Period Charge Not Based on Balancing 

Purpose

It is possible to levy account maintenance charges in two different ways:

·        Based on the defined balancing period

·        Based on when they are due

The system uses the whole period to calculate the charge based on the balancing period. If the charge is levied based on when it is due, the amount is related to the actual time period involved.

You can levy function of charges when they are due for opening and closing accounts, and when you change the balancing data.

You can define this charge for new accounts and also for existing account maintenance charges.

Function Description

An account maintenance charge is generally due on a monthly basis. When an account is opened or closed, however, the time period on which the charge is based can differ from one month.

When you create an account maintenance charge, the Time Period, Time Unit, and Pro Rata Calculation fields allow you to adjust the charge. If you use these fields, you can specify that the charge amount is not to be levied for the balancing period as a whole, but is only to apply for a certain length of time.

 Example of a period-based calculation:

Condition: 20 USD account maintenance charge for two months

Balancing period:

1 month      -> 10.00 USD

2 months     -> 20.00 USD

3 months     -> 30.00 USD

Condition: 0.10 USD account maintenance charge for one day

Balancing period:

12/31/99 – 01/31/00       -> 3.10 USD

12/31/99 – 02/28/99       -> 5.90 USD

12/31/99 – 03/31/00       -> 9.00 USD

Procedure

1.       Choose Conditions ® Charges ® Edit

2.       Enter the condition area and choose Account Maintenance Charge as the condition category.

3.       Choose Create Condition or double-click on an existing account maintenance charge.

4.       Enter the Valid From date.

5.       Enter the time period and the time unit.

This data means that the charge amount is not calculated for the whole balancing period, but proportionately.

6.       Specify whether the calculation is to be pro rata.

The system uses this field to determine how the remaining days are to be dealt with. You have three alternatives to choose from:

·         No inclusion: The charge is only levied for the full months.

·         Full inclusion: The whole charge is levied for an additional full month.

·         Pro rata calculation: The system calculates the charge amount proportionately for the remaining days.

 Example without pro rata calculation:

Condition: 10.00 USD account maintenance charge for one month

Period for balancing: Two months and 15 days

 Example of pro rata calculation:

Condition: 20 USD account maintenance charge for two months

Balancing from 15/06/99 to 08/31/99

Ø       The charge amount is 10 USD per month.

Ø       The balancing period amounts to two months and 16 days

Ø       End date of the period of full months is 08/15/99

Ø       The next end date would be 09/15/99

Ø       The period between 08/15 and 09/15 is 31 days

Ø       The charge for the period of the full months is 20 USD

Ø       The charge for the remaining days is 10 USD/31 days x 16 days = 5.16 USD

Ø       This means the entire charge is 25.16 USD.