Interest calculation in Dunning Wizard

[Former Member]

Hi All,

I have a question with regard to the calculation of Interest amount via Dunning wizard.

Let us say I have a dunning term that issues Dunning Letter 1, 30 days past the due date. Dunning Letter 2 is issued 30 days past the dunning letter 1. The interest to be charged is 10% per anum.

Let us say I have an invoice of $1000. 30 days past the due date when I run the dunning wizard, it would show an interest of 8.33. As SAP does not post the interest amount automatically in the form of a journal entry, we manually pass this journal entry for receivables of $8.33.

Next time, when I run the dunning wizard after 30 days of running the first dunning wizard, I will see that the date of last dunning run is updated. When I check the Interest amount, it will show me 16.67. This interest amount is a cumulative i.e 8.33 (last dunning run) and 8.33 of this run.

Now, if we pass a journal entry for 16.67, it will be wrong as I have already passed a previous journal entry for 8.33. Is there a way we can make the system count the interest days from the last dunning run to give me the incremental interest amount of $8.33. Currently the interest days are calculated from the due date of the invoice.

Is there a UDF that can be created in the dunning wizard and can have a formatted search assigned to it?

Thank you very much for your input.

Regards,

Payal

[jitin_chawla]

Hi Payal,

Please check the following information from the Dunning documentation and see if it is of any help regarding your issue :

The interest will be calculated as follows:

Open Sum * Annual Interest Rate * Number of Days Overdue / (Number of days in Year * 100)

o Open Sum u2013 This value will be calculated according to the calculation method defined in the previous window (Calculate Interest Value on Remaining Sum or Calculate Interest Value on Original Sum).

o Annual Interest Rate u2013 This value is taken from the Annual Interest Rate field in the Define Dunning Terms window.

o Days Overdue u2013 The number of days that passed from date of payment as defined in the Invoice to the day of running the Dunning Wizard (see explanation on the Dunning Wizard below).

If a month passed since the defined day of payment, and a value was entered into the field Number of Days in Month (for example 30 days), this value will be taken into account as follows:

1. If the number of days in the past month was more or

less than the number of days defined in Number of

Days in Month field (for example if 31 or 29 days have

passed and 30 days were defined for a month), then the

value defined for calculation of interest will be used (in

the example above, the value will be calculated

according to 30 days and not 29 days).

2. If the number of days in the past month is less than the

number of days defined in the Number of Days in Month

field (for example if 29 days passed and 30 days were

defined for a month), the value defined for calculation of

interest will be used (in the example above, the value

will be calculated according to 30 days and not

according to 29 days).

3. If a month has not yet passed from the day of payment

and the number of days overdue is less than the

SAP Business One Dunning System in Release 2004 A

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number of days defined for that month (for example 14

days), the calculation will be done according to the

number of days overdue (14 days), and not number of

days in a month.

Check if this helps.

Regards,

Jitin

SAP Business One Forum Team

[Former Member]

Hi Payal,

Which option have you selected for interest calculation on the Dunning term: by Original or by Remain amount?

Thanks,

Gordon

[Former Member]

Hi Gordon,

The setting is to calculate Interest on Remaining amount. I am not certain if this setting would make a difference as it is the no. of interest days that are being taken into consideration for calculation of interest. And the interest days are calculated from the due date of the invoice rather than the last date of dunning run.

Thank you for your input.

Regards,

Payal

[jitin_chawla]

Hi ,

Also check the working by ticking and unticking the 'Include

Interests' checkbox.

Regards,

Jitin

SAP Business One Forum Team

[Former Member]

Hi Jitin,

Thanks for the information you provided. It does not help me answer the question though.

In the interest calculation formula, the days overdue are calculated from the due date of the invoice or from the last payment date.

In the first dunning run it is fine that the days overdue are calculated based on the due date of the invoice.

But in the second run, the interest days need to be calculated from the last dunning run and not from the due date of the invoice. Not sure if I am clear on the issue..

I unchecked the Include Interest checkbox - this will not work as the dunning now shows 0 amount as interest. We do not want 0 amount but we want a incremental interest amount due from the last dunning run.

I think the requirement cannot be met using the standard SAP Interest calculations (unless I am missing something here). I was wondering if a UDF can be added in the dunning wizard to give the information we need via a formatted search.

Thanks,

Payal