How Ajera calculates finance charges

Ajera creates one finance charge invoice for each client’s project that has outstanding invoices (as determined by the options you selected on the Company > Preferences > Billing tab).

Ajera bases the amount of the finance charge on the total outstanding invoice amount as of the finance charge date. Any payments or credits applied after the finance charge date reduce the outstanding amount Ajera uses to calculate finance charges.

Ajera calculates finance charges when:

• the Create finance charges check box is selected for the client in Setup > Clients.
• the total past due balance for a client’s project is more than the minimum balance you specified on the Company > Preferences > Billing tab.

In calculating finance charges, Ajera considers

• an invoice past due when the invoice date plus the grace period days (as specified on the Company > Preferences > Billing tab) is less than the finance charge date.
• the total of outstanding invoices within the grace period for the client/project is more than the minimum balance due (as specified on the Company > Preferences > Billing tab).
• the finance charge amount is greater than the minimum finance charge (as specified on the Company > Preferences > Billing tab). If it is less, Ajera uses that amount instead.  

If there are multiple outstanding invoices for a client’s project, Ajera calculates finance charges for each outstanding invoice and then sums them to create one finance charge for the client/project.

Invoices considered for finance charges

To see invoices that Ajera considers for finance charges, view the Client Invoice Aging report using the following options:

1. From the Reports menu, click Client > Client Invoice Aging.
2. Enter an Aging Cutoff date that equals the finance charge date.
3. Click (Customize) and make the following selections:

• For the Sort Order select Client.
• For the Date Basis, select the Invoice Date.
• Clear the Use drilldown check box.
• Clear the Include finance charges check box.

Finance charge formula

(Days / 365 days) * (Annual Finance Charge Rate) * Invoice outstanding balance 

How Ajera determines the finance charge amount

Ajera determines the number of days using one of the following methods:

• Days past the grace period if no finance charges were created for an outstanding invoice.
• Days since the last finance charge if finance charges were created for an outstanding invoice.

Days past the grace period

Ajera uses the grace period days (as specified on the Company > Preferences > Billing tab) to determine the number of days to use in calculating the finance charge. It calculates the days as the difference between the date of the invoice plus the grace period and the finance charge date entered for the new charges.

Example:

Annual Finance charge rate = 18%

Minimum balance = 100.00

Minimum finance charge = $10.00

Grace period = 30 days

Client 100 and Project A

Invoice date = 6/15/07

Invoice balance outstanding = $1000

Finance charge date = 7/31/07

Days = Finance charge date - (Invoice date + Grace period days) 

7/31/07 - (6/15/07 + 30 days) = 16 days

Finance charge calculation

(16 / 365) * .18 * 1000 = 7.89

Since 7.89 is less than the Minimum finance charge amount of $10 the finance charge invoice will be created for $10.

Days since the last finance charge

To see the last finance charge date for the invoice:

1. Select Manage > Finance Charges > Existing tab.
2. Use (Change View) to see

• finance charges for all dates.
• both paid and unpaid finance charges.
• (optional) finance charges for only a specific client or project.

If finance charges appear on the list, then Ajera calculates the days as the difference between the date of the most recent finance charge and the finance charge date entered for the new charges.  

Example:

Client 200 and Project B

Last finance charge date = 5/31/07

Invoice balance past due = $1500.00

Finance charge date = 7/31/07

Days = Finance charge date – Last Finance charge date

7/31/07 - 5/31/07 = 61 days

Formula for calculating finance charge

(61 / 365) * .18 * 1500 = 45.12