Interest on Overdue Items 

Use

You can employ standard interest calculation functions to calculate and charge interest on overdue duplicata items.

Features

The duplicata contains information on the interest amount the customer is charged for each day that the payment is overdue. You can customize a reference interest rate per year and an optional surcharge. The system calculates interest by applying the interest rate which is valid at the item due date; it then calculates the daily interest amount to be paid by the overdue customer, per item, by dividing the annual interest rate by 360.

Activities

Customizing

The following standard Customizing activities are relevant under Financial Accounting ® Accounts Receivable and Accounts Payable ® Business Transactions ® Interest Calculation ®

·        Interest Calculation Global Settings ® Define Interest Calculation Types

·        Define Reference Interest Rates

·        Define Time-Based Terms

·        Enter Interest Values

Alternatively, you can specify tolerance days for arrears; to customize this, choose Interest Calculation Global Settings ® Prepare Interest on Arrears Calculation. 

In Brazil, it is common to print an interest rate on the boleto, which applies in the case of an overdue payment. For the boleto print program (see Boleto Creation) to access this information, be sure to make settings in the activities above, Define Reference Interest Rates and Define Time-Based Terms, in addition to setting the indicator listed under Master Data.

Master Data

If you want to charge a customer for overdue items, enter an appropriate interest calculation indicator in the customer master record (under Company Code Data, on Account management tab).

Periodic Processing

If a customer pays a boleto after the due date, the bank calculates and collects interest. It then includes any interest amounts in the return file it sends to the company – per item. You import this file and, if an item is overdue, the system calculates the expected interest and compares it against any interest the bank has collected. If the difference exceeds a given threshold, the system displays a warning. You can customize thresholds per customer under Financial Accounting ® Accounts Receivable and Accounts Payable ® Business Transactions ® Incoming Payments ® Manual Incoming Payments ® Define Tolerances (Customers). Make sure you enter the threshold amount in the Gain/Adjust discount by field (Maximum Discount Adjust. for Gain from Payment Differences; field SKNTS).