Use Finance Charges to create the rules for calculating finance charges for customers who have outstanding balances. The rules created here will be used by the System for posting the amounts generated in Assess Finance Charges.
Setting up Finance Charges
Select Financials | Setup | Finance Charges.
Click New to create a new finance charge.
In Description, specify a description for the finance charge.
In Calculation Method, select the method that you want to use to calculate the finance charge. The options include the following:
Fixed Amount – indicates the monthly finance charge is a fixed amount
Percent – indicates the monthly finance charge is based on a percentage of the Receivables account balance
Click to select the Active check box to indicate that the finance charge should be calculated. If this check box is cleared, no finance charges are calculated.
In the Percent Method area, specify the following settings:
In Monthly Finance Charge Rate, specify the monthly finance charge rate as a percentage. This is the percentage that you want to apply to the customer’s outstanding balance every time that you run Assess Finance Charge. Typically, you run Assess Finance Charges monthly.
Click to select the Include Finance Charges in Calculation check box if you want previous finance charges to be included in the balance for against which to calculate current finance charges.
In Minimum Balance, specify the minimum balance amount used to determine whether finance charges should be calculated. If the finance charge calculated in Assess Finance Charges is less than this amount, no finance charge will be assessed.
In Minimum Finance Charge, specify the minimum amount of a finance charge. If the finance charge calculated in Assess Finance Charges is less than this amount, this is the amount that will be assessed.
In the Fixed Amount Method area, specify a fixed amount in Fixed Finance Charge if you want to define a fixed amount that will be used as the assessed charge when you run Assess Finance Charges.
Click Save and New, or click Save and then click New, to save the current finance charge and start adding the next.
A: You chose Percent in Calculation Method. You have to specify the finance charge information in the Percent Method area.
A: You chose Fixed Amount in Calculation Method. You have to specify the finance charge information in the Fixed Amount Method area.