Below are some examples of different types of Finance Charges. Whether you want to retroactively apply charges or just to initially set up.
CHAPTERS
Finance Charge Calculation Examples
Example 1: Finance charges set up at the beginning; no retroactive charges
Example 2: Finance charges set up at the beginning; retroactive charges apply
Example 3: Intermittent finance charges; retroactive charges apply
Example 4: Finance charges set up at the beginning; corrections made; no retroactive charges
Example 5: Finance charges set up at the beginning; corrections made; retroactive charges apply
Example 6: Finance charges with a gap; payment made; corrections made; retroactive charges apply
Finance Charge Calculation Examples
To help explain how finance charges are calculated by Avionté, several examples are provided below. These examples apply to version 13.2 and beyond.
Note: Finance charges will only show on the Statement Letter and AR Aging Report. Finance charges are NOT shown on an invoice.
Example 1: Finance charges set up at the beginning; no retroactive charges
Preconditions
Customer with invoices overdue.
Table 1. No Retroactive Charges
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $100.00 | 0 | 0 | 0 |
| 102 | 2/1/2013 | $100.00 | $110.00 | $50.00 | 0 | $10.00 | 0 |
| 103 | 3/1/2013 | $110.00 | $105.00 | $110.00 | 10% | $5.00 | 0 |
Setup
In Customer > Back Office Setup > Billing Setup, the options are set as follows:
- Include Finance Charges is checked.
- Finance charges are not assessed retroactively (answer No on prompt).
- Increase Balance Amount Due is checked.
- Invoice balance is not increased retroactively (answer No on prompt).
Results
The automatic overnight finance charge processing will run, with calculated results as follows. This calculates the charges for the previous day.
Table 2. Finance charges assessed
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type |
|---|---|---|---|---|---|---|
| 101 | 1 | 4/2/2013 | $100.00 | $2.00 | $102.00 | Regular |
| 102 | 1 | 4/2/2013 | $60.00 | $1.20 | $61.20 | Regular |
| 103 | 1 | 4/2/2013 | $105.00 | $2.10 | $106.10 | Regular |
Table 3. Invoice updates
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $102.00 | 0 | 0 | $2.00 |
| 102 | 2/1/2013 | $100.00 | $110.00 | $51.20 | 0 | $10.00 | $1.20 |
| 103 | 3/1/2013 | $110.00 | $105.00 | $112.10 | 10% | $5.00 | $2.10 |
Example 2: Finance charges set up at the beginning; retroactive charges apply
Preconditions
Customer with invoices overdue.
Table 4. Retroactive Charges
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $100.00 | 0 | 0 | 0 |
| 102 | 2/1/2013 | $100.00 | $110.00 | $50.00 | 0 | $10.00 | 0 |
| 103 | 3/1/2013 | $110.00 | $105.00 | $110.00 | 10% | $5.00 | 0 |
Setup
In Customer > Back Office Setup > Billing Setup, the options are set as follows:
- Include Finance Charges is checked.
- Finance charges are assessed retroactively (answer Yes on prompt).
- Increase Balance Amount Due is checked.
- Invoice balance is increased retroactively (answer Yes on prompt).
Results
The automatic overnight finance charge processing will run, with calculated results as follows. This calculates the charges for the previous day.
Table 5. Finance charges assessed
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type |
|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Retroactive |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Retroactive |
| 101 | 3 | 3/2/2013 | $104.40 | $2.08 | $106.12 | Retroactive |
| 102 | 1 | 2/2/2013 | $60.00 | $1.20 | $61.20 | Retroactive |
| 102 | 2 | 3/2/2013 | $61.20 | $1.22 | $62.42 | Retroactive |
| 103 | 1 | 3/2/2013 | $105.00 | $2.10 | $106.10 | Retroactive |
Table 6. Invoice updates
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $106.12 | 0 | 0 | $6.12 |
| 102 | 2/1/2013 | $100.00 | $110.00 | $52.42 | 0 | $10.00 | $2.42 |
| 103 | 3/1/2013 | $110.00 | $105.00 | $112.10 | 10% | $5.00 | $2.10 |
Example 3: Intermittent finance charges; retroactive charges apply
Preconditions
Customer with invoices overdue.
Table 7. Retroactive Charges Apply
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $100.00 | 0 | 0 | 0 |
| 102 | 2/1/2013 | $100.00 | $110.00 | $50.00 | 0 | $10.00 | 0 |
| 103 | 3/1/2013 | $110.00 | $105.00 | $110.00 | 10% | $5.00 | 0 |
Setup
Table 8. Finance charges assessed
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type |
|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Regular |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Regular |
| 101 | 3 | 3/2/2013 | $104.40 | $2.08 | $106.12 | Regular |
| 102 | 1 | 2/2/2013 | $60.00 | $1.20 | $61.20 | Regular |
| 102 | 2 | 3/2/2013 | $61.20 | $1.22 | $62.42 | Regular |
| 103 | 1 | 3/2/2013 | $105.00 | $2.10 | $106.10 | Regular |
Results
Table 9. Finance charges assessed
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type |
|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Regular |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Regular |
| 101 | 3 | 3/2/2013 | $104.40 | $2.08 | $106.12 | Regular |
| 101 | 4 | 4/2/2013 | $106.12 | $2.12 | $108.24 | Retroactive |
| 101 | 5 | 5/2/2013 | $108.24 | $2.16 | $110.40 | Retroactive |
| 101 | 6 | 6/2/2013 | $110.40 | $2.20 | $112.60 | Retroactive |
| 101 | 7 | 7/2/2013 | $112.60 | $2.25 | $114.85 | Retroactive |
| 102 | 1 | 2/2/2013 | $60.00 | $1.20 | $61.20 | Regular |
| 102 | 2 | 3/2/2013 | $61.20 | $1.22 | $62.42 | Regular |
| 102 | 3 | 4/2/2013 | $62.42 | $1.24 | $63.66 | Retroactive |
| 102 | 4 | 5/2/2013 | $63.66 | $1.27 | $64.93 | Retroactive |
| 102 | 5 | 6/2/2013 | $64.93 | $1.30 | $66.23 | Retroactive |
| 102 | 6 | 7/2/2013 | $66.23 | $1.32 | $67.55 | Retroactive |
| 103 | 1 | 3/2/2013 | $105.00 | $2.10 | $106.10 | Regular |
| 103 | 2 | 4/2/2013 | $106.10 | $2.12 | $108.22 | Retroactive |
| 103 | 3 | 5/2/2013 | $108.22 | $2.16 | $110.38 | Retroactive |
| 103 | 4 | 6/2/2013 | $110.38 | $2.20 | $112.58 | Retroactive |
| 103 | 5 | 7/2/2013 | $112.58 | $2.25 | $114.83 | Retroactive |
Table 10. Invoices updated as follows
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $114.85 | 0 | 0 | $14.85 |
| 102 | 2/1/2013 | $100.00 | $110.00 | $56.23 | 0 | $10.00 | $6.23 |
| 103 | 3/1/2013 | $110.00 | $105.00 | $119.83 | 10% | $5.00 | $9.83 |
Example 4: Finance charges set up at the beginning; corrections made; no retroactive charges
Preconditions
Customer with invoices overdue.
Table 11. No Retroactive Charges
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $90.00 | 0 | 0 | 0 |
| 101-R1 | 1/1/2013 | $60.00 | $60.00 | $60.00 | 0 | 0 | 0 |
| 101-R2 | 1/1/2013 | - $10.00 | - $10.00 | $0.00 | 0 | 0 | 0 |
Table 12. Finance charges
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type | Finance charge removed? |
|---|---|---|---|---|---|---|---|
| 101 | 1 | 4/2/2013 | $100.00 | $2.00 | $102.00 | Regular | No |
Results
The automatic finance charge processing runs overnight, then the finance charges are assessed as displayed in the table below for the first invoice correction.
Table 13. Finance charges assessed after first invoice correction
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type | Finance charge removed? |
|---|---|---|---|---|---|---|---|
| 101 | 1 | 4/2/2013 | $100.00 | $2.00 | $102.00 | Regular | Yes |
| 101 | 1 | 4/2/2013 | $100.00 | - $2.00 | Removal | No | |
| 101 | 1 | 4/2/2013 | $160.00 | $3.20 | $163.00 | Correction | No |
Note: The finance charges are then assessed as follows after the second invoice correction.
Table 14. Finance charges assessed after second invoice correction
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type | Finance charge removed? |
|---|---|---|---|---|---|---|---|
| 101 | 1 | 4/2/2013 | $100.00 | $2.00 | $102.00 | Regular | Yes |
| 101 | 1 | 4/2/2013 | $100.00 | - $2.00 | Removal | No | |
| 101 | 1 | 4/2/2013 | $160.00 | $3.20 | $163.00 | Correction | Yes |
| 101 | 1 | 4/2/2013 | $160.00 | - $3.20 | $163.00 | Removal | No |
| 101 | 1 | 4/2/2013 | $150.00 | $3.00 | $153.00 | Correction | No |
Table 15. Invoices updated as follows
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $93.00 | 0 | 0 | $3.00 |
| 101-R1 | 1/1/2013 | $60.00 | $60.00 | $60.00 | 0 | 0 | 0 |
| 101-R2 | 1/1/2013 | - $10.00 | - $10.00 | $0.00 | 0 | 0 | 0 |
Example 5: Finance charges set up at the beginning; corrections made; retroactive charges apply
Preconditions
Customer with invoices overdue.
Table 16. Retroactive Charges Apply
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $96.12 | 0 | 0 | $6.12 |
| 101-R1 | 1/1/2013 | $60.00 | $60.00 | $60.00 | 0 | 0 | 0 |
| 101-R2 | 1/1/2013 | - $10.00 | - $10.00 | $0.00 | 0 | 0 | 0 |
Table 17. Finance charges
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type |
|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Retroactive |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Retroactive |
| 101 | 3 | 3/2/2013 | $104.04 | $2.08 | $106.12 | Retroactive |
Results
Table 18. Finance charges assessed after first invoice correction
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type | Finance charge removed? |
|---|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Retroactive | Yes |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Retroactive | Yes |
| 101 | 3 | 3/2/2013 | $104.40 | $2.08 | $106.12 | Retroactive | Yes |
| 101 | 1 | 1/2/2013 | $100.00 | - $2.00 | $102.00 | Removal | No |
| 101 | 2 | 2/2/2013 | $102.00 | - $2.04 | $104.04 | Removal | No |
| 101 | 3 | 3/2/2013 | $104.04 | - $2.08 | $106.12 | Removal | No |
| 101 | 1 | 1/2/2013 | $160.00 | $3.20 | $163.20 | Correction | No |
| 101 | 2 | 2/2/2013 | $163.20 | $3.26 | $166.46 | Correction | No |
| 101 | 3 | 3/2/2013 | $166.46 | $3.33 | $169.79 | Correction | No |
Table 19. Finance charges assessed after the second invoice correction
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type | Finance charge removed? |
|---|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Retroactive | Yes |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Retroactive | Yes |
| 101 | 3 | 3/2/2013 | $104.04 | $2.08 | $106.12 | Retroactive | Yes |
| 101 | 1 | 1/2/2013 | $100.00 | - $2.00 | $102.00 | Removal | No |
| 101 | 2 | 2/2/2013 | $102.00 | - $2.04 | $104.04 | Removal | No |
| 101 | 3 | 3/2/2013 | $104.04 | - $2.08 | $106.12 | Removal | No |
| 101 | 1 | 1/2/2013 | $160.00 | $3.20 | $163.20 | Correction | Yes |
| 101 | 2 | 2/2/2013 | $163.20 | $3.26 | $166.46 | Correction | Yes |
| 101 | 3 | 3/2/2013 | $166.46 | $3.33 | $169.79 | Correction | Yes |
| 101 | 1 | 1/2/2013 | $160.00 | - $3.20 | $163.20 | Removal | No |
| 101 | 2 | 2/2/2013 | $163.20 | - $3.26 | $166.46 | Removal | No |
| 101 | 3 | 3/2/2013 | $166.46 | - $3.33 | $169.79 | Removal | No |
| 101 | 1 | 1/2/2013 | $150.00 | $3.00 | $153.00 | Correction | No |
| 101 | 2 | 2/2/2013 | $153.00 | $3.06 | $156.06 | Correction | No |
| 101 | 3 | 3/2/2013 | $156.06 | $3.12 | $159.18 | Correction | No |
Table 20. Invoices updated as follows
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $99.18 | 0 | 0 | $9.18 |
| 101-R1 | 1/1/2013 | $60.00 | $60.00 | $60.00 | 0 | 0 | 0 |
| 101-R2 | 1/1/2013 | - $10.00 | - $10.00 | $0.00 | 0 | 0 | 0 |
Example 6: Finance charges with a gap; payment made; corrections made; retroactive charges apply
Preconditions
Customer with an overdue invoice, with a payment made of $50.00.
Table 21. Invoices updated as follows
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $96.12 | 0 | 0 | $6.12 |
| 101-R1 | 1/1/2013 | $25.00 | $25.00 | $25.00 | 0 | 0 | 0 |
Table 22. Finance charges
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type |
|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Regular |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Regular |
| 101 | 3 | 3/2/2013 | $104.04 | $2.08 | $106.12 | Regular |
| 101 | 4 | 5/2/2013 | $56.12 | $1.12 | $57.24 | Regular |
| 101 | 5 | 6/2/2013 | $57.24 | $1.14 | $58.38 | Regular |
Results
Table 23. Finance charges assessed after the second invoice correction
| Invoice number | Month ID | Finance charge date | Chargeable amount | Finance charge amount | Total chargeable amount due | Charge type | Finance charge removed? |
|---|---|---|---|---|---|---|---|
| 101 | 1 | 1/2/2013 | $100.00 | $2.00 | $102.00 | Regular | Yes |
| 101 | 2 | 2/2/2013 | $102.00 | $2.04 | $104.04 | Regular | Yes |
| 101 | 3 | 3/2/2013 | $104.04 | $2.08 | $106.12 | Regular | Yes |
| 101 | 4 | 5/2/2013 | $56.12 | $1.12 | $57.24 | Regular | Yes |
| 101 | 5 | 6/2/2013 | $57.24 | $1.14 | $58.38 | Regular | Yes |
| 101 | 6 | 7/2/2013 | $58.38 | $1.17 | $59.55 | Retroactive | Yes |
| 101 | 7 | 8/2/2013 | $59.55 | $1.19 | $60.74 | Retroactive | Yes |
| 101 | 1 | 1/2/2013 | $100.00 | - $2.00 | $102.00 | Removal | No |
| 101 | 2 | 2/2/2013 | $102.00 | - $2.04 | $104.04 | Removal | No |
| 101 | 3 | 3/2/2013 | $104.04 | - $2.08 | $106.12 | Removal | No |
| 101 | 4 | 5/2/2013 | $56.12 | - $1.12 | $57.24 | Removal | No |
| 101 | 5 | 6/2/2013 | $57.24 | - $1.14 | $58.38 | Removal | No |
| 101 | 6 | 7/2/2013 | $58.38 | - $1.17 | $59.55 | Removal | No |
| 101 | 7 | 8/2/2013 | $59.55 | - $1.19 | $60.74 | Removal | No |
| 101 | 1 | 1/2/2013 | $125.00 | $2.50 | $$127.50 | Correction | No |
| 101 | 2 | 2/2/2013 | $127.50 | $2.55 | $130.05 | Correction | No |
| 101 | 3 | 3/2/2013 | $130.05 | $2.60 | $132.65 | Correction | No |
| 101 | 4 | 5/2/2013 | $82.65 | $1.65 | $84.30 | Correction | No |
| 101 | 5 | 6/2/2013 | $84.30 | $1.68 | $85.98 | Correction | No |
| 101 | 6 | 7/2/2013 | $85.98 | $1.72 | $87.70 | Correction | No |
| 101 | 7 | 8/2/2013 | $87.70 | $1.75 | $89.45 | Correction | No |
Table 24. Invoices updated as follows
| Invoice number | Due date | Invoice amount | Bill amount | Balance amount | Sales tax | Discount amount | Total finance charges |
|---|---|---|---|---|---|---|---|
| 101 | 1/1/2013 | $100.00 | $100.00 | $64.45 | 0 | 0 | $14.45 |
| 101-R1 | 1/1/2013 | $25.00 | $25.00 | $25.00 | 0 | 0 | 0 |
