Oracle Cloud Receivables Late Charges

Caution: The Create Late Charges process only assesses late charges on transactions belonging to customers with a positive open balance. The process doesn't assess late charges on customers with a zero or negative balance, and doesn't recognize advance payments or guarantees from customers against transactions when there is no positive open balance. Adjustments If you record late charges as adjustments, then Receivables combines all interest charges relating to an overdue transaction, and creates a single late charge adjustment against that transaction. Note: You can't record late charges as adjustments for bills receivable transactions. You can only record late charges for bills receivable as debit memos or interest invoices. What steps are required to record a late charge? Answer:You must complete these steps to record late charges as interest invoices: 1. Select Invoice in the Late Charge Type field on the Credit Limits and Late Charges tab of the applicable customer profile. 2. Define a transaction source for late charges with a type of Imported. Receivables creates an interest invoice batch using the Invoice API. 3. Define a transaction type for late charges: o Select a class of Invoice. o Specify the receivable and revenue accounts for this transaction type. Receivables uses these accounts instead of AutoAccounting when generating late charges. 4. Assign the transaction source and transaction type to Billing and Revenue system options: o Select the interest invoice transaction type in the Interest Invoice Transaction Type field in the Late Charges region. o Select the interest invoice transaction source in the Late Charge Transaction Source field in the Late Charges region. 5. If you use interest tiers and charge schedules to assess increasingly higher late charges the longer a payment is overdue, you can set the Use multiple interest rates option on the related profile class, or customer or customer account profile. If you set this option, then if the effective dates for two charge schedules occur within a charge calculation period, both rates apply to late charge calculations during that period. 6. Select payment terms for the applicable customer profiles to indicate the interest invoice due date. Late Charge Interest Calculation Methods When you set up a late charge profile for your customers, you must decide the method to use to calculate late charges. You select the calculation method in the Late Charge Calculation Method field in the Credit Limits and Late Charges tab of the Customer Profile Class pages, or on the applicable customer or customer site profile. The interest calculation methods are: Average Daily Balance: Calculate late charges based on the average daily balance of overdue invoices. This method is for balance forward bills only. Late Payments Only: Calculate late charges based on the number of days between the payment due date and the actual payment date. This method uses the paid amount as the overdue invoice amount when calculating the late charge. Overdue Transactions Only: Calculate late charges for transactions based on the number of days a payment is late when you submit the Create Late Charges program. Overdue Transactions and Late Payments: Calculate late charges on both overdue transactions and late payments. This option levies the largest late charge amount on a customer. For example, your enterprise calculates late charges on the 15th and 30th of each month. Your customer has an overdue invoice of $100 that falls due on November 16: On November 30, you run the Create Late Charges program. The program calculates late charges for this overdue invoice. On December 10, your customer pays the invoice. On December 15, you run the Create Late Charges program again. The program assesses further charges for the additional 10 days that the payment was overdue. Late Charge Interest Calculation Formulas When you set up a late charge profile for your customers, you must decide the formula to use to calculate late charges. You select the calculation formula in the Interest Calculation Formula field in the Charge Calculation Setup section in the Credit Limits and Late Charges tab of the Customer Profile Class pages, or on the applicable customer or customer site profile. Guidelines for Presenting Late Charges During your late charges setup, you must decide how to record and present late charges to your customers. You can record and present late charges as one of three documents: Adjustments Debit Memos Interest Invoices You must complete the entire setup for late charges along with creating your late charge document. The sections below describe the specific steps you must complete for each late charge document that you intend to use. .