Penalty interest invoicing

Interest on overdue accounts receivable (AR) debts can be charged on any invoice that is not settled by the due date. The calculation is the number of days overdue by transaction, or days from original invoice date that an invoice has is overdue. The interest charge creates an AR open item.

United Kingdom specifics

The customer cannot impose unfair terms, for example, contractual payment periods are capped at 60 days. Public sector customers must pay within 30 days. If credit terms have not been agreed upon, a payment is late after 30 days.

The law gives the right to charge interest at the Bank of England base rate plus 8%.

Interest is charged on the gross amount of the debt including any element of VAT, but VAT is not paid on this interest. Nor is VAT paid on any debt-recovery costs that are claimed.

How Infor meets the requirement

See Finance charges in Receivables User Guide.