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Aging & Finance Charges

• Aging Process

• Finance Charge Calculation Process

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Aging & Finance Charge Purpose

• Calculate the age of the unpaid invoices.

• Verify the totals of the open sales orders.

• Verify the location A/R totals.

• Update credit history balances.

• Calculate balances for finance charges.

• Create a Finance Charge Report.

• Create Finance Charge invoices.

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Finance Charges

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Finance Charge Setup

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1. Before finance charges can be run, they must be designed.

2. Setup finance charge tables under A/R Setup, Finance Charge Tables.

3. A finance charge is an invoice generated for late payment of an invoice amount.

4. The finance charge table is a required two digit (numbers only) code.

5. Finance Charge Description — Give the table a descriptive title.

6. Grace Period (Days Past Due) — enter the number of days to extend the due date on invoices. This allows the accrual of finance charges to be delayed beyond the due date to allow for postal delivery. To determine if the unpaid amount on an invoice is eligible for finance charge, add the number of grace period days to the due date and then compare that date to the date in the ending date input field when calculating and creating finance charges.

7. Finance Charge Method — there are four methods for charging finance charges.

   1. No Charges causes no finance charges to be accrued for customers assigned to this table.

   2. Period Ending Balance method includes the unpaid past due balance at the end of the period. Invoices that are not yet past due are excluded from the chargeable balance.

   3. Average Daily Balance method uses the Beginning and Ending date input fields on the Finance Charge screen to determine the number of days in the billing period. The sum of the balances at the end of each day in the billing period is divided by the number of days in the period to determine the average daily balance. Then a rate is applied to the averaged balance.

   4. Daily Balance method applies the periodic percentage rate at the end of each day in the billing period and then this balance is divided by the number of days in the billing period.

8. Charge Only On Past Due Invoices? — Answer 'Y' to this question & invoices with a due date plus grace period days later than the ending date are excluded from finance charge.

9. Accrue on unpaid finance charge? — Answer 'Y' to this question & unpaid finance charges are included in the chargeable balance.

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Finance Charge Setup Continued

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1. Minimum Finance Charge To Accrue — This is the amount that will be charged to a customer if the calculated finance charge is less than the minimum.

2. Minimum Balance Amount – There must be an AR balance of this amount, past due, in order to receive finance charges.

3. Periodic Charge Percentage Rate — User may enter up to three levels of rates. Enter the rate that would be charged on a monthly basis.

4. Maximum Balance — this controls the rate percent at each balance level. If only one level is used enter all nines in this field.

5. Annual Rate — this is only printed on statements. Not used in any calculations.

6. Minimum Payment Amount — the lesser of either the balance due or the minimum payment amount may be printed on the A/R statement.

7. Minimum Payment Percent (%) — the lesser of either the balance due or an amount calculated using a percentage may be printed on the A/R statement.

8. Add Amount Over Credit Limit? — Answer 'Y' and Agris adds the amount in excess of the credit limit to the minimum payment amount or to the amount calculated by the minimum payment percent printed on the statement form.

9. Range of Invoice Types Subject To Charges — Invoices included in the chargeable balance may be restricted by range selection on the invoice type field.

10. Enter through the interest on prepayment screens to save your setup.

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Finance Charge Setup Continued

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The customer needs to have a default finance charge table set.

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Calculating Finance Charges

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1. Calculate Finance Charges/Interest Credits/Historical Balances? — Answer yes to this question. It must by 'Yes' in order to calculate finance charges. Be aware that this will also age.

2. Beginning & Ending Dates — the beginning date is not important to finance charges unless you are calculating finance charges using the average daily balance or daily balance method. Remember that if you are creating Historical balances at this time also, beginning date does matter.

3. Name ID Number — Use this field to limit the customers receiving finance charges.

4. Location Code — Use this field to limit the locations receiving finance charges.

5. Invoice Date – Allows you to run finance charges / age on a group of invoices based on their date.

6. Invoice Due Date – Allows you to run finance charges/age on a group of invoices based on their due date.

7. Invoice Terms Codes — Use this field to limit the invoices receiving finance charges.

8. Update Finance Charges? — Answer 'Y' to actually have the finance charges update.

   1. If answered 'N', then finance charge report will print but no actual finance charges will be created.

9. Update Interest Credits? — Answer 'Y' to actually update the interest credits.

10. Update Historical Balances? — Answer 'Y' to update the historical balances.

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Calculating Finance Charges Continued

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1. Finance Charge Location — this is a required field that identifies the document location where the invoice created during this process is maintained.

2. Finance Charge Table — this field allows you to run only the finance charges for a certain range of finance charges. It means that it will only create for the name id's that have this range in their name/address accounting information defaults.

3. Override Finance Charge Table? — Y - Opens Override Table Value where you select a finance charge table to use for the calculation. N - Uses the finance charge table specified in Name/Address for each name Id.

4. Printed Dated Balance Detail — Answer 'Y' to this question & the format changes on the Finance Charge Report to show the chargeable balance on each date that the chargeable balance changed within the date range. This report does nothing if you calculate the finance charges on the period ending balance.

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Calculating Finance Charges Continued

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1. Invoice Date — this is the invoice date of the finance charge.

2. Ledger Date — This is the ledger date of the finance charge invoice.

3. Due Date — this is the due date of the finance charge invoice.

4. Sales Tax fields — Input fields for the four tax fields are opened for entry.

   1. These input fields reflect the descriptive titles assigned in Setup Information.

   2. Search selection boxes may be opened on any of these input fields.

5. Do you want these to be the new default parameters? — If the defaulted value in any input field on this screen is changed, Agris will prompt user to save the new defaults.

   1. A positive response to this question saves the changes.

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Manual Entry of Finance Charges

There are times that an invoice charge needs to be made for a flat amount. There is no need to set up a one-time finance charge & spend a couple of hours testing it. Agris will allow you to enter finance charge invoices.

1. Enter the Finance Charge just like a manual invoice.

2. Choose the Finance Charge Document type.

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Manual Entry of Finance Charges

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1. Enter the finance charge amount.

2. Enter the miscellaneous codes.

3. Notice that you are not given the option of the G/L coding screen. Because of the choice of finance charge document, the coding is taken care off.

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Completing Aging & Finance Charges in Job Stream

A new enhancement was added to Accounts Receivable November of '97. You can now run Aging & Finance Charges in a Job stream.
Make sure you have the default parameters saved.
Include in job stream.