ARCALFCH Accounts Receivable Finance Charges Processing

Finance Charges Processing

Application Overview

 

A finance charge is an amount the customer is charged when open items on his account have become too long overdue.  This application allows you to calculate finance charges and to charge them to your customers' accounts.  If you usually calculate finance charges manually, you do not have to use this application.  Instead you can enter your manually computed finance charges by way of the Sales & CR/DR Memo Proces­sing application.

 

Several of the entries you made during A/R Setup have some relevance to Finance Charges Processing.  For example, A/R Setup allowed you to specify how overdue the items on a customer's account must be before they are subject to finance charges.  You may want to refer to the explanation of these fields in the Application Overview and Run Instructions for A/R Setup.  However, most of these points will be covered here as well.

 

Finance charges are calculated by this program in the following way:

 

1.   For the purpose of this explanation, let us assume that you have specified that the customer can be charged a finance charge on items that are more than 60 days old.  The program goes through all of the open items on a customer's account, looking for those invoices which are older than 60 days.  The total of these invoices is accumulated.  While this is occurring, the program adds up to the total of all credits to the customer's account, whether the credit is from credit memos or from payments.

 

2.   If the total of the credits is larger than the total of the overdue amount, then no finance charge is calculated.

 

3.   On the other hand, if the total overdue amount is greater than the total of credits on the customer's account, then a finance charge is calculated on the difference between these two amounts.  For example, if the total of overdue amounts was $4,500 and the total of credits and payments was only $1,500, a finance charge is going to be calculated on the overdue $3,000.

 

4.   In A/R Setup, you specified up to two levels of finance charge percentages.  Let us take an example here:  finance charges are calculated at 1.5% on amounts up to $1,000, and at 1% on amounts over $1,000.  Using these sample figures, the finance charge on the overdue $3,000 would be calculated like this:

 

                                                $1,000 x 1.5% = 15

 

                                                (3,000 ‑ 1,000) x 1% = 20

 

                                                Total finance charge = 15 + 20 = $35

 

Most of the figures that are used during this calculation are up to you to specify.  You may want to review the entries made during A/R Setup to be sure that they actually match the way you want to calculate your finance charges.

 

Not all customers will necessarily have a finance charge automatically calculated for them.  During Customer File Maintenance, you specified whether each customer was subject to this automatic calculation.  You can omit certain customers from this calculation, and compute their finance charge amounts by hand.  Some of your customers may even be exempt altogether.


Run Instructions

 

Select Finance Charges Processing from the pull down A/R Processing window.  The following screen will then be displayed:

 

 

 

Finance Charges Processing Screen

 

 

 

The following options are available:

  • Allows you to change calculated finance charges
  • Delete calculated finance charges made against a customer before they are posted
  • Print the finance charges made against a customer before they are posted to the customer's account
  • Calculate finance charges

 

To return to the menu bar, press the ESC or F10 key.  To leave this application, press X for EXIT when positioned at the menu bar.

Entry Field Descriptions

 

Change/Delete

 

Name

Type and Description

Customer No

6 alphanumeric characters.

Enter the customer number whose finance charge you want to change or delete.  The past due amount that was calculated for this cus­tomer will then be displayed.

Press the F7 key for customer search by number or press the F8 key for customer search by name.

Past Due Amount

Display Only.

Finance Charges               

9 numeric digits with 2 decimal places (9,999,999.99).

Enter the finance charge amount you want to charge the customer, if it is different from the amount calculated by the program.

 

Calculate

 

Name

Type and Description

Document Cut‑off Date

A date in the standard date format.

This is the date that will be used to determine how old a document is.

Statement Frequencies To Calculate

1 alphanumeric character.

Enter the statement frequency code for the customers whom you wish to calculate finance charges on.

If you press RETURN the field will default to All statement frequen­cies.

Statement Frequencies To Calculate  (continued)

This field can have any of the following values:

 

W             =              Weekly

S              =              Semi-Monthly

M             =              Monthly

Q             =              Quarterly

D              =              Discretionary

N              =              No Statement

 

  


 

Finance Charge Processing

 

 

 


 

Finance Charges Processing (Calculate)

 

 

Post Finance Charges

Application Overview

 

The Post Finance Charges application transfers all transactions that were previously created in Finance Charges Processing into the A/R Open Item File. In addition it sends this information to the Customer File Maintenance, Salesman File Maintenance, and A/R Distribution To G/L file applications. Consequently the result of posting serves to automatically adjust the balance that a given customer owes your business. It also affects the cost of sales, and other related variables recorded in the customer and salesman files.     

 

When you perform a posting, the system prints a journal of all transactions that were posted.

 

Run Instructions

 

Select Post Finance Charges from the pull down A/R Processing window.  The following screen will then be displayed:

  

 

 

 

Post Finance Charges Entry Screen

 

 

 

 The following option is available:

  • Post finance charges

 

To return to the menu bar, press the ESC or F10 key.  To leave this application, press X for EXIT when positioned at the menu bar.

 

Entry Field Descriptions

 

Name

Type and Description

Do You Want To Post At This Time?

Y or N.

Enter Y to post or N to decline.

  

 

 

Post Finance Charges

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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