Calculating Finance Charges
You can calculate finance charges against past due debit items for each customer or site when you generate dunning letters or statements. Finance charges are calculated based on the remaining amount due of open and past due debit items, and include credit items as of the dunning or statement date.
Note: You can calculate finance charges without actually generating statements by using statement sites. To do this, assign an appropriate statement cycle to your customer level profile, but set the Send Statements option to No and the Calculate Finance Charges to Yes for the customer sites.
Finance charges are calculated from the last time they were computed for each customer. For example, you usually calculate finance charges for all of your customers on a monthly basis. If you last calculated finance charges on March 31, 1993 and you calculated it on May 31, 1993, Receivables calculates finance charges from March 31 to May 31.
For each customer or site, you can specify the interest rate for each currency, the number of days to which your interest rate refers, and the number of receipt grace days.
Accrue Finance Charges
To collect finance charges from your customers, define Receivables to accrue interest for past due items. Accrued interest updates the amount due remaining for the past due debit item. See: Accruing Finance Charges.
Adjust Finance Charge Calculations Based on Receipt Grace Days
Receivables looks at the number of receipt grace days when determining the Number of Days Late for an open debit item. Receipt grace days extend the due dates for outstanding debit items when calculating finance charges and sending dunning letters. You specify Receipt Grace Days when defining your customer profile classes. See: Defining Customer Profile Classes. For dunning letters to include grace days, check the Use Grace Days check box in the Dunning Letter Sets window. See: Creating Dunning Letter Sets.
Assign Finance Charge Limits and Interest Rates by Currency
For each currency you define for your customer's profile class, you can determine the interest rate, maximum interest charge for each invoice, and the minimum customer and invoice balance that must be exceeded before you will calculate finance charges. These values, along with your customer's past due balance, determine the amount of finance charges. See: Defining Customer Profile Classes.
Calculate Finance Charges for Disputed Items
You can choose to include items in dispute when calculating finance charges by checking the Charge Finance on Disputed Items check box in the Print Statements window. You can mark an item 'In Dispute' in either the Transaction or the Customer Calls window. See: Placing an Item in Dispute.
Compound Finance Charges
Oracle Receivables lets you compound finance charges since the last time finance charges were calculated. Finance charges are calculated on the remaining amount due of the past due debit item and then added to any previously calculated finance charges. See: Compounding Finance Charges.
Display Finance Charges on Statements and Dunning Letters
When defining your Dunning Letter sets, choose to calculate and display finance charges on your dunning letters by checking the Finance Charges check box. See: Creating Dunning Letter Sets.
When printing your statements, choose to calculate and display finance charges by checking the Calculate Finance Charges check box. See: Printing Statements.
Exclude Specific Debit Items From Finance Charges
If you normally charge finance charges for your customers' past due debit items, but you want to exclude a specific debit item from finance charges, choose No in the Finance Charges field of the Transaction window for that item.
See Also
Preparing Receivables for Accruing and Compounding Finance Charges
Setting Up Receivables to Calculate Finance Charges
Determining the Past Due Amount
Accruing Finance Charges
Compounding Finance Charges
