Language:


Create Interest Invoices

Use this function to creates Invoices that charge interest for late payment.

The function will take its instructions from the Interest setting. Its methodology in creating Interest Invoices will depend on the Debiting Mode in that setting, as follows:

Running
The function will create new Invoices charging interest on Invoices that were outstanding during a specified period. Very late Invoices may therefore cause more than one Interest Invoice to be raised.

For example, an Invoice becomes due on March 25th and is paid on May 10th. If you run the 'Create Interest Invoices' function at the end of every month, interest will be charged three times: at the end of March (for six days), at the end of April (for 30 days) and at the end of May (for nine days), making a total of 45 days).

At Payment
The function will create new Invoices charging interest on outstanding Invoices that were paid during the specified period. So, only one Interest Invoice will be raised for a particular outstanding Invoice, no matter how late it was when it was paid.

In the example above, interest will be charged once at the end of May, for the whole overdue period of 45 days.
In both cases, interest will only be charged on outstanding amounts that remained unpaid after their Due Date.

The Interest Invoices created by this function will not be marked as OK, so you can modify or delete any of them before marking them as OK, saving and printing. If you would like to see a list of the Invoices that will be created, produce an Interest Invoicing report before using this function.

In order to create Interest Invoices, a number of conditions must be met:

  • Specify your interest conditions (e.g. the interest rate, the calculation method and optionally the Payment Term to be used in Interest Invoices) in the Interest setting.

  • Create an Item in the Item register for interest and, if appropriate, one for the interest fee. If you intend to use special Sales Accounts for interest and interest fees, specify these in the Item records. You can also specify VAT Codes in these Item records. In the case of the interest fee Item, the Base Price should be the fee itself,

  • Specify the Customers to whom you can issue Interest Invoices by ticking the Interest check box on the 'Terms' card of the Contact record for each Customer. You can exclude an individual Invoice made out to such a Customer from the interest calculation by ticking the No Interest box on the 'Identifiers' card.

  • If you need Interest Invoices to use a different Number Series to standard Invoices, specify the Number Series to be used in the Interest Invoices field in the Number Series Defaults setting in the System Module. Otherwise the first valid number sequence in the Number Series - Invoices setting will be used.

  • When you print an Interest Invoice, it will use the Interest Invoice Form Template instead of the standard Invoice Form Template. You should therefore ensure you have designed an Interest Invoice Form Template and connected it to the Interest Invoice form. Please refer to the Printing Invoices page for more details
If the function does not create any Interest Invoices when expected (and/or the related Interest Invoicing report is empty) and the conditions mentioned above have all been met, the probable causes are:
  1. The Calculation method specified in the Interest setting is Inv. Date Rate * Late Days, and there is no interest rate specified in the outstanding Invoices (in the Interest field on the 'Price List' card). This problem is more likely to occur if the outstanding Invoices were entered before you configured the Interest setting because the default value in the Interest field will be taken from the Interest setting.

  2. The total interest chargeable to a Customer including VAT if appropriate but excluding any invoicing fee is less than the Min. Sum specified in the Interest setting.

  3. There is no valid record in the Number Series - Invoices setting (in the Sales Ledger). This might be a fault in the setting itself, or it might be because the default Invoice Number on the 'Number Series' card of the current user's Person record or in the Number Series Defaults setting (in the System module) is not in a valid Number Series. This problem will usually occur at the beginning of a new year. If a change is made to the 'Number Series' card of the Person record, you will need to quit Standard ERP and restart for it to take effect.
When you select the function, the 'Specify Create Interest Invoices' window will open:

Invoices in Period
Paste Special    Reporting Periods setting, System module
Interest will be charged on outstanding Invoices whose Invoice Dates fall within the period specified here.

Customer
Paste Special    Customers in Contact register
Range Reporting    Alpha
Enter the Number of the Customer (or range of Customer Numbers, separated by a colon) for whom you want to generate Interest Invoices.

Category
Paste Special    Customer Categories setting, Sales Ledger
If you want to generate Interest Invoices for Customers belonging to a particular Customer Category, specify that Category here.

Period From Date, To Date
Paste Special    Choose date
The period for which interest is to be charged. The previous month will be entered as the default, but you can edit the date range to suit your purposes.

If the Debiting Mode in the Interest setting is Running, interest will be charged on all overdue Invoices. If the Calculation method in the same setting is Inv. Date Rate * Late Days or Current Rate * Late Days, interest will be charged daily for this period. If the Calculation method is Flat Rate per Debiting, a single interest rate will be levied on each overdue Invoice.

If the Debiting Mode is At Payment, interest will only be charged on overdue Invoices for which payment was received during this period. If the Calculation method is Inv. Date Rate * Late Days or Current Rate * Late Days, interest will be charged daily for the entire overdue period (from Due Date to payment date). If the Calculation method is Flat Rate per Debiting, a single interest rate will be levied on each overdue Invoice for which payment was received.

Int. Invoice Date
Paste Special    Choose date
Enter the date to be used as the Invoice and Transaction Dates in the Interest Invoices generated by the function. If you do not enter a date, the current date will be used.

The Due Dates in the new Interest Invoices will be calculated using the Payment Term specified in the Interest setting. If you have not specified a Payment Term in the Interest setting, the usual Payment Terms for each Customer will be used. If you choose an Invoice Date here that means the Due Dates in the new Interest Invoices will be in the past, the Due Dates will be set to the current date.

Int. Invoice Salesman
Paste Special    Person register, System module
If you need the Interest Invoices created by the function to have a particular Salesman, enter their Signature here. If you leave this field blank, the Salesman will be taken from the Contact records for each Customer.

Int. Invoice Debtors Account
Paste Special    Account register, Nominal Ledger/System module
If you need the Interest Invoices created by the function to post to a particular Debtor Account, specify that Account here. If you leave this field blank, the usual Debtor Account for each Customer will be used.

Including Period on Invoice
Select this option if you want the interest period (as defined using the From Date and To Date above) to be included in a separate row on the Interest Invoices.

No Interest for Interest Invoices
Usually interest will be charged on previous Interest Invoices that are still unpaid. Select this option if you do not want interest to be charged on such Invoices.

Due Date
This function will create Invoices charging Interest on amounts that remain outstanding after their Due Dates have passed. Use these options to specify how those Due Dates will be determined.
From Invoice
Due Dates will be taken from each outstanding Invoice.

Invoice Date + Payment Term Days
Due Dates will be calculated by adding the Net Days in the relevant Payment Term record to the Invoice Dates of each outstanding Invoice. Therefore, if you have entered an ad hoc Due Date in a particular Invoice, it will be ignored and the "standard" Due Date that would normally apply will be used instead.
When the specification window is complete, click the [Run] button to activate the function. The relevant Interest Invoices will be created and placed in the Invoice register. They will be marked with an "I" in the 'Invoices: Browse' window (between the Total and the Currency), making them easy to locate.

You can also enter Interest Invoices directly to the Invoice register, without using this Maintenance function. To do this, enter the Invoice in the normal way, but make sure you use a Payment Term in which the Type is "Manual Interest Inv.". This will ensure the Interest Invoice will be printed using the correct Form Template (you can find details about Form Template selection here. These Invoices will be independent of the Interest setting, so it is recommended that you use the same Item that you quoted in that setting to ensure that you use the correct Sales Account and VAT Code. The Quantity should be the number of days for which you are charging interest, and you should include in the Description the interest period and the Invoice Number for which you are charging interest.

If you need to issue a Credit Note against an Interest Invoice (created using either method), you should do so by opening the Interest Invoice and selecting from the Create menu. You cannot duplicate an Interest Invoice in order to credit it.

---

Maintenance functions in the Sales Ledger:

Go back to: