating an interest invoice/note for a customer, there are three different ways of choosing what applies from the date of interest calculation. One way specifies interest to be calculated as soon as the invoice is fully paid. The calculation is based on a specified number of days compared to the invoice due date.

Another way of calculating interest is based on the invoice due ('as from') date specified for interest calculation. As soon as an invoice has passed its due date, interest is calculated. The reminder date used for calculation is then used as the starting date for any further reminders.

It is also possible to calculate interest for an invoice when a partial payment has been made after the due date. Interest on a partially  paid invoice will be based on the amount paid after the last interest calculation date.

Different methods of calculating interest on an invoice can be combined. If you choose fixed interest rate, the interest rate stays the same for calculating penalty interest. The interest rate can be changed when needed. You can also specify that the interest rate can be increased after a certain number of days.

Modification is only possible for existing interest templates. New interest templates can be entered at any time.

Prerequisites

There are no prerequisites for this activity.

System Effects

As a result of this entry, one or more interest templates with various interest rates can be used within the system.

Window

Interest Templates

Related Window Descriptions

Interest Templates

Procedure

To enter a new interest template:

  1. Open the Interest Templates window and create a new record.
  2. Enter an ID for the template in the Template ID field.
  3. Enter the template description in the Description field.
  4. If interest is not to be calculated, clear the Calculate Interest check box. This means that all invoices linked to the interest template will be exempted from interest proposals.
  5. Select the Default Template for Customer check box if you want this template to be used as default when a new customer is entered. Only one template can be the default template, at any given time.
  6. Select the Default Template for Supplier check box if you want this template to be used as the default when you enter new suppliers. Only one template can be the default template at any given time.

To enter interest calculation terms for customer payment:

  1. In the Interest Method field, select a value from the list.
  2. Enter values in the Min Interest Amount and Min Interest Amount Total fields.
  3. If delayed payment is accepted, enter the number of days in the Accepted Delay field.
  4. If the interest rate is to be increased for non-payment, enter the the values in the Extra % Rate and the Extra % After No of Days fields.
  5. Enter valid-from date and the interest rate that is to be applied from that date in the Interest Rate field. Use a second row if the interest rate changes on more than one date.
  6. Save the information.

To enter calculation terms for interest and fine for payment:

  1. Select the Interest and Fine at Payment Tab.
  2. Enter a method in the Interest Calculation Method field by selecting a value from the list.
  3. Enter the interest rate per month and the fine rate that will be used to calculate interest and fine, in their respective fields.
  4. Enter the number of interest tolerance days and fine tolerance days in their respective fields.
  5. Select the Use Commercial Year check box if the interest rate per month should be calculated based on the commercial year.
  6. Select the Always Reduce Tolerance Days check box if you want the number of tolerance days entered in the Fine Tolerance Days field to be taken into account when calculating interest.
  7. Save the information.