Aging and finance charges

[barbola]

We are trying to assess finance charges on overdue SOP invoices. If an invoice is paid late, but is paid before the Finance Charges are assessed, the finance charges do not calculate.

I tried examples:
Invoice date = 06/02/07
Payment Terms = Net 30
Finance Charge = 1.5%
Due date = 07/02/07

Payment received and applied 07/25/07
Aging was done on July 31 which moved this to 1-30 days
Finance charge was assessed on July 31 but calc as zero.

There should be finance charges for July 2-25 but because the customer's balance was zero on July 31, none was assessed. I don't understand why it works this way.

We even tried posting and applying the payment as August 2, changed the system date to July 31, and still, because the customer's balance was zero, it did not assess the finance charge.

This makes no sense to me?!?!

 

[knesja]

Barbola, I am surprised nobody replied to you yet.

I am not an expert, but that is my understanding of how finance charges work for most companies. Finance charges only apply to open balances on the date that you calculate charges. Since the invoice was paid prior to running the finance charges, nothing is calculated for that invoice.

If you want to calculate finance charges like you were talking about, you would either have to calculate finance charges every day, or manually (or otherwise outside of GP) calculate the days the invoices were paid late and apply finance charges individually. Seems to me, that would be more time than it is worth.

Good luck.

Keith

 

[barbola]

Yeah I had to take this to support and the system really sucks at this. So how come my credit card company can calculate interest on my short payment of $16.00 that I didn't realize until my next statement, so now I've been charged 49 days at 18.5% which comes out to over $40 on a lousy short payment of $16.00? They're obviously NOT using Great Plains!