Setting Up Calculated Adjustment Types
You can use an algorithm to calculate an adjustment amount for example if you need to calculate tax on a base amount or calculate a non-sufficient funds charge based on the customer's credit rating. Because the base package algorithm calculates adjustment amounts by calling the rate application, calculated adjustments are sometimes referred to as ratable adjustments.
Ratable Adjustments Appear Deceptively Simple. But, they are not. Calculated adjustments that use the base package algorithm have all the power and flexibility (and complexity) of the rate application. Anything that you can do with a rate can be applied to a calculated adjustment. For examples that illustrate the flexibility of the rate application (and therefore calculated adjustments), refer to Rate Examples.
Adjustment types that indicate they are calculated have a generate adjustment algorithm. The base package algorithm defines the rate schedule used to calculate the adjustment as well as any UOM, TOU or SQI parameters.
To set up calculated adjustment types using the base package generate adjustment algorithm type:
- Define the rate that performs the calculations, including the rate schedule, calculation groups, and calculation rules. Refer to Rates for information.
If you create your own Generate Adjustment algorithm type, you may not need to set up a rate that performs the calculations. It depends on the needs of your algorithm type.
- Create a Generate Adjustment algorithm (refer to Setting Up Algorithms ) that references the base package algorithm type that generates calculated adjustments (see the table above).
- If you want the generation algorithm's calculation lines to provide the distribution codes when the adjustment is posted to the GL, create an Adjustment Financial Transaction algorithm (refer to Setting Up Algorithms ) that references an algorithm type that creates the adjustment's financial transactions using the calculation lines. A parameter of the adjustment financial transaction algorithm determines whether the distribution codes are taken from the adjustment type (AT) or calculation lines (CL). The system comes supplied with several sample algorithm types that create adjustment financial transactions.
- Create an adjustment type where the Adjustment Amount Type is Calculated Amount, the Generate Adjustment event references the generation algorithm created above, and the Adj. Financial Transaction event references the adjustment financial transaction algorithm created above.