Create Interest Rule
This instruction explains how to set the rules for how interest should be calculated when creating interest invoices based on previously recorded customer invoices and when calculating interest to be stated in payment reminders.
Outcome
An interest rule is defined, regulating among other things, from which date the interest is calculated, the annual interest percentage, minimum amounts, and invoice charge.
You can review the rule in 'Interest Rule. Open' (CRS460).
By connecting an interest rule to each customer in 'Customer. Open' (CRS610/K) or 'Customer. Open Local Exceptions' (MFS610/H) and activating it in the adjacent field, the rule is automatically applied when you select invoices to include in the interest invoicing routine. If the payment reminder rule in 'Payment Reminder Rule. Open' (CRS465) specifies that interest is calculated when creating a payment reminder, the interest rule connected to the customer is used for the calculation.
The interest rule is saved in the parameter table (CSYTAB).
Before you start
Before you start, you must meet these prerequisites:
- Payment terms must be defined in 'Payment Term. Open' (CRS075)
- If VAT is to be calculated, VAT codes must be defined in 'VAT Code. Open' (CRS030).
Parameters to set
| Program ID/Panel | Field | Field description |
|---|---|---|
| (CRS460/E) | Annual interest | The field indicates the annual interest specified as a percentage with two decimal places. |
| (CRS460/E) |
Number of free days |
The field indicates the number of days free of interest after the due date. If the number of days is set to three, for example, invoices whose payments have been up to three days late will not be included in the interest invoicing routine, no matter how large the invoice amount. However, a payment received the fourth day will be included, and interest will then be charged for all four days. |
| (CRS460/E) |
Minimum amount per payment received |
The field indicates the minimum interest amount before interest is charged for a specific late payment. Invoices are listed in the proposal even if the interest amount is lower than the specified minimum amount. However, they are not included in the final interest invoice until the accumulated interest amount equals or exceeds the minimum amount. |
| (CRS460/E) |
Minimum amount per interest invoice |
The field indicates the minimum invoice amount required for an invoice to be included in the interest invoice proposal. |
| (CRS460/E) |
Payment terms |
The field indicates a set of payment terms. The payment terms control how the due date is calculated in relation to the invoice date. |
| (CRS460/E) |
Invoice charge |
The field indicates the interest charge to be debited to the customer. |
| (CRS460/E) |
Interest invoicing method |
The field indicates whether interest is calculated only for invoices paid too late, or for both open invoices (past due as well as not past due) and invoices paid too late. The value specified is proposed when creating an interest invoice proposal in 'Interest Invoice. Open' (ARS660) but can be changed. |
| (CRS460/E) |
Grouping method |
The field indicates whether one interest invoice is produced per combination of payer and customer or one per payer. |
| (CRS460/E) |
Interest credit invoice |
The field indicates whether to calculate interest on credit invoices on the customer's behalf. The amount is then automatically deducted from the payment amount in the interest invoice. |
| (CRS460/E) |
Include previous interest invoice |
The field indicates whether to calculate interest on interest invoices, that is by including previously created interest invoices in the calculation. Note that this may not be legal in all countries. |
| (CRS460/E) |
Calculation base |
The field indicates the date from which interest is charged:
|
| (CRS460/E) |
VAT code charge |
The field indicates the VAT code to use for calculating VAT on invoice charges. |
| (CRS460/E) |
VAT code |
The field indicates the VAT code to use for calculating VAT on the total amount of the interest invoice. |
| (CRS460/E) | Time fence | The field indicates whether the parameter time fence is
considered when creating an interest invoice proposal. The field indicates how many days after payment that a payment transaction can still be included in an interest invoicing proposal in (ARS660). The number of days is calculated from the payment date to the date of the interest invoicing proposal. If there is a value in this field, any older payments will be excluded from the proposal. This functionality is only available when the field 'Int inv method' is set to 1-'Invoices paid too late'. For example, if the time fence is set to 365 days, any late payment that is made 365 days ago, or earlier, is excluded from the interest invoicing proposal. |
| (CRS460/E) | Interest on invoice net amount | The field indicates whether the parameter interest on invoice net amount is
considered when creating an interest invoice proposal in (ARS660). Select the check box to calculate interest on invoice net amount in (ARS660). This means that the interest charge will be based on the net amount of goods or service excluding VAT. If the check box is not selected, the interest charge will be based on the invoice gross amount including VAT. Example:
Base amount for interest invoicing, for which interest is calculated:
Note: If the calculated interest amount is subject to VAT, a VAT code must be specified
in the field 'VAT code - total interest inv
amt' (VTC2) on (CRS460/E).
|
| (CRS460/E) | Daily int rate | This field indicates if the interest is calculated with rates defined by date
in (ARS008) instead of rate in (CRS460). Note: This parameter
is a legal requirement in some countries.
|
Follow these steps
-
Start 'Interest Rule. Open' (CRS460/B).
-
Specify three-position code or identity for the rule. Click .
-
On the E panel, specify a description and a name.
-
Specify the required values: Annual interest, payment terms, interest invoicing method, grouping method, and calculation base.
-
When needed, specify any of the other values described in the table above. Press Enter.