When the Accounts Receivables - Finance Charges function is set to Active, Finance Charges can be levied against outstanding AR balances. This feature allows you to automatically post a flat amount or a percentage finance charge based on a user-defined cycle. The End of Day Post AR Finance Charges procedure posts finance charges using the transaction code specified in the AR > Default Finance Charge Transaction Code application setting. Each finance charge levied appears on the AR account as a separate invoice. On this invoice, the Supplement associated with the finance charge transaction reads - Finance Charges Posted Automatically.
Day of Month: Day of the month when the End of Day procedure should run the AR Post Finance Charge procedure. Values from 1 to 28 are valid.
Amount/Percentage. A flat amount regardless of the outstanding balance. Select Percentage if the finance charge is to be a percentage of the outstanding balance. Only one of these options can be chosen. Specify the amount or percentage in the field to the right.
Days Older Than: Number of days after which an outstanding balance triggers finance charges. For example, if charges older than 30 days incur a finance charge, enter 30 in this field. When the Finance Charge process runs, it will identify outstanding balances older than 30 days. For determining the age of the AR balance, the clock starts on the date when the invoice is created.
Include Unallocated Payments. Includes unallocated payments in the finance charge calculation. When the check box is selected, any unallocated payments are subtracted from the outstanding balance before the finance charge is calculated.
Note:
If the finance charge calculation results in a zero amount or a negative amount, no finance invoice is generated.Parent topic: Accounts Receivables