Finance Charges are calculated for all customers who have the Apply Finance Charges option selected in the Maintain Customers/Prospects window and meet the filter criteria selected in the Calculate Finance Charge window.
Finance charges are calculated using the following formula for each overdue invoice:
Number of Days Past Due is the number of days between the date that finance charges are calculated and one of the following:
- the invoice date if aging is set to Invoice Date in Customer Defaults OR
- the due date if aging is set to Due Date in Customer Defaults OR
- the date of the last finance charge calculation
Daily Rate is the percentage (set up Customer Defaults for Finance Charges) divided by 365 days.
Outstanding Invoice Amount is the amount due on the invoice.
Example
You have set up an 18% finance charge for invoices 30 days overdue. You age your customer invoices by due date.
Invoice Date: 1/1/11 Due Date 1/31/11
Invoice Amount Due: $100.00
A finance charge applied on 3/15/11 is $2.12. The finance charge is calculated as follows:
On 3/15/11 the invoice is 43 days past due (1/31/11-3/15/11).