Charges and Interest
Charges and Interest
You can levy charges and interest for dunning notices and print them out on the dunning notices. The amounts are not posted.
You determine the amount of dunning charges separately per dunning procedure, currency, and dunning level. You can specify the dunning charges either as an amount or a percentage rate. You can also stagger the dunning charges by dunning amount (see the figure below).
Dunning Charges
Dunning Charges |
||||
Dunning Procedure |
0001 |
|||
Name |
4-Level Dunning Procedure | |||
Dunning Level |
From dunning amount |
Dunning charge |
Dunning charge % | |
1 |
100.00 |
2.00 |
DM |
|
1 |
1000.00 |
0.3 | ||
1 |
5000.00 |
0.3 | ||
2 |
100.00 |
3.00 |
DM |
|
2 |
1000.00 |
0.4 | ||
2 |
5000.00 |
0.4 | ||
3 |
100.00 |
4.00 |
DM |
|
3 |
1000.00 |
0.5 | ||
3 |
5000.00 |
0.5 | ||
4 |
100.00 |
5.00 |
DM |
|
4 |
1000.00 |
0.6 | ||
4 |
5000.00 |
0.6 | ||
The dunning program determines the dunning charges for each currency: If you posted to an account in different currencies, the program determines the amount to be dunned and the charges in local currency. If all the open items in an account were posted in the same currency, the program uses this currency. This can be the local or a foreign currency.
The charges must be defined in the currencies that the dunning program determines. Otherwise, no charges are printed in the dunning notice. If you only process business transactions with customers in a foreign currency, you should also enter the charges in this foreign currency. Otherwise, the customer is not billed for any charges during dunning.
You define whether interest is to be calculated for the individual levels of a dunning procedure (see
Dunning Levels and Days in Arrears). Interest is generally calculated for higher dunning levels in order to render the dunning notice more insistent.For the interest calculation, you can specify an interest indicator in the master record of the customer/vendor and per dunning procedure (see
Dunning Levels and Days in Arrears). The specification in the master record has higher priority.The interest rates valid on the dunning date are used for the interest calculation. The interest is always determined and printed out in the currency of the item. Since, generally speaking, interest is not calculated for small dunning amounts, you can make the interest calculation dependent on minimum amounts. You enter this separately per dunning level in local currency and/or foreign currency (see
Minimum Amounts and Dunning Level Determination). If no entry exists in foreign currency, the dunning program uses the entry in local currency.If you have defined rounding rules for the currency, the interest is rounded according to these rules. For more information about the rounding rules, see the
Implementation Guide for Financial Accounting.Define your interest rates for every interest indicator. You can define a validity date for the interest rates and enter interest rates separately for every currency and depending on the credit/debit balance.