Charging Interest and Surcharges for Installment Plans

If you are using the Item Interest Calculation component, you can calculate interest on the installment plan.

Prerequisites

You have defined the transactions and account assignments for the interest credits arising and the details for calculating interest on installment plans in Customizing for Contract Accounts Receivable and Payable (see Start of the navigation path Business Transactions Next navigation step Deferral and Installment Plans End of the navigation path ).

You also checked which of the following settings you need for your processes, and have made these settings in Customizing.

Interest for Installment Plan Items

You can execute item interest calculation when you create or change an installment plan. In Customizing choose Start of the navigation path Business Transactions Next navigation step Deferral and Installment Plan Define Default Values for Interest on Installment Plans. End of the navigation path Using the Only int. on arrears and the Never int. on arrears indicators, you can specify how the system handles interest:

Calculates interest only for installment payments that are received late
Calculates interest both for installment payments that are received late and those received early
Calculates interest regardless of the reciept date of the installment payments

Using a transaction of your own, you can post interest due as part of installment plan processing statistically or for the G/L. Whether installment plan interest is posted statistically or for the G/L depends on the statistics indicator that you maintain as part of company-code-dependent transaction data.

Interest for Original Items

During clearing, the system can check the installment plan items and, if necessary, calculate interest on the original items that it assigns to the cleared installments based on the settings in clearing control.To have this happen, choose Business Transactions Interest Calculation Item Interest Calculation Activate Additional Functions for Interest Calculation and set the Int. Inst. Plan (interest calculation for clearing of installment plan items) indicator. By setting this indicator, you deactivate all interest calculation functions in installment plan processing. In that case, the system then calculates interest solely for the original receivables that are included in the installment plan.

Or you can set up the calculation of interest on original items by choosing Start of the navigation path Business Transactions Next navigation step Deferral and Installment Plan Define Default Values for Interest on Installment Plan.In theInt.fm Orig.Itm End of the navigation path (interest from original item) field, you can define the interest calculation as follows:

Choosing SPACE ( Interest Not Calculated from Original Items) allows you to overwrite the proposed interest start date, which is also the installment plan start date, when processing the installment plan.
Choosing X ( Interest Calculated from Original Items ) means that the system calculates interest on the original items that the system assigned to the cleared installments based on the settings in clearing control.
Choosing Y( Original Interest Calculation or Original Interest Calculation from Start Date ) means that, if the start date is initial, you can calculate interest for the original items in installment plan processing, or you can choose a date of your own for the start of interest calcuation. If a start date is entered, depending on the settings you made in the Define Categories for Installment Plan IMG activity, the system can also calculate additional interest on original items up to the start date. In the Define Categories for the Installment Plan activity under Business Transactions Deferral and Installment Plan, you specify that you do not want to calculate interest for original items, or if you want to start the interest calculation for items automatically or manually before the start of the interest calculation.

Interest When the Installment Plan Is (Partially) Deactivated

You can control how the system calculates interest if the installment plan is deactivated or partially deactivated.In Customizing choose Business Transactions Deferral and Installment Plan Define Default Values for Installment Plans. Make your setting in the Interest on Arrears field. See the documentation for the field.

For the deactivation reason, you can also specify how you want the system to handle the interest calculated. You can choose to have the interest credited or refunded, either partially or wholely. Or you can specify that the interest posting remains despite the deactivation. In Customizing, choose Business Transactions Deferral and Installment Plans Define Deactivation Reasons for Installment Plan.

Surcharges and Interest on Installment Plans

In addition to interest on installment plans and originial items, you can also:
Calculate inflation surcharges and/or installment plan surcharges, either manually or automatically
Calculate interest for original items up the start date of the installment plan (default value) or up to any other point in time (before the start date of the installment plan)

To do so, choose Start of the navigation path Business Transactions Next navigation step Deferral and Installment Plans Activate Installment Plan Enhancement for Surcharges Interest End of the navigation path and enter the value Xin the InstPlan Enh. (installment plan enhancement) field. If you make that entry, then the system displays the pushbuttons for using this enhancement (see below).The system derives additional specifications, such as the installment plan category and charge category, from the activity Define Categories for Installment Plan under Start of the navigation path Business Transactions Next navigation step Deferral and Installment Plans End of the navigation path .

You make settings for posting any charges you make in the Define Charge Categories for Installment Plan Surcharges activity.

In the Exclude Main or Subtransaction from Surcharges activity, you can exclude certain main transactions and subtransactions from being assessed with surcharges.

Features

You can calculate interest for original items and installment plan items, as well as levy charges and surchages on installment plans.

Activities

Choose one of the following paths and create an installment plan proposal (see Creating Installment Plans):
- Role Process Outstanding Payments(SAP_FI_CA_OUTSTANDING_PAYMENTS) Display Installment Plan/Change Installment Plan.
- SAP menu Account Installment Plan Create/Change
On the Create Installment Plan: Specifiy Installments screen, choose the Calculate Interest pushbutton. A dialog box appears for you to enter the interest parameters.
In the toolbar, choose either the pushbutton Calc. Inst.Plan Surcharge ( Calculate Installment Plan Surcharge ) or Calc. Inflation Surcharge ( Calculate Inflation Surcharge ) to calculate inflation or installment plan surcharges.
Choose the OrigItmIntCalc. ( Original Item Interest Calculation ) pushbutton in the toolbar to calculate interest for original items up the start date of the installment plan (default value) or up to any point in time you choose.
Specify the due date for the interest, and whether you want the interest to be treated as one or more separate interest installments.
To specify the point in time up to which the system should calculate interest on the original items, enter a date in the Orig. Item Interest Calc. To field.
Choose Installment Plan Post . You can use the following options to calculate interest retroactively:
- Only overdue installments are taken into account (in other words, installments that have been paid too late).
- The interest on the installment plan is recalculated. In this case, the interest calculation takes account of individual installments that were paid too early (before the due date), as well as installments that were paid too late. Recalculation may result in an interest credit or an interest receivable.