Example of Setting Up a Late Charge Policy

This example demonstrates how to set up a late charge policy for the customer Business World. The example includes the setup of late charge documents, the Business World customer profile, and your user-defined settings.

This table summarizes key decisions for this scenario.

Decisions to Consider	In This Example
Which document will record late charges?	Adjustments
What period basis is used for late charge calculations?	Monthly
Which currencies?	US dollar and British pound sterling
Are there exceptions to the general policy?	Yes, for the customer account site and customer transactions

Summary of the Tasks

The calculation of late charges is determined by your late charge policy. The late charge policy comprises the late charge document, Receivables system option settings, and customer profile settings.

1. Define a Late Charges receivables activity..

2. Set Receivables system options for late charges.

3. Set up the Business World customer profile for late charges.

4. Update the customer site and customer transactions for late charges.

Define a Late Charges Receivables Activity

To record late charges as adjustments, define a Receivables activity for late charges:

1. Open the Create Receivables Activity page.

2. Complete the fields, as shown in this table:

   Field	Value
   Name	Name that identifies this Receivables activity as a late charge adjustment.
   Activity Type	Late Charges
   Activity GL Account	General ledger account for late charges.

Set Receivables System Options for Late Charges

Set Receivables system options for late charges:

1. Open the Create or Edit Receivables System Options page.

2. Complete the fields in the Late Charges section of the Billing and Revenue tab, as shown in this table:

   Field	Value
   Assess late charges	Enable this option.
   Interest Charge Activity	Name of the Late Charges receivables activity that you previously defined.

Set Up the Customer Profile

Set up the customer profile for Business World for late charges:

1. Open the Create Receivables Customer Profile Class page.

2. Complete the general required fields for the profile class.

3. Click the Credit Limits and Late Charges tab.

4. Complete the fields in the Late Charges section, as shown in this table:

   Field	Value
   Enable late charges	Enable this option.
   Late Charge Calculation Method	Overdue Invoices and Late Payments
   Charge Reductions	Credit Items
   Late Charge Type	Adjustment
   Interest Calculation Formula	Compound
   Interest Calculation Period	Monthly
   Receipt Grace Days	2
   Interest Days Period	30
   Assess Late Charges Once	No

5. In the Currency Settings section, click the Add icon.

6. Complete the fields, as shown in this table:

   Field	Value
   Currency	USD (US Dollar)
   Minimum Invoice Balance Overdue Type	Percent
   Minimum Invoice Balance Overdue Percent	15
   Minimum Customer Balance Overdue Type	Percent
   Minimum Customer Balance Overdue Percent	15
   Interest Charge Type	Fixed Rate
   Interest Charge Rate	9

7. Repeat steps 5 and 6 for British pound sterling (GBP).

8. Assign this profile class to the Business World bill-to site.

Update the Customer Site and Transactions

Update the Business World customer site and transactions for late charges:

1. Open the Statement, Dunning, and Late Charges Site Profiles Used profile option.

2. Set the profile option to No.

   By setting this profile option to No, the Create Late Charges program uses the late charge policy assigned to the bill-to site.

3. Open the Create Transaction Type page and create a transaction type that excludes invoices from late charges.

4. Complete the fields, as shown in this table:

   Field	Value
   Name	Late charges exemption
   Transaction Class	Invoice
   Transaction Status	Open
   Exclude from late charges calculation	Enable this option.

5. Assign this transaction type to the applicable invoice transactions.