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 Determination of Interest and Charges


You can calculate interest and charges for overdue payments related to a promise to pay.


When a promise to pay is set up, you and the customer can agree on a charge. The system determines the charge automatically, posts it, and adds the charge to the total amount of the promise to pay. You can define the amount of the charge in event 0186. In the standard system, no charge is calculated. (See the documentation for the sample function module FKK_SAMPLE_0186.)

You can calculate interest on the period between the due date of the receivables and the due dates of the promise to pay. For the interest calculation, the system assumes that the installments of the promise to pay will be paid on time and that payments are assigned to the open items with the oldest due date.

You have to enter the interest key to be used for each category. In Customizing for Contract Accounts Receivable and Payable , choose Start of the navigation path Business Transactions Next navigation step Promise to Pay Next navigation step Define Categories End of the navigation path .

If a promise to pay is closed and not classified as broken at that time, there is no change to the interest and charges.

If the promise to pay is classified as broken, depending on the category, you can

  • Retain, reverse, or adjust the interest

  • Retain or reverse the charges

Adjusting the interest means that the system reverses the original interest and instead calculates interest on all items again as follows:

  • Cleared items up to clearing date

  • Open items up to the day of the withdrawal of the promise

If a promise to pay is withdrawn , the same options apply. However, in this case, the treatment of charges and interest is dependent on the withdrawal reason and not on the category of the promise.

If a promise to pay is replaced , charges and interest for the old promise to pay are handled according to the withdrawal reason; the charges and interest of the new promise to pay are handled according to the category selected.

If the same charges are to be levied for the new promise to pay as for the old one, there is no new posting. The charges receivable already posted is automatically added to the new promise.

A similar rule applies if the interest amounts are the same. Since a new interest calculation is not necessary only if the items subject to interest and the periods remain the same, the interest receivable can only be added to the new promise if both the items and the installments remain the same. However, this is an exception when replacing a promise to pay, since in that case only payment data would have changed, which would not require entering a replacement.