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Administrator Guide
Last Updated: 2023-06-23
Set Up Calculation Options for Interest and Late Fees

Set Up Calculation Options for Interest and Late Fees

  • Configure interest and late fee rules.
  • Define default behavior and set the overrides for interest and late fee calculations.
  • Security:
    Set Up: Interest Rate and Late Fee Rule
     domain in the Common Financial Management functional area.
To define when and how Workday calculates the finance charges, configure additional parameters as defaults, or add rules for specific companies to override the defaults.
You can also specify the type of finance charge document you want to generate. To view the finance charge calculations before you process them, specify the reporting only option.
  1. Access the
    Maintain Interest and Late Fee Calculation Options
     task.
  2. As you complete the
    Calculation Options
     section, consider:
    Option Description
    Use On-Account Amount
    Select the check box to use the on-account amount to pay for finance charges. Workday applies this amount to the oldest invoice first.
    When you process finance charges again in the same period, for a company or customer, Workday doesn't use the on-account amount for subsequent payments.
    You can configure it at the tenant level or for specific companies as an override.
    Include Partial Month
    Select the check box to charge a full month of interest on invoices that are only partially past due in a 30-day period.
    This option is valid when the finance charge rules use a monthly calculation option.
    Minimum Days
    Enter a value to add buffer days to the partial month. Workday calculates finance charges for full month after the specified minimum days.
    Workday displays this field only when you select the
    Include Partial Month
     check box.
    Example: Your payment terms are net 30, and the invoice period is from September 30 to October 30. You enable including partial month and specify 10 minimum days as your buffer. When you run the process on:
    • October 5, Workday doesn't charge interest or late fees on past due invoices.
    • October 11, Workday charges full month of interest or late fee on all customer invoices past due from this date onwards.
    When you don't include partial month option, and process finance charges on any of these dates, Workday excludes the invoice from incurring an interest fee until after October 31.
    # of Days In a Year
    Workday automatically sets it to 365. Enter another value that you want to use for calculating daily finance charge rates.
  3. As you complete the
    Output Options
     section, consider:
    Option Description
    Document Output Options
    Specify the type of finance charge invoice document that you want to generate.
    • Create New Invoice Adjustment for Finance Charges
      : Workday creates 1 finance charge invoice adjustment document for each past due customer invoice.
    • Create New Invoice for Finance Charges
      : Workday creates 1 finance charge invoice per customer for all past due invoices. Each line on the invoice corresponds to 1 past due customer invoice.
    • Create Separate Invoice Adjustment for Finance Charges
      : Workday creates 2 separate invoice adjustment documents, 1 for interest charges and 1 for late fee charges.
    • Reporting Only
      : Workday updates report fields only and doesn't generate any accounting, enabling you to review your configuration before you process finance charges.
    Invoice Adjustment Reason
    Select an option for Workday to add the reason to your finance charge invoice adjustment document.
    Revenue Category
    Select a category so that Workday can populate this value automatically on the finance charge invoice or adjustment line.
    To post finance charges to a different ledger account, use this revenue category as a condition in the revenue account posting rule.
    Copy Header Worktags from Original Invoice
    When you select this check box Workday copies the worktags from the original past due invoice to the new finance charge invoice.
    Copy Customer Worktags
    Select this check box to copy worktags from the customer profile to the finance charge invoice adjustment when the original invoice doesn't include worktags.
    Worktags
    Select worktags for the finance charge invoice. Workday uses these values only when the invoice header or the customer profile don't have worktags.
    When you've worktag balancing enabled, ensure to define a primary worktag. It prevents processing errors when the original invoice or the customer profile don't have worktags configured.
    Target Company
    Specify the company from which you want to generate the finance charge invoices.
  4. As you complete the
    Company Overrides
     section, consider:
    Option Description
    For Customer Category
    When you define a category, Workday disables the
    Company
     option and you must specify a
    Target Company
    .
    Revenue Category
    You can define this category as a condition in your revenue account posting rule to post finance charges to a different ledger account.
When you process finance charges, Workday calculates them according to the specified options.
Run the
Process Interest and Late Fees
 task to generate a report or create a finance charge document.