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<ManualTopic ID="/baanerp/tf/onlinemanual/000412" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">Examples of interest calculation for overdue invoices</Title>
		<Keyword><Level1>Invoicing</Level1>
			<Level2>interest invoices, examples</Level2>
		</Keyword>
	</Header>
	<GeneralSection><GeneralSection><SectionTitle>Example 1: Unpaid invoice</SectionTitle>
			<Paragraph>You sent a sales invoice of € 612.15 to a customer on February 1. The invoice due date is February 16. Until March 1 you do not received any payments from this customer. You send the customer an interest invoice.</Paragraph>
			<Paragraph>13 days have elapsed between the due date and the interest invoice date. Therefore, the interest percentage is 10% over a period of 13 days.</Paragraph>
			<Paragraph>The formula is:</Paragraph>
			<Paragraph>Open invoice amount * actual interest percentage on the interest invoice date /number of days in year * (interest invoice date - due date or previous interest calculation date)</Paragraph>
			<Paragraph>The results in:</Paragraph>
			<Paragraph>€ 612.15 * ((10%) / (365 days) * 13 days) = € 2.18</Paragraph>
		</GeneralSection>
		<GeneralSection><SectionTitle>Example 2: More than one interest invoice per sales invoice</SectionTitle>
			<Paragraph>You sent a sales invoice of € 612.15 to a customer on February 1. The invoice due date is February 16. Until March 1 you do not received any payments from this customer. You send the customer an interest invoice.</Paragraph>
			<Paragraph>13 days have elapsed between the due date and the interest invoice date. Therefore, the interest percentage is 10% over a period of 13 days.</Paragraph>
			<Paragraph>On March 15, you send an additional interest invoice. The previous invoice was sent on March 1. Therefore, the interest must be calculated over a period of 14 days.</Paragraph>
			<Paragraph>As it is already 27 days after the due date, the interest percentage is increased to 20%.</Paragraph>
			<Paragraph>The formula is the same as in Example 1:</Paragraph>
			<Paragraph>Open invoice amount * actual interest percentage on the interest invoice date /number of days in year * (interest invoice date - due date or previous interest calculation date)</Paragraph>
			<Paragraph>The results in:</Paragraph>
			<Paragraph>€ 612.15 * ((20%) / (365 days) * 14 days) = € 4.70</Paragraph>
		</GeneralSection>
		<GeneralSection><SectionTitle>Example 3: Partly paid invoice</SectionTitle>
			<Paragraph>You sent a sales invoice of € 612.15 to a customer on February 1. The invoice due date is February 16. On February 20, the customer paid € 584.65, excluding the late payment surcharge of € 27.50.</Paragraph>
			<Paragraph>You send the customer an interest invoice on March 1. The payment was made 4 days after the due date. Therefore, 2% interest must be charged.</Paragraph>
			<Paragraph>13 days have elapsed between the due date and the interest invoice date. This means that the interest percentage for the remainder amount is 10% over a period of 13 Days.</Paragraph>
			<Paragraph>The formula for the paid amount is:</Paragraph>
			<Paragraph>Paid invoice amount * actual interest percentage on payment date /number of days in year * (receipt date - due date or previous interest calculation date).</Paragraph>
			<Paragraph>This results in an interest invoice for the paid amount of:</Paragraph>
			<Paragraph>€ 584.65 * ((2%) / (365 days) * 4 days) = € 0.13</Paragraph>
			<Paragraph>The formula for the paid amount is:</Paragraph>
			<Paragraph>Open invoice amount * actual interest percentage on the interest invoice date /number of days in year * (interest invoice date - due date or previous interest calculation date).</Paragraph>
			<Paragraph>This results in an interest invoice for the unpaid amount of:</Paragraph>
			<Paragraph>€ 27.50 * ((10%) / (365 days) * 13 days)* = € 0.10</Paragraph>
		</GeneralSection>
		<GeneralSection><SectionTitle>Example 4: Payment Schedules</SectionTitle>
			<Paragraph>You sent a sales invoice of € 612.15 to a customer on February 1. A payment schedule with two due dates is linked to this invoice. The first 70% of the amount (€ 428.50) is due after 10 days. The remaining 30% of the amount (€ 183.65) is due after 30 days.</Paragraph>
			<Paragraph>Until March 1 you do not received any payments from this customer. You send the customer an interest invoice.</Paragraph>
			<Paragraph>You send the first interest invoice on February 28. The same progressive interest rates from the previous examples are used. As the due date for the last 30% is on March 2, this interest invoice only applies to 70% of the invoice amount. The interest invoice amount for the unpaid amount is:</Paragraph>
			<Paragraph>€ 428.65 * ((20%) / (365 days) * 17 days) = € 3.99</Paragraph>
			<Paragraph>On March 12, you send the next interest invoice. This time, the last 30% of the invoice amount is also considered. However, this part is only 10 days overdue, and therefore an interest rate of 10% applies to this amount. The period for this part is calculated from its due date, March 2.</Paragraph>
			<Paragraph>To the other 70% of the invoice amount, an interest rate of 20% applies and this is calculated from the previous interest invoice date (February 28).</Paragraph>
			<List><ListIntro>As a result, the amount of the interest invoice is calculated in two steps:</ListIntro>
				<ListItem>20% over 70% of the invoice amount for the period from the previous interest invoice, as follows: € 428.50 * ((20%) / (365 days) * 12 days) = € 2.82</ListItem>
				<ListItem>10% over the remaining 30% of the invoice amount from its due date, as follows: € 183.65 * ((10%) / (365 days) * 10 days) = € 0.50</ListItem>
			</List>
			<Paragraph>The total interest invoice amount is:</Paragraph>
			<Paragraph>€ 2.82 + € 0.50 = € 3.32</Paragraph>
		</GeneralSection>
		<GeneralSection><SectionTitle>Example5: credit notes</SectionTitle>
			<List><ListItem>Interest 10%, based on 365 days a year.</ListItem>
				<ListItem>Sales invoice: USD 100,000.00</ListItem>
				<ListItem>Due date on 2003-01-31 (including 10 days tolerance)</ListItem>
			</List>
			<TABLE border="1"><THEAD><TR><TD>-</TD>
						<TD>amount</TD>
						<TD>doc.date</TD>
						<TD>days late</TD>
						<TD>interest</TD>
						<TD>open amount</TD>
					</TR>
				</THEAD>
				<TBODY><TR><TD>invoice</TD>
						<TD>100,000</TD>
						<TD>-</TD>
						<TD>-</TD>
						<TD>-</TD>
						<TD>100,000</TD>
					</TR>
					<TR><TD>credit note 1</TD>
						<TD>10,000</TD>
						<TD>2002-01-15</TD>
						<TD>0</TD>
						<TD>-</TD>
						<TD>90,000</TD>
					</TR>
					<TR><TD>credit note 2</TD>
						<TD>10,000</TD>
						<TD>2002-02-15</TD>
						<TD>0</TD>
						<TD>-</TD>
						<TD>80,000</TD>
					</TR>
					<TR><TD>receipt 1</TD>
						<TD>30,000</TD>
						<TD>2002-01-20</TD>
						<TD>0</TD>
						<TD>0</TD>
						<TD>50,000</TD>
					</TR>
					<TR><TD>receipt 2</TD>
						<TD>40,000</TD>
						<TD>2002-02-29</TD>
						<TD>29</TD>
						<TD>318</TD>
						<TD>10,000</TD>
					</TR>
					<TR><TD>receipt 3</TD>
						<TD>20,000</TD>
						<TD>2002-03-15</TD>
						<TD>44</TD>
						<TD>241</TD>
						<TD>0</TD>
					</TR>
					<TR><TD>receipt 4</TD>
						<TD>10,000</TD>
						<TD>2002-03-31</TD>
						<TD>60</TD>
						<TD>0</TD>
						<TD>0</TD>
					</TR>
					<TR><TD></TD>
						<TD></TD>
						<TD></TD>
						<TD></TD>
						<TD></TD>
						<TD></TD>
					</TR>
				</TBODY>
			</TABLE>
			<Paragraph>Interest total: USD 559.</Paragraph>
			<Paragraph>Explanation:</Paragraph>
			<List><ListItem>All the credit notes are first deducted from the open sales invoice amount, followed by the receipts in order of document date.</ListItem>
				<ListItem>An interest invoice advice is generated for receipt 2. The base of interest calculation is USD 40,000.</ListItem>
				<ListItem>An interest invoice advice is generated for receipt 3. The base of calculation is USD 10,000 instead of USD 20,000 because the receipt amount is higher than the remaining open amount of the sales invoice.</ListItem>
				<ListItem>No interest invoice advice is generated for receipt 4, because there is no remaining open amount.</ListItem>
			</List>
		</GeneralSection>
	</GeneralSection>
	<RelatedTopics><SectionTitle>Related topics</SectionTitle>
		<RelTopic><Link href="/baanerp/tf/onlinemanual/000031" role="manual">Interest calculation on overdue invoices</Link>
		</RelTopic>
		<RelTopic><Link href="/baanerp/ci/onlinemanual/000013" role="manual">To process interest invoices</Link>
		</RelTopic>
	</RelatedTopics>
</ManualTopic>
