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<ManualTopic ID="/baanerp/tf/onlinemanual/000412" xml:lang="en">
   <Header>
      <Title>Examples of interest calculation for overdue invoices</Title>
      <Keyword type="header" order="d1e1661058">
         <Level1>Invoicing</Level1>
         <Level2>interest invoices, examples</Level2>
      </Keyword>
   </Header>
   <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>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph>open invoice amount * actual interest percentage on interest invoice date / number of days in year * (interest invoice date - due date or previous interest calculation date) </Paragraph>
      </Formula>
      <Paragraph>This 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>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph>open invoice amount * actual interest percentage on interest invoice date / number of days in year * (interest invoice date - due date or previous interest calculation date) </Paragraph>
      </Formula>
      <Paragraph>This 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>
      <Formula space-and-orientation="indented-estimated">
         <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>
      </Formula>
      <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>
      <Formula space-and-orientation="indented-estimated">
         <Paragraph>open invoice amount * actual interest percentage on interest invoice date / number of days in year * (interest invoice date - due date or previous interest calculation date)</Paragraph>
      </Formula>
      <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 receive 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>Example 5: 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 2007-01-31 (including 10 days tolerance)</ListItem>
      </List>
      <TABLE border="1" borderstyle="default" space-and-orientation="indented-estimated">
         <THEAD noTR="1">
            <TR no="1" isLast="true">
               <TD rowspan="1" colspan="1"> </TD>
               <TD rowspan="1" colspan="1">Amount</TD>
               <TD rowspan="1" colspan="1">Doc. date</TD>
               <TD rowspan="1" colspan="1">Days late</TD>
               <TD rowspan="1" colspan="1">Interest</TD>
               <TD rowspan="1" colspan="1">Open amount</TD>
            </TR>
         </THEAD>
         <TBODY noTR="7">
            <TR no="1" isLast="false">
               <TD rowspan="1" colspan="1">Invoice</TD>
               <TD rowspan="1" colspan="1">100,000</TD>
               <TD rowspan="1" colspan="1">-</TD>
               <TD rowspan="1" colspan="1">-</TD>
               <TD rowspan="1" colspan="1">-</TD>
               <TD rowspan="1" colspan="1">100,000</TD>
            </TR>
            <TR no="2" isLast="false">
               <TD rowspan="1" colspan="1">Credit note 1</TD>
               <TD rowspan="1" colspan="1">10,000</TD>
               <TD rowspan="1" colspan="1">2007-01-15</TD>
               <TD rowspan="1" colspan="1">0</TD>
               <TD rowspan="1" colspan="1">-</TD>
               <TD rowspan="1" colspan="1">90,000</TD>
            </TR>
            <TR no="3" isLast="false">
               <TD rowspan="1" colspan="1">Credit note 2</TD>
               <TD rowspan="1" colspan="1">10,000</TD>
               <TD rowspan="1" colspan="1">2007-02-15</TD>
               <TD rowspan="1" colspan="1">0</TD>
               <TD rowspan="1" colspan="1">-</TD>
               <TD rowspan="1" colspan="1">80,000</TD>
            </TR>
            <TR no="4" isLast="false">
               <TD rowspan="1" colspan="1">Receipt 1</TD>
               <TD rowspan="1" colspan="1">30,000</TD>
               <TD rowspan="1" colspan="1">2007-01-20</TD>
               <TD rowspan="1" colspan="1">0</TD>
               <TD rowspan="1" colspan="1">0</TD>
               <TD rowspan="1" colspan="1">50,000</TD>
            </TR>
            <TR no="5" isLast="false">
               <TD rowspan="1" colspan="1">Receipt 2</TD>
               <TD rowspan="1" colspan="1">40,000</TD>
               <TD rowspan="1" colspan="1">2007-02-29</TD>
               <TD rowspan="1" colspan="1">29</TD>
               <TD rowspan="1" colspan="1">318</TD>
               <TD rowspan="1" colspan="1">10,000</TD>
            </TR>
            <TR no="6" isLast="false">
               <TD rowspan="1" colspan="1">Receipt 3</TD>
               <TD rowspan="1" colspan="1">20,000</TD>
               <TD rowspan="1" colspan="1">2007-03-15</TD>
               <TD rowspan="1" colspan="1">44</TD>
               <TD rowspan="1" colspan="1">241</TD>
               <TD rowspan="1" colspan="1">0</TD>
            </TR>
            <TR no="7" isLast="true">
               <TD rowspan="1" colspan="1">Receipt 4</TD>
               <TD rowspan="1" colspan="1">10,000</TD>
               <TD rowspan="1" colspan="1">2007-03-31</TD>
               <TD rowspan="1" colspan="1">60</TD>
               <TD rowspan="1" colspan="1">0</TD>
               <TD rowspan="1" colspan="1">0</TD>
            </TR>
         </TBODY>
      </TABLE>
      <Paragraph>Interest total: USD 559.</Paragraph>
      <List>
         <ListIntro>Explanation:</ListIntro>
         <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>
   <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">Interest invoices</Link>
      </RelTopic>
   </RelatedTopics>
</ManualTopic>