Understanding Methods of Calculating Delinquency Fees
The system provides a processing option to enable you to specify whether the system calculates delinquency fees based on the pending amount and the amount of payments that are made after the due date, or based on the open amount (30-day rule method).
The amount of the delinquency fees calculated might be different for each method, depending on whether the interest rate charged increases or decreases from the invoice due date until the invoice is paid in full, and depending on whether the customer makes partial payments.
The system uses these methods of calculating delinquency fees:
Method |
Base amount |
Interest type |
Date from |
Date through |
|---|---|---|---|---|
30 day rule |
Open amounts |
Legal rate |
The latest occurring of the invoice date, shipment date, or delivery date, plus 30 days. |
The earliest occurring of the invoice due date, the as of date, or the date receipt cleared date. Note: A processing option in the Delinquency Fees program determines whether the system uses the receipt cleared date or standard as of processing. |
Late payment |
Paid amount |
Legal or contract rate |
Invoice due date |
Receipt cleared date. Note: A processing option in the Delinquency Fees program determines whether the system uses the receipt cleared date or standard as of processing. |
Open invoices |
Pending amounts |
Legal or contract rate |
Invoice due date |
As of date |
The system supports as of processing for the 30 day rule method. When an invoice is fully or partially paid, the system uses the value from the Cleared/Value Date field to determine the open amount for which to calculate delinquency fees. If no value exists for the Cleared/Value Date field, the system uses the G/L date of the receipt.