This program can be used to generate an additional charge on the
customer accounts that are overdue for payment.
Refer to the A/R Month End Procedure for
procedural information and process flow.
If finance charges are applied on the overdue accounts, this
indicates to the client a specific measure of the carrying cost.
This is also a reminder to the customer that the account is past
due.
Develop a policy for dealing with customers which refuse to pay the
finance charges.
For instructions on adjusting unpaid finance charges, refer to "Reversing A Finance Charge" under Post Finance Charges.
Invoices:
The invoice must be overdue (the due date is older than the Finance
Charge cut-off date) in order to be eligible for the Finance Charge
calculation.
Example: Cut-off Date is 03/31/20XX
Invoice 34555 Due: 03/31/20XX will be skipped.
Invoice 34453 Due: 03/30/20XX will be eligible.
Note: If Finance Charges are re-calculated for a division or a
selection of divisions before posting the last run, the Finance
Charges to be billed will be over-written for only the
re-calculated divisions.
This means be very careful and always review the posting journal to
ensure the calculated amounts and division selection are correct,
prior to accepting and posting the Finance Charges in Post Finance Charges.
If the divisional posting feature is not activated then the
Finance Charges are posted for the run as a single total per
customer to the Head Office (blank division) in the General Ledger
and in the individual customers' accounts in the A/R
sub-ledger.
The Finance Charge document number is identified by Currency. e.g.
FINCHRG/C
Note: Divisions are not limited to the operator's Divisional Restricted Views.
The prompts to generate the Finance Charges are:
This date is checked to ensure it is within the current Date Range for ARIF, as defined in Date Range Control.
If the finance charge calculated is below this amount, it will either be ignored (not billed to the customer) or the minimum will be applied.
Select Ignore to prevent billing the customer if the
calculated finance charge is less that the minimum set.
e.g. If the minimum selected is $1.00, and the finance charge
calculated is less than $1.00, then the customer would not be
billed any finance charge this time.
Uncheck this box to calculate finance charges on a single selected currency.
Uncheck this box to skip printing the edit list.
The information may be reviewed and deleted (if necessary) using
Review Finance Charges without printing
the Edit List.
Click the ACCEPT button to begin printing the report, or CANCEL to abort.
Finance Charge transactions can now be reviewed and adjusted in
Review Finance Charges, and then posted in
Post Finance Charges.
The Finance Charge Report can be used to
review and manage the payment status of existing Finance
Charges.
If the unposted information should be replaced by a new
calculation for this division or division selection and the
operator has a Security Role that gives
permission to Reset Finance Charges then he can highlight
the locked division record in the table and can click
DELETE to remove the lock and proceed with the new
calculation.
(The Finance Charge locking records are maintained in Posting Control File by division.)
Note: This locking control is not triggered if the unposted
Finance Charge run had been generated by the same operator and
division.
This allows an operator to run and re-run his own calculations
repeatedly before posting a final run.
The operator is only questioned if he is re-running the calculation
over another operator's work.
e.g. If your terms are 'NET 30', the invoice would have to be at
least 30 days old before it would be eligible for finance
charges.
To delay the application of the finance charges to 60 days, change
the value in the Due Days field in Terms Codes to 60 leaving the description at 'NET
30'.
Note: All customers assigned that Terms Code would get the 30 days grace.
Advantages and disadvantages of giving a grace period by manipulating the Due Date include:
PRO: - Fewer finance charges will have to be written off. CON: - Fewer finance charges will be calculated so less revenue can be collected. - Internal invoice Due Dates not accurate as due dates now reflect the grace period. - Less effective reminder that the account is overdue.
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