As we are aware of Sage Intacct has many features that are useful for the business. In this blog, we will be discussing the Interest calculation on the open AR Invoice. Here, the penalty gets calculated according to the AR Terms setup.
Users can set the Terms as per the business scenario, further that term will be utilized to calculate the Penalty on the invoices which are overdue according to the Term applied to the Invoice.
Navigation to this feature is à Account receivable à setup à More à Terms.
Here we will discuss the process in brief of setting up the Terms and applying those to the Invoices or Customers. While creating the Terms, users need to make sure that they are filling out the mandatory data in the Penalty section on the Term Screen.
Cycle – Cycles define the time span in which the penalty accrues, such as Weekly, Biweekly, Monthly, and so on.
Amount – user can set the fixed amount of penalty or also the percentage depending upon the value set in the next dropdown. For e.g., if the user mentions 2 in the amount field and selects the % symbol in the dropdown below then a 2% penalty will be applied to overdue Invoices and unpaid Invoices.
Grace Days – In the Grace Days field, enter the number of days after the due date that the penalty takes effect. For example, you can use the grace period to compensate for the delay caused when a check is mailed within the penalty period but is delayed in the mail.
How to identify if the penalty is applied or not?
If the penalty is applied on overdue payment the individual adjustment will be created in Sage Intacct.
As of now, we discussed how to calculate the Penalty. The penalty does also have GL Journal Entries effects and we will discuss the same in our next blog.
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