Interest notes – Activity selection (FKR06001)

The interest invoicing function is controlled by parameters in the A/R control file, such as:

• Interest handling
• Interest calculation
• TOP interest notes
• Interest stop code

The relevant parameters in the Business partner file are:

• Interest invoicing = Y/N
• Interest grace days

The Work with countries program holds the interest rates and the interest year base, deciding whether interest is calculated based on a year with 360 days, or a year with 365 (366) days. The Work with currencies program holds the values for minimum interest amount total and minimum interest amount per line. The Interest note text file holds the texts in the different languages.

It is defined per document type in Work with document types whether or not interest should be calculated on open items, and whether the document should be handled as an invoice or a payment at interest calculation.

When you calculate interest for an invoice the total invoice amount is split into two parts:

1. Remaining amount
2. Settled amount

These are the bases for separate interest calculations, and they are independently controlled on document type level by values you can define in Interest/Paid and Interest/Open items.

Interest based on Remaining amount is charged for the none-settled amount of the invoice at the calculation day and for the time period starting from the day after the invoice due date and ending with the interest calculation date.

Note: This interest will not be calculated if the document type of the invoice has the Interest/Open item field value set to NO in Work with document types.

Interest based on Settled amount consists of interest amounts charged for each payment that partly settle the invoice after its due date. The period for the interest amount calculation starts with the day after the invoice due date or after the last updated interest calculation date. It ends with the payment date or the calculation date if the Interest handling code in the A/R control file is 2 or 3 and the payment date is after the calculation date.

Note: This interest will not be calculated if the document type for the invoice has the Interest/Paid value set to 0 in Work with document types.

The calculation of interest can be per started day, started week, started month or be a fixed rate. The calculation per started day can be done based on a year with 360 or 365 (366) days, but all other methods use 365 (366) days.

The first interest note that is issued for a document will be for the period between the day after due date until payment or calculation date. If interest is charged per started week or month, the system calculates the number of started periods for this time span. If interest is issued at regular intervals before payment is done, the next interest note will be for the time period from the day after last calculation date (if charged per day) or from the day after the ending date of the last period for which interest was charged with the first interest note (if charged per week or month).

The exchange rate used when calculating the interest amount is according to the time period and level defined in the A/R control file, based on the calculation date. If documents are inactivated and activated during maintenance of the proposal, the exchange rate will be recalculated based on the actual date. If the exchange rate is missing, an error message will be printed on the control list, and you will not be able to update and print the interest transactions.

This automatic issuing routine can only be run by one user at a time, and only one proposal can be active.

The processing of interest notes is done in three steps:

• The system makes a proposal of interest notes to be issued according to your selections. A control list can at all times be printed. At this stage, the interest notes are preliminary, changes are made in the next step.
• You make changes in the proposal, and print new control lists until you are satisfied with the proposal.
• The interest notes are issued and printed, and the A/R and G/L are updated with the new transactions.