Apply Late Payment Charges for Overdue Paid Invoices (Finance Charge)

How to Apply with "Apply Late Payment Charges for Overdue Paid Invoices" and outcome.

1st, As per above System Options,

Annual Interest Rate is 6.00%, and Calculate Late Payment Charges From Transactions "Due Date"

2nd, Customer  "700-F004", invoice Date as at 01/01/2021, Terms is 14Days, Due Date will be 15/01/2021 and invoice amount is RM100.

3rd, Customer "700-F004" pay for the Invoice at 20/01/2021.

Since we already checked "Apply Late Payment Charges for Overdue Paid Invoices", means that even the invoice had paid, but its still late, we will apply late payment charge on this Invoice.

Calculation For Above Charge 

[(Invoice overdue Amount * annual interest rate) * No. of Overdue day] / 365

=(100*6%)*(5/365)

=(6*5)/365

=0.08

Remark: the reason of 5 Overdue is, the invoice date is 01/01/2021, term is 14Days, meaning to said due date will be 15/01/2021, and Customer Paid at 20/01/2021, hence overdue for 5 Days, and will Charge for late payment for 5 Days.

End. 

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