Create Interest Invoices

Overview & Setup:

  1. This process will generate interest invoices for customers designated to be charged interest on outstanding receivables. It is designed to generate one interest invoice per customer per month for those customers where an ‘Interest on Past Due’ has been assigned and where the outstanding invoice due dates exceed the assigned ‘Grace’ period.
  2. Setup:
    1. The system requires a ‘Section’ and ‘Cost Group’ classification to accommodate journal creation of interest charges.
      • In Advantage, setup the following:
        • Add a ‘Section’ in the menu Tools/System Administration/Project Section window.
        • Add a ‘Cost Group’ in the menu Maintenance/Product Cost Groups window.
      • In Enterprise, make the appropriate assignment for the new Cost Group. (Only the ‘Sales (Revenue)’ account class requires an account assignment. The other Cost of Sales Adjustments, Miscellaneous Cost of Sales and Work in Process may be left blank.)
    2. In Enterprise, System Options/Terms table, populate the applicable number of ‘Grace’ days for the customer terms. If the terms for interest invoices is different from normal invoices, a new ‘Terms’ record is required (unless that specific terms record already exists).  This will allow the system to assign a different due date to interest invoices rather than the normal terms for the customer.
    3. Customer Master
      • Enter a value for ‘Interest on Past Due’ that represents an annual interest rate.
      • Assign a terms code to the ‘Interest Terms’ which will be applied to the interest invoice.
      • Assign the new section and cost group defined above, for each customer subject to interest charges.
      • Use the Customer Maintenance window to globally apply these values.
  1. Generating Interest Invoices:
    1. In Enterprise, select the menu option ‘Receivables Invoicing/Customer Interest’. This will take you through a step-by-step ‘wizard’ and will result in generating an interest invoice for each customer.
    2. Wizard –Page 1 - Options
      1. The ‘To Date’, which will default to the month end date of the current month.  This will represent the ‘Effective Date’ of the interest calculation.
      2. If project invoices are NOT subject to interest charges, un-check the ‘Calculate Interest on Projects’ box.
      3. Notes:
        • Where the interest invoice will cover outstanding invoices crossing more than one division, select the division to which the interest revenue will be journalized in the ‘Combine to Division’ field.
        • For multi-divisional companies and where there is a need to journalize each divisions interest to it’s appropriate division, then select the appropriate division and preform the ‘Generate Interest’ separately for each division.
    3. Wizard – Page 2 – Select Customers
      1. The Top section of the window will show customers without interest rates assigned in the Customer profile.
      2. The Bottom section of the window shows those customers who are subject to interest charges. Customers may be removed from this list as circumstances dictate.
    4. Wizard – Page 3 – Customer Interest (Preview window)
      1. This windows provides a preview of the interest that will be generated.
      2. The ‘Suggested Interest’ and ‘Interest’ columns value represents an accumulation of the interest calculated for each invoice for the specific customer which is determined as follows (this value may be adjusted manually):
      3. Notes:
        • Determine the ‘Interest due date’ by adding the number of grace days associated with the customer terms to the invoice due date..
        • Determine the ‘Number of interest days past due’ by subtracting the ‘Interest due date’ from the interest generation date.
        • Determine the ‘Number of days subject to interest’ by taking the lesser of number of days in current interest generation month and ‘Number of interest days past due’.The interest charge is calculated by dividing the customer’s interest rate by 365 and multiplying by the ‘Number of days subject to interest’ and multiplied by the invoice balance due.
      4. Customers may be removed from interest generation by unchecking the ‘Selected’ column.
      5. The columns ‘Invoice Date’, ‘Journal Date’, ‘Note’ and ‘Internal Note’ are open for editing and may be populated by individual customer or by using the global replace function.
      6. Clicking the Save or Save & Close will launch the generation of interest invoices will show the status as it creates transactions for each customer. The due date in the interest invoice is determined by the ‘Interest Terms’ defined for the specific customer.

 

 

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