Accounts Receivable > AR Finance Charges

The Apply Finance Charge function wizard allows you to post finance charges to customer’s past-due invoice balances. The parameters for calculating and applying finance charges are defined in the Finance Charge Settings page of the AR Module Setup function.

These finance charge parameters determine:

•The period between charges against the same account or invoice. This protects you from erroneously applying charges more than once against the same invoice or account for the same period.

•The minimum balance against which a charge will be calculated.

•The percentage rate and minimum finance charge to be applied, or the fixed charge amount to be applied, whichever is applicable.

•Whether finance charges are to be calculated against past-due statement balance or invoice balance.

•Whether finance charges are to be based on a fixed (flat) amount or a percentage rate of the past due statement or invoice balance.

•Whether finance charges will be compounded or accrued on outstanding finance charges as well as the rest of the outstanding balance.

Note: When you apply finance charges based on Past Due Invoice Balance, the applied amount is just added to its corresponding invoice. On the other hand, if you choose to apply based on Past Due Statement Balance, the system creates a separate invoice to show that finance charges have been applied. These invoices always have the invoice number “FCHG” as indicated in the Invoice # field of the Apply Payment function; however, you cannot amend this invoice using the AR Invoice Transaction function or print it since it is intended for internal use by the system for the application of finance charges. When your customer pays their outstanding accounts inclusive of finance charge, you can then apply finance charges by indicating the amount on the corresponding finance charge invoice number (FCHG).

The options you choose in the customer records and pay code records affect the application of finance charges to the related customers:

•The Apply Finance Charge check box in the Settings page of the customer’s record controls whether that customer’s past-due balances can be applied with finance charges when they become due. If the Apply Finance Charge check box in a customer record is activated, finance charges will be applied against all of that customer’s past-due balances, unless the invoice created has a pay code which is not eligible for finance charges.

Notes:

•Only invoices with pay codes that are marked as eligible for finance charges can have finance charges applied against their past due balances.

•When the ClickToPay feature is enabled, past due ClickToPay invoices are excluded from finance charge application in this function.

•The number of days entered in the Net Days field in the Terms area of the pay code record assigned to the invoice displays its due date. When an invoice reaches its due date but still remains unpaid, it will be eligible for finance charges on the next day. The system will calculate finance charges from the first day after its due date as long as still outstanding. For example, if you enter 30 in the Net Days field in the pay code record and the invoice is dated August 1, it will be due on August 31, the 30th day after August 1. Any unpaid balance as of September 1, the day after the due date of August 31, will be past-due and eligible for finance charge.

Always enter the appropriate value in the Net Days field in each pay code record when you set it up. If a pay code record has a zero (0) value in its Net Days field, invoices issued to customers assigned with this pay code will be past-due the day after the invoice date and will be subjected to finance charges, as applicable.

To apply finance charges to your customer invoices, perform the following steps:

1.Access the Apply Finance Charge function from the Finance Charge group under the Routine Tasks main menu of the Accounts Receivable module. This will automatically initiate the Apply Finance Charge wizard.

If any of the balances to which you will apply finance charges are in a foreign currency, be sure that you update the exchange rates for the applicable currency codes using the Currency Exchange Maintenance function before proceeding to apply finance charges. If you fail to do this, you may generate finance charges based on old exchange rates.

2.In the Selection Criteria screen, review the values in the following read-only fields which the system will use to compute and apply finance charges to your customer’s account. These values are provided from the Finance Charge Settings page of the AR Module Setup function. If you want to change these values, directly access the AR Module Setup function.

•Charge On

•Apply By

•Charge Period (Days)

•Minimum Statement/Invoice Balance

•Charge Rate / Fixed Charge Amount

•Minimum Charge Amount

3.In the Apply Date field, enter the date when the application of finance charges will be posted in the system. The system computes finance charges against past-due balances as of the date entered in this field.

•Each past-due account or invoice will be charged for only one (1) period. If you need to record finance charges for another period, run this function again. The system will not duplicate the application of finance charges.

•If you want to apply finance charges to all past-due balances at the end of a period, you should wait until the period’s sales and receipts are posted, then you should enter the last day of the period as your apply date.

Note: You should post charges using a consistent Apply Finance Charge Date cycle (e.g., the end of each period.) If you use a later Apply Date and a customer pays for a past-due invoice during the period, the system will apply the finance charge against the reduced balance.

4.In the Customer # field, specify the customer(s) for whose outstanding accounts you will apply finance charges. Click the List box button and select either of the following options:

oAll

Select this option if you want the finance charge to be applied against all customers with past-due invoice(s) or statement balance(s).

oList

Select this option if you want the finance charge to be applied against customers you specify in a list. Click the Ellipses (...) button to display a pop up window where you can select the specific customer records to include in the list.

oRange

Select this option if you want the finance charge to be applied against a selected customers' past-due invoice(s) or statement balance(s). Enter in the From/To fields the range of customer numbers to applied with finance charge.

5.After you have entered the customer selection in the Customer # field, click the Next button.

6.The customer records that meet the selection criteria you entered are displayed in the Apply Finance Charge screen. Review the information displayed on the grid. If you want to view the details of the invoice or the customer, click the underlined field label in the Invoice # or in the Customer # column to show the invoice transaction record or the customer maintenance record, respectively.

7.In the Apply Amount field, review and either accept or adjust the finance charge amount you want to apply to each customer invoice shown. Note that only the Apply Amount field is editable on the grid.

8.When you are ready to proceed, click Next. You may click the Back button at any time to return to the previous screen. Click the Cancel button anytime to stop the process and exit the function screen.

9.A message will appear indicating that the process will use the exchange rates defined in Currency Exchange Maintenance and asking for confirmation. Click Yes to proceed, or No to return to the Apply Finance Charge screen. If you click Yes, AccountMate will then process the transaction.

10.Once the process is completed, the Summary screen will automatically display showing the total number of invoices charged, and the overall amount of finance charges applied. Click the Finish button to close the wizard screen.

Note: If no invoices for the customer are eligible for finance charges as of the date entered in the Apply Date field, no finance charges will be computed and applied to any customer’s invoice balances. The system will simply display a message box informing you of such.

Q. I have just applied finance charges against overdue customer balances; however, these finance charges do not appear in the AR Status Report. What could be the problem?

A. Verify if the following conditions are met:

•The customer record has the Apply Finance Charge checkbox option activated.

•The customer has a past due invoice with a pay code that makes it eligible for finance charges or the Invoice is Subject to Finance Charges option checkbox in the pay code record is marked.

•The unpaid balance in the invoice reached the minimum invoice balance for finance charges application as indicated in the Finance Charge Settings page of the AR Module Setup function.

•The days that elapsed between the date of the last finance charge applied to the invoice and the Apply Date you entered in the Apply Finance Charge function screen have reached the Charge Period (days) indicated in the Finance Charge Settings page of the AR Module Setup function.

Apply Finance Charge

Apply Finance Charge

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