About overdue charges

You perform the following steps to configure the collection and processing of overdue charges:

1. In the Overdue charges (AR204500) window, you configure at least one overdue charge code, which defines the calculation method and the criteria for collecting charges. For details, see About overdue charge code definition.
2. In the Customer classes (AR201000) window, you do the following for each customer class whose customers you want to be subject to overdue charge collection:
   1. Select the Apply overdue charges check box.
   2. Associate the overdue charge code you created with the customer class by specifying the code in the Overdue charge ID field.

   When a new customer account is created in the Customers (AR303000) window and a customer class is selected, the customer class supplies the default value of the Apply overdue charges check box (on the General info tab). You can change this default value for any customer account. If the customer account is subject to overdue charge collection (that is, if this check box is selected for the customer), for all of the customer's debit documents, the system displays the Apply overdue charge check box on the Financial details tab of the Sales invoices (AR301000) window. By default, the check box is selected, but you can clear the check box for a particular document.

The following options, located in the Customer ledger preferences (AR101000) window, affect all customers that are subject to overdue charges and can be set to fit your company's policies:

• Apply payments to overdue charges first: If this check box is selected, payments will be applied first to overdue charges and only then to outstanding invoices, starting with those having the earliest dates. Payment can be applied to a particular invoice only if the Apply payments automatically check box is selected for a customer in the Customers (AR303000) window.
• Calculate on overdue charges documents: If this check box is selected, overdue charges will be calculated on overdue charge documents as well as on invoices; thus, the amount of overdue charges compounds.

After configuration is done, you use the Calculate overdue charges (AR507000) window to process the overdue documents of customer accounts that are associated with the statement cycle you select in this window. For details, see Calculate overdue charges.

By default, the system uses the overdue charge code specified in the applicable customer class to calculate overdue charges. Alternatively, you can indicate to the system that the code should be taken from the applicable statement cycle to calculate charges.

Customer accounts are initially assigned the statement cycle, if any, specified for their customer class. But specifying a statement cycle in a customer class is not mandatory, as it is for a customer account. Additionally, for each customer, you may override the statement cycle that was assigned by default. Therefore, customer accounts within the same customer class may have different statement cycles.

You perform the following steps to set up overdue charge calculation by using the code specified in the statement cycle:

1. In the Statement cycles (AR202800) window, you specify an overdue charge code for each statement cycle used in the system. You may associate different codes with different statement cycles or use the same code for all statement cycles.
2. In the Customer ledger preferences (AR101000) window, you select the Set default overdue charges by statement cycle check box, to indicate to the system that the source of the overdue charge code is the statement cycle of the customer account.

After you have performed these configuration steps, the system will use the overdue charge code assigned to the applicable statement cycle to calculate overdue charges for customers and documents included in the charge collection process.

You process the calculation of the overdue charges for the overdue documents (that is, invoices and debit notes) in the Calculate overdue charges (AR507000) window. In this window, once you specify the criteria in the selection area, the system displays the documents that comply with the following requirements:

• The customer of the document is subject to overdue charges or the Apply overdue charges check box is selected for the customer account in the General info tab of the Customers (AR303000) window.
• The document is subject to overdue charges or the Apply overdue charge check box is selected for the document on the Financial details tab of the Sales invoices (AR301000) window.

To run the calculation process, you click Calculate on the window toolbar. If the Calculate on overdue charges documents check box is cleared in the Customer ledger preferences (AR101000) window, the system calculates simple charges by doing the following:

• Checking whether an invoice or a debit note is past due by using the associated credit terms
• Calculating the charges for the days past due (if there are no previous overdue charges for the document)
• Calculating the charges since the date of the last overdue charges (if overdue charges have been recorded for the document)

After the calculation is done, the system displays the list of overdue documents with the relevant details for each document, including the amounts of calculated overdue charges. You review the calculation results and process either the overdue documents you select (by using the unlabelled check boxes) or all of the documents by clicking either Process or Process all in the window toolbar.

The result of processing is a customer ledger document of the Overdue charge type with the Balanced status (or the On hold status if Hold documents on entry is selected in the Customer ledger preferences (AR101000) window).

If the system finds multiple overdue documents for the same customer account, it creates for this customer one document of the Overdue charge type that lists the charge amounts for each invoice.

You further process this document of the Overdue charge type by using the Sales invoices (AR301000) window.

If the Calculate on overdue charges documents check box is selected in the Customer ledger preferences (AR101000) window, the system searches for documents of the Overdue charge type as well and calculates charge amounts the same way as it does for the invoices and debit notes.

You release a document of the Overdue charge type by using the Sales invoices (AR301000) window. When you release an overdue document, the system generates a batch with the general ledger transactions. One transaction debits the customer ledger account referred to in the original document (which is usually the default customer ledger account for the customer), and the other transaction credits the Overdue charges account specified in the Overdue charges (AR204500) window for that charge, as shown in the following table.

Account	Debit	Credit
Customer ledger account	Amount	0.0
Overdue charges account	0.0	Amount

If the system finds an unreleased overdue charge document for an overdue document (among other overdue documents of the particular customer), this document is marked with an error and no new overdue charge document is created for overdue documents of this customer account. You can select this document and click View last charge to view and release the existing overdue charge document. Then you can calculate and process overdue charges for overdue documents of this customer account again.

Overdue charges may be numbered differently from invoices or notes. VAT are not calculated on overdue charges, and discounts are not applicable to overdue charges.

To exclude a customer account from the charge collection process, you clear the Apply overdue charges check box for the customer account on the General info tab of the Customers (AR303000) window.

To exclude a particular document from the process, you clear the Apply overdue charge check box for the document on the Financial details tab of the Sales invoices (AR301000) window.

Note: This check box is displayed for the document only if the customer of the document is included in the charge collection process.