You have the following options for calculating interest on customer and vendor accounts:

● With Balance Interest Calculation

● With calculation of interest on arrears

The following
section describes the **calculation of interest on arrears**.

Interest
calculation is controlled by settings made in the **interest indicator**.
You assign an interest indicator to the master records of the customer and
vendor accounts you want to calculate interest for. You make other settings
for each interest calculation. These specifications take effect together with
the specifications for the indicator, and sometimes have a higher priority.

Interest is
calculated using the debit interest rate defined for the interest indicator in
the system. Credit interest rates are used when interest is being calculated
on items paid **prior** to their due date.

There are different ways of calculating interest:

●
In either Accounts
Payable or Accounts Receivable, choose *Periodic Processing* → Interest
Calculation*
*→ *Arrears Interest* → Without Open Items
if you only want to
calculate interest for cleared items and post the interest. The system
calculates interest as of the due date for net payment.

●
In either Accounts
Payable or Accounts Receivable, choose *Periodic Processing* → Interest
Calculation*
*→ *Arrears Interest* → With Open Items
if you want to calculate
interest for open and cleared items and post the interest. The system
calculates interest as of the upper limit date of the last interest
run.

●
In either Accounts
Payable or Accounts Receivable, choose *Periodic Processing* → Interest
Calculation*
*→ *Arrears Interest* → Without Postings
if you want to calculate
interest for open and/or cleared items but do not want to post the interest.
The system calculates interest as of the due date for net payment.

In each of the above cases, either the relevant fields have default entries or only the selection criteria required are displayed.

●
In either Accounts
Payable or Accounts Receivable, choose *Periodic Processing* → Interest
Calculation*
*→ *Arrears Interest* → Custom
Selections if you want to
make a selection that differs from the options mentioned above.

For more information about calculating interest on arrears, see the report documentation:

RFDUZI00 Calculation of Interest on Arrears (Customers)

RFKUZI00 Calculation of Interest on Arrears (Vendors)