Understanding Delinquency Fee Generation

As part of the collection process, you can generate and approve delinquency fees. These fees are finance charges that you can assess on past-due open invoices or invoices that have been paid late.

You create delinquency fee records by running the Generate Delinquency Fees version of the Credit Analysis Refresh program (R03B525). This version has processing options set for generating delinquency fees. You can run this version in proof or final mode.

When you generate delinquency fees, the system:

• Compares the invoice due date with the effective date of the policy to determine which policy instruction to use when retrieving the rate for calculating the late fee.

  If the invoice is paid, the system uses the G/L date on the receipt to calculate the number of days paid late:

  Days Paid Late = The difference between the receipt G/L date and the age as of date

• Uses aging begin days and aging end days in the policy to determine the number of days past the invoice due date (plus grace days, if applicable) to start generating the fee, and the rate and flat fee to use for fee calculations.

  If the invoice is unpaid when subsequent fees are generated, the system uses the last fee date (LFCJ) from the invoice record, in conjunction with the aging begin days, to determine the start date for generating the fee. The system does not use grace days for subsequent fees.

• Uses the policy to determine whether to calculate the fee on open amounts, paid late amounts, or fees previously generated, such as a compound fee.

• Uses the policy to determine whether to calculate the fee based on the annual percentage rate, a flat amount, or both.

• Prorates fees that were calculated using the annual percentage rate by day using this formula:

  ((annual percentage rate/YYY) x .01) x invoice amount x number of days late

  YYY = 365 days (or number of days in a year)

• Generates one fee per customer and currency for all eligible invoices.

• Prints the A/R Delinquency Fee Journal (R03B22).

If you run this program in proof mode, the system produces a Finance Charge Journal that details the invoices selected for a fee and the amount of the fee that are generated when the program is run in final mode.

When you run the program in final mode, the system:

• Creates a delinquency fee document (document type RF) in the F03B11 table for the total amount of all fees generated for all eligible invoices for the customer.

• Creates a record in the A/R Fee Journal History (F03B22) and A/R Fee Journal History Detail (F03B23) tables.

• Updates the Last Fee Date (LFCJ) field in the F03B11 and Receipts Detail (F03B14) tables.

After you generate fee invoice records, you must post them. When you post fees, the system generates a record in the Account Ledger table (F0911) using the automatic accounting instruction (AAI) items RFC and RFD to determine the revenue account and receivables trade account to use.

If you select the Collection Manager Approval Required option in the policy, the collection manager must approve each fee before the system generates it for the customer. The system sends workflow messages to the collection manager that is defined in the customer record. The collection manager can access the Work With Delinquency Fee form from these messages to approve or reject the fees.