Examples of Delinquency Fee Calculations

The base software calculates delinquency fees for open amounts from the due date to the as of date, uses only one interest rate, and calculates delinquency fees on late payments from the due date to the payment date.

When you complete the process for calculating delinquency fees for Czech Republic, the system either uses the 30-day rule method to calculate the delinquency fees or calculates the delinquency fees based on the pending and late payment amounts.

Suppose that you issued an invoice and received payment for the invoice with these factors in effect:

• Invoice amount is 10,000.

• Invoice is issued on August 19.

• 30-day due date is September 18.

• The interest rate in effect on September 18 is 15 percent.

• The interest rate changes to 20 percent on October 1.

• The customer makes these payments:

  • 1000 on September 26.

  • 500 on October 10.

• October 24 is the as of processing date.

The system makes these calculations when you enable the 30-day rule method:

• When the 1000 payment is made on September 26, determines and applies to the 10,000 original invoice amount a daily delinquency fee based on an interest rate of 15 percent and multiplies it by 8 days (September 18 through September 26).

• When the interest rate changes on October 1, determines and applies to the open amount of 9000 a daily delinquency fee based on an interest rate of 15 percent and multiplies it by 4 days (September 27 through September 30).

• When the payment of 500 is made on October 10, determines and applies to the open amount of 9000 a daily delinquency fee based on an interest rate of 20 percent and multiplies it by 10 days (October 1 through October 10).

• When you calculate the delinquency fees on October 24, determines and applies to the open amount of 8,500 a daily delinquency fee based on an interest rate of 20 percent and multiplies it by 14 days (October 10 through October 24).

The system makes these calculations for based on pending amounts and late payments (the 30-day rule method is not enabled):

1. For the 1,000 paid on September 26, determines a daily delinquency fee based on an interest rate of 15 percent and multiplies it by 8 days (September 18 through September 26).

2. For the 500 paid on October 10:

   • Determines a daily delinquency fee based on the interest rate of 15 percent and multiplies it by 12 days (September 18 through September 30).

   • Determines a daily delinquency fee based on the interest rate of 20 percent and multiplies it by 10 days (October 1 through October 10).

3. For the 8,500 open amount up to the as of execution date, October 24:

   • Determines a daily delinquency fee based on the interest rate of 15 percent and multiplies it by 12 days (September 18 through September 30).

   • Determines a daily delinquency fee based on the interest rate of 20 percent and multiplies it by 24 days (October 1 through October 24).