| Field | Description |
|---|
| Charge Interest
|
If you mark this field, the current interest charge/reminder principle can be used for calculation of interest charges on customers.
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| Interest Charge Basis
|
If you mark this field, the current interest charge/reminder principle can be used for calculation of interest charges on customers.
In this field, you can select the interest basis to be used in the current interest charge/reminder principle. You can choose between three calculation principles, namely “Open,” “Closed,” or “Open and Closed.”
The difference between these three principles can be outlined using the following example:
First consider that the interest charge calculation principle “EOM” is used and that the annual interest charge is 24 percent.
The table below forms the basis for the following examples:
| Date
|
Activity
|
Entry
|
Remainder
|
| January 1st
|
Invoice due
|
USD 10.000
|
USD 10.000
|
| February 1st
|
Payment 1
|
USD -3.000
|
USD 7.000
|
| March 1st
|
Interest Charge 1
|
(*)
|
(*)
|
| April 1st
|
Payment 2
|
USD -7.000
|
USD 0
|
| May 1st
|
Interest Charge 2
|
(**)
|
(**)
|
- Open entries — Interest charge calculation is only performed on entries for which payment has been made. “Payment 1” on February 1st has covered a part of the amount due, USD 10.000, meaning that the remainder of USD 7.000 is open on the current entry. The interest charge on this entry therefore has to be calculated on USD 7.000 EOM over 59 days (Jan. 1st to Feb. 28th). The interest charge is determined using the following calculation:
(59/365) * (24/100) * USD 7.000 = USD 271,56.
The interest charge of USD 271,56 can now be added to the remainder amount of USD 7.000, resulting in a new remainder of USD 7.271.56 (“Payment 2”).
Once the second payment has taken place, the entry is closed and “Interest Charge 2” is therefore USD 0,00.
- Closed entries — Interest charge calculation is only performed on entries for which payment has been made, but where the payment has possibly been made after the due date on the entry. “Interest Charge 1” on March 1st shows that the entry has not been closed yet, meaning that the interest charge at this point in time is USD 0,00.
“Interest Charge 2” on May 1st shows that the entry has been closed and the interest charge on the entry is therefore calculated on USD 10.000 over 31 days (Jan. 1st to Jan. 31st) plus on USD 7.000 over 59 days (Feb. 1st to Mar. 31st). The interest charge is determined using the following calculation:
(31/365) * (24/100) * USD 10.000 + (59/365) * (24/100) * USD 7.000 = USD 475,40.
- Open and closed entries — Interest charge calculation is performed on both open and closed entries. “Interest Charge 1” on March 1st shows that interest charge is calculated on USD 10.000 over 31 days (Jan. 1st to Jan. 31st) plus on USD 7.000 over 28 days (Feb. 1st to Feb. 28th). The interest charge is determined using the following calculation:
(31/365) * (24/100) * USD 10.000 + (28/365) * (24/100) * USD 7.000 = USD 332,71.
The interest charge of USD 332,71 can now be added to the remainder amount of USD 7.000, resulting in a new remainder of USD 7.332,71 (“Payment 2”).
“Interest Charge 2” on May 1st shows that the interest charge is calculated on USD 7.000 over 31 days (Mar. 1st to Mar. 31st) and is determined using the following calculation:
(31/365) * (24/100) * USD 7.000 = USD 142,68.
If you want to calculate interest on the interest charge determined earlier, this charge will have to be added to the remainder amount resulting in the following calculation:
(31/365) * 24/100) * USD 332,71 = USD 6,78.
|
| Net/EOM
|
In this field, you can choose between the two interest charge calculation principles “Net” and “EOM.”
“Net” results in an interest charge calculation using the specified percentage in the field “Percentage p.a..” The calculation is made no matter how long each entry has been due for payment.
“EOM” results in an interest charge calculation for the number of days that each entry has been due for payment. For each day, an interest charge of 1/365 of the specified percentage in the field “Percentage p.a.” is calculated. If an earlier interest charge calculation has been made on an entry, the interest charge is only calculated from the date of the last interest charge calculation.
The difference between these two principles can be outlined using the following example:
The balance due on June 1st is USD 1,000.00. Consider that interest charge has only been calculated on the specified date since the due date June 1st. Thus when performing the interest charge calculation on August 1st, no interest charges have been calculated on June 15th and on July 1st.
| Date
|
June 15
|
July 1st
|
August 1st
|
| Net 2%
|
20.00
|
20.00
|
20.00
|
| EOM 24%
|
9.21
|
19.73
|
40.11
|
The table above shows that by selecting the interest calculation principle “Net” a fixed interest charge is calculated no matter for how long the entry has been due for payment. If you select the interest charge calculation principle “EOM” the calculated interest charge depends the number of days that the current entry has been due for payment. Note that the interest charge calculation principle “Net” is only used if the you have selected “Open” in the field “Interest Basis.”
|
| Percentage p.a.
|
In this field, you specify the interest charge percentage per year. If you have selected the interest charge calculation principle “Net,” you have to specify a percentage in this field. If you have selected the principle “EOM,” the percentage specified is the annual interest charge percentage.
|
| Number of Days since Last Interest Charge
|
In this field, you specify the minimum number of days that must pass before making a new interest charge calculation on a customer. This rule, however, only applies if a given interest charge calculation has resulted in an added interest charge to a customer entry.
|
| Minimum Number of Days since Entry Date
|
This field allows you to specify the minimum number of days since entry date that must pass before an interest calculation can be made.
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| Maximum Number of Days since Entry Date
|
This field allows you to specify the maximum number of days that an interest calculation can be made. If the number of days since the entry date exceeds the value specified in this field, the entry will be considered too old and will be excluded from the interest calculation.
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| Minimum Interest Charge
|
In this field, you specify the minimum interest charge amount that can be added to a customer entry. The amount should be specified in the currency selected in the island Currency. The difference between the minimum interest charge and the interest charge limit can be outlined using the following example: Consider that the minimum interest charge is USD 25.00 and the interest charge limit is USD 10.00. This will not affect the customer if the calculated interest charge is USD 8.00. But if the calculated interest charge is USD 15.00, the customer will be charged USD 25.00 in interest.
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| Total Interest Charge Limit
|
In this field, you specify the minimum total interest charge amount that has to be calculated before charging interest on a customer entry. The amount should be specified in the currency selected in the island Currency. Maconomy will not charge interest on a customer entry, if the total interest charge amount is less than the amount specified in this field.
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| Entry Interest Charge Limit
|
In this field, you can specify the minimum interest charge amount that has to be calculated on the specific entry before charging interest on the entry. If the interest charge amount for this specific entry is less than the value of this field, the entry will be excluded from the interest calculation. As result, the entry will not be included in the interest charge selection printout and interest charge notice printout.
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| Payment Terms on Memo
|
In this field, you specify the payment terms that should apply to interest charge notices. The payment terms specified are used for determining the due date on interest charges.
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| Calculate interest from interest and reminder charges
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In this field you can specify whether interest charge selections should also include overdue interest and reminder charges created in previous interest charge or reminder selections, thus resulting in compound interest and interest from reminder charges.
If you mark the field, interest charge selections will calculate interest from overdue interest/reminder charge entries as well as overdue customer entries. If you do not mark the field, only overdue customer entries will be included.
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| Calculate interest from credit memos
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If you mark this field, credit memo selections will also include overdue credit memos. This means that interest will also be generated from credit memos. If you do not mark the field, no interest will be calculated from credit memos.
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| Derive Dimensions from Original Transaction
|
In this field, you can specify how the dimensions on the finance entries that are created when posting the interest journal should be derived. If marked, the finance entries for the interest account will have the dimensions derived from the original transaction (for example, invoice), while the offset finance entries and customer entries will have the dimensions derived from the customer. This happens, however, only if the total interest is not the minimum interest. If unmarked, all entries will derive the dimensions from the customer. By default, the field is unmarked.
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| Calculate Interest from Original Due Date
|
This field controls whether interest notes are being calculated based on the original due date on the customer entry (if marked) or calculated based on the actual due date on the customer entry (if not marked).
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| Default Block Type for Interest Notes
|
A customer entry will be created when posting an interest note with an amount. The block type on the customer entry will be set to the default block type for interest notes.
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