If your organization assesses late charges on customers, you can use interest tiers to charge progressively higher interest charges or penalties on a transaction, as a payment becomes more overdue. See: Calculating Late Charges.
First, you define interest tiers, which are based on ranges of late days, in the Aging Buckets and Interest Tiers window. See: Aging Buckets and Interest Tiers.
Next, define a charge schedule in which you assign values to the interest tiers that you previously defined. Receivables uses the charge schedule during late charge calculations.
When you define a charge schedule, you indicate if Receivables should use a flat amount or percentage of the overdue transaction when calculating the late charge. You can also assign effective dates, so that you can predefine charge schedules to take effect on future dates.
Navigate to the Charge Schedules window.
Enter a schedule name and description.
Select the interest tier that you want to associate with charges.
Select the schedule type:
Amount
To calculate late charges, Receivables uses a flat amount against overdue transactions that fall within the specified ranges.
Suggestion: Use the Amount charge schedule type to calculate late and penalty charges using the Charge Schedule Per Tier interest charge type.
Rate
To calculate late charges, Receivables uses a percentage of the overdue transactions that fall within the specified ranges.
Enter the effective date range for this charge schedule. You can optionally enter an end date, if you want to predefine another charge schedule for future use.
In the Tiers field, select a tier. The list of values is populated by the selected interest tier's ranges.
Suggestion: A charge schedule can include a single interest tier. Using a charge schedule to assign values to tiers provides you with a convenient method to update interest rates or amounts when your late charge policy changes. Otherwise, to change those values, you must update your customer profile classes.
Assign a charge value. This value is either an amount or rate, depending on your selection in the Schedule Type field.
Continue assigning a value to each tier until you have assigned values to all tiers.
To predefine a future charge schedule, return to the Interest Tier field, select a new interest tier, and enter an effective date range for the schedule.
Note: If the effective dates for two charge schedules occur within a charge calculation period, Receivables can use both rates in late charge calculations during that period. To enable this, you must select the Use Multiple Interest Rates box on the customer profile class, or at the customer account or site level. This applies to interest invoices only.
As before, assign a value to each tier in the selected interest tier.