This procedure is used to automatically create finance charge invoices for overdue accounts. The Finance percentage that is charged for each customer is based on the Interest rate that has been entered for each customer in the Customer Master file. The Tax Type and Tax Code to be used on each Finance Charge invoice can be set on a global, branch or user basis using a system parameter or it they can be defaulted based on the tax information stored in the Customer record that the finance charge invoices are being created for.
1. Verify that the Interest rate for each customer has been entered correctly in the Customer Master file. The system allows you to specify the interest rate to be used when creating Finance Charge invoices for each customer. The interest rate can be defaulted for new customers (please see the System Administrators Documentation for more information about setting customer defaults) and it can be loaded or updated using various utility programs available in the system. You should not create finance charge invoices until you have verified that the customer information used by the program is correct.
2. Verify that the FINANCE CHARGES inventory item that is used by the Create Finance Charges program is present in the Inventory Master file and that the product line and other information for the item is set up properly. Each Finance Charge invoice created by the program will create one invoice line item (Transact) record. This invoice line will be created with the item number FINANCE CHARGES. The general ledger accounts which will be used when posting the finance charge invoice are determined by the autopost accounts that are assigned to the FINANCE product line. You should verify that the FINANCE product line and the FINANCE CHARGES inventory item are properly set up before you run the Apply Finance Charges program.
3. Verify that the Tax Type and Tax Code to be used when creating Finance Charge invoices are set to the proper value. The Tax Type and Tax Code used by the Apply Finance Charges program are determined by the information entered into the ARFCTAXT and ARFCTAXC parameters in the System Control file. You may either specify the Tax Code and Tax Type by entering the value to be used into the Info field for each parameter or you may leave the parameters blank to have the system use the tax information which is stored in each customer record.
4. Select the Apply Finance Charges program from the Menu. This program is normally located on the Accounts Receivable Maintenance Menu.
5. Enter the selection criteria to be used when creating finance charge invoices. The Apply Finance Charges program uses the following selection criteria.
6. Division No: The division number to be processed. The program will only create finance charge invoices for the open invoice amounts that are assigned to the selected division. You must run the program for each division that you would like to create finance charges for.
7. Cutoff Date/Past Due Basis: The cutoff date is used along with the Past Due basis to determine whether individual invoices should be included in the finance charge calculation. The Cutoff date defaults to the current date and the Past Due Basis defaults to 30 days. The number of days entered into the Past Due Basis is added to each invoice date and then compared to the cutoff date to determine if the invoice should be included when the calculating finance charge for the customer.
8. Minimum Finance Charge. This selection allows you to specify the minimum finance charge to be charged to the customers being processed. If a customer has invoices meeting the selection criteria and the finance charge calculated for the customer is less than the minimum finance charge specified, the system will use the minimum finance charge when creating the finance charge invoice.
9. Invoice Date: The date entered for this selection will be used on the finance charge invoices created by the program.
10. Dept. No: The department number entered for this selection determines the department in which the finance charge invoices will be created.
11. Select Customers From: This selection allows you to process a range of customers. If one company or a range of companies is entered for this selection, the system will create finance charge invoices for the selected customers who meet the other selection criteria.
12. Verify that the selections entered are correct and enter the output routing to be used for the report created by the program. Once you have verified or changed the displayed selections as required you may press the ENTER key to specify the Output Option to be used for the report.
13. Run the program. The system will examine all open invoices meeting the selection criteria you entered and it will create individual finance charge invoices for the customers whose invoices meet the criteria.
14. Review the report produced by the program. Once the Apply Finance Charges program has completed processing, you should review the report produced by the program. The report will list the customers for whom finance charge invoices were created and it will also list the past due invoice total, the interest rate and amount, and the invoice number which was used for each customer.
15. Make any required corrections to the invoices which were created. If you need to remove any of the finance charge invoices that were created by the program, you may do so by adjusting the invoice amount to the general ledger or by voiding the invoice prior to posting sales (Note: Voiding invoices after they are posted will cause the AR sub-ledger and AR control account in the general ledger to disagree. If you have to void an invoice that has already been posted using the Sales Posting program, you will need to Re-post the sales for the affected date using the procedure described in this document.