Use this table to define the criteria and rules used for the calculation of early payment discounts and late payment charges. 

Each set of criteria and rules is defined as an Early discount/Late charge code which can be added to customer and supplier Business Partner (BP) records as a settlement discount code (Financials section). The settlement discount code is applied to invoices, open items and payments associated with the BP but can be amended if authorization to modify it has been granted.

An early discount is defined as one or many fixed rates applied to an open item amount.

A late charge is defined as one or many yearly rates (over 365 days late), depending on the difference between the forecast payment date on the open item and the actual payment date.

You use early discounts and late charges as follows:

  • For automatic payments (payment proposals from the customer or the supplier), early payment discounts and late payment charges are calculated automatically, as associated with the corresponding payment.
  • For manual payments, the amount is submitted automatically if an open item has an early payment discount or late charge payment attribute associated with it.
  • When carrying out an open item inquiry, early payment discounts or late payment charges associated with each open item can be displayed based upon a reference date or a number of days.
  • With reminder management, a fixed late charge rate or the late charge rate defined for the customer can be calculated or mentioned on the letters. This is obtained from the settlement discount code specified on the open item.

Late charges and Interest notes

Late charges for customer invoices depend on several parameter values in the TRS chapter, TDC group at the company level:

IDNINVTYP- Late charges invoice type to select the document type after interest notes are generated.

IDNINTNOT - Compute interest notes to select eligible journal entries.

IDNTDAEXE - Late charges flow to select whether late charges are added to payments or sent separately as Interest notes (IDNGEN).

Prerequisites

SEEREFERTTO Refer to documentation Implementation

Screen management

The Early discount/Late charge function displays a single screen into which you enter the criteria and rules for the calculation of payment discounts.

Entry screen

Use this screen to define the criteria and rules for an Early discount/Late charge code.

Each Early discount/Late charge code can store up to 12 early settlement discount rates and late settlement surcharge rates. You can enter the the Number of days/Rate table in ascending order from the earliest payment days/rate on line 1 to the latest payment days/rate on lines 2+ or you can enter the Start date.

  • Enter settlement discounts, or early payment discounts, as negative percentage rates with a preceding minus (-) sign.
  • Enter surcharges, or late payment charges, as positive percentage rates.

The value of parameter DATDEP - Date for the calculation of discounts (TRS chapter, TDC group) determines whether you enter the number of days associated with each percentage rate as negative or positive:

  • If set to Open item due date, enter early payments as negative days with a preceding minus (-) sign and late payment charges as positive days.
  • If set to Invoice date, enter both early payments and late payment charges as positive days, usually starting at zero (0) days.

Example 1: Parameter DATDEP=Open item due date

The start date for the calculation of an early payment discount or late payment charge is the open item due date.

The following table demonstrates a set of discount rates:

Number of days Rate (Percent)
-20 -2
-10 -1.5
0 0
5 *8
10 12
80 15

  • A payment 21 days or more before an open item due date receives a 2% early payment discount. On a 1,000 euro invoice the settlement discount would be 20 euros.
  • A payment 11 to 20 days before an open item due date (both values included) leads to a 1.5% early payment discount, that is a 15 euro discount on a 1,000 euro invoice.
  • No settlement discount (because the Rate=0%) is awarded for a payment on an open item due date (0 days) to 10 days before the due date (both values included).
  • No surcharge (because the Rate=0%) is generated for a payment up to 5 days after an open item due date.
  • A payment 5 to 9 days after an open item due date (both values included) generates a late payment charge calculated pro rata temporis on an 8% yearly basis. For example, a payment 5 days late for a 1,000 euro invoice generates a surcharge of 1.10 euros (5/365*8/100*1,000=1.10).
  • A payment 10 days to 79 days (both values included) after an open item due date generates a late payment charge calculated pro rata temporis on a 12% yearly basis. For example, a payment 73 days late for a 1,000 euro invoice generates a surcharge of 24 euros (73/365*12/100*1,000=24).
  • A payment 80 days or more after an open item due date generates a late payment charge calculated pro rata temporis on a 15% yearly basis. For example, a payment 146 days late for a 1,000 euro invoice generates a surcharge of 60 euros (146/365*15/100*1,000=60).

Example 2: Parameter DATDEP=Invoice date

The start date for the calculation of an early payment discount or late payment charge is the invoice, or accounting date.

The following table demonstrates a set of discount rates:

Number of days Rate (Percent)
0 -2
11 -1.5
21 0
31 *8
91 12
547 15

  • A payment within 10 days of an invoice date receives a 2% early payment discount. On a 1,000 euro invoice the settlement discount would be 20 euros.
  • A payment between 11 and 20 days of an invoice date leads to a 1.5% early payment discount, that is, a 15 euro discount on a 1,000 euro invoice.
  • No settlement discount (because the Rate=0%) is awarded for a payment between 21 and 30 days of an invoice date.
  • A payment more than 30 days but less than 90 days after an invoice date generates a late payment charge calculated pro rata temporis on an 8% yearly basis. For example, a payment 73 days late for a 1,000 euro invoice generates a surcharge of 16 euros (73/365*8/100*1,000=16).
  • A payment over 90 days but less than 546 days after an invoice date generates a late payment charge calculated pro rata temporis on a 12% yearly basis. For example, a payment 146 days late for a 1,000 euro invoice generates a surcharge of 48 euros (146/365*12/100*1,000=48).
  • A payment 547 days or more after an invoice date generates a late payment charge calculated pro rata temporis on a 15% yearly basis. For example, a payment 730 days late for a 1,000 euro invoice generates a surcharge of 300 euros (730/365*15/100*1,000=300).

Block number 1

Early discount/Late charge (field DEP)

Code used by default for the current BP to identify a series of early discount and late charge rates (up to 12) to be applied to a payment according to a number of days early or days late with respect to the open item date.
Legislation (field LEG)

Non-compulsory field containing the legislation code (miscellaneous table 909).

The entered value is used upon creation and validation of the folder and upon addition of data during legislation copy.

The data concerning the requested legislations and the common data (legislation code empty) on folder creation.

Only the records concerning the folder legislations are retrieved on folder validation.

The Legislation field is also used as a filter and checked upon movement selection and entry (entry of invoices, payments, journals etc.).

If the field is empty, the current record can be used whatever the legislation of the company concerned by the movement.

If a legislation is specified, you can only use the current early discount/late charge code with companies of the same legislation.

For further information, refer to the documentation on the General principles linked to the multi-legislation setup.
Description (field DESAXX)

This long description is used as a title in screens and reports.

By default the short title, the long title or the column header of a data are recorded (on creation/update) in the connection language of the user.
You can add your translation in another language using the Translation function:

  • Click Translation from the Actions icon in the corresponding field.
  • In the Translation window, add a new language code with the translation in this language.

A user who logs on with this language will view the short description, long description or column header in their connection language if a translation exists. Otherwise, these descriptions will be available in the folder language.

SEEINFO The connection language must be defined as a default language for thefolder.
Short description (field SHOAXX)

Short title used in the screens and reports. This title is recorded in your connection language.

By default the short title, the long title or the column header of a data are recorded (on creation/update) in the connection language of the user.
You can add your translation in another language using the Translation function:

  • Click Translation from the Actions icon in the corresponding field.
  • In the Translation window, add a new language code with the translation in this language.

A user who logs on with this language will view the short description, long description or column header in their connection language if a translation exists. Otherwise, these descriptions will be available in the folder language.

SEEINFO The connection language must be defined as a default language for thefolder.
Group (field GFY)

This field is used to allow access to the transaction to a limited group of companies.

Calculation method (field CLCMOD)

Select a calculation method for late charges.

  • Daily rate – by days late
  • Actual / 365 – requires a Start date
  • Actual / 360 – requires a Start date
  • Actual/Actual ISDA (with leap year consideration) – requires a Start date
  • 30E/360 ISDA – requires a Start date

Table number 1

Start date (field DEPDAT)

Enter a start date if you selected a Calculation method other than Daily rate.

A date is required because these methods do not rely on the number of days between the due date and reference date.
No. of days (field DEPDAY)

Use this field to define the number of days between an open item payment due date and an actual payment date.

The DATDEP - Date for the calculation of discounts parameter value (TRS chapter, TDC group) determines whether you enter the number of days as negative or positive:

  • Open item due date: Enter early payments as negative days preceded by a minus sign (-) and late payments as positive days.
  • Invoice date: Enter all days as positive days, usually starting at zero (0) days.

SEEREFERTTO Early discount/late charge.
Rate (field DEPRAT)

Early discount or late charge rate impacting the invoice amount.
For an early discount, the specified rate must be negative.
For a late charge, the specified rate must be positive.

SEEREFERTTOAn example is provided in the documentation of the function Early discount/late charge.
It describes the rule applied to determine the rate used according to the variance between the expected and actual payment dates corresponding to the open item.
Description (field DEPRATDES)

Block number 3

Accounting code (field ACCCOD)

Use this field to specify the accounting code of the site.
The accounting code is a default value used in the setting up of accounting entries.
It refers to a table that lists a certain amount of elements (collective accounts, accounts or parts of accounts) that can be used for the determination of the documents that will be posted.

Table number 2

Dimension type (field DIE)

The preloaded dimension view codes match those of the default dimension views.

Dimension (field CCE)

The setup determines if the analytical dimensions can be modified. They are initialized based on the setup of the default dimension.

In creation mode, if no order line has been entered and the project code is modified, the analytical dimensions are reset based on the setup of default dimensions.

In creation mode, as in modification mode, if an order line is entered and the project code is modified, the analytical dimensions are not reset.

Scope

field DEPTYP

Use this field to specify whether the discount calculation perimeter relates to the tax excluded amounts or to the tax included amounts of the invoice.
This setting also affects the calculation of the discountable base.

  • If the discount code is set up as Tax excluded, the discountable base includes:
        • Tax excluded total of the lines
        • Tax excluded total of the invoicing elements relating to the discount and where the calculation base is: Tax excluded amount
        • Tax included total of the invoicing elements relating to the discount and where the calculation base is: Tax included amount because it is not possible to extract the tax from these tax included amounts, they are, as a rule, also taken into account.
           
  • If the discount code is set up as Tax included, the discountable base includes:
        • Tax included total of the lines
        • Tax included total of all the invoicing elements relating to the discount.

SEEWARNINGSpecific case of the payment discounts managed according to the Discount on tax method selected in the DEPMGTMOD - Discount management mode parameter. If an invoicing element is associated with the discount code, the discount calculation affects the tax included amount, but the discountable base always displays the tax excluded amount, since the discount on the VAT has already been taken into account upon invoice creation.

Reminder: The discount base is only calculated if the discount code is set up with at least one discount line (negative rate).
Restricted to reminder campaigns (field RMDCMG)

Rebate on VAT

Purchase invoice element (field PFINUM)

This field makes it possible to link an invoicing element to the early discount code, in order to decrease the base subject to VAT, thus making it possible to apply the early discount on the VAT amount, directly on the invoice.
An invoicing element can only be entered if the indicator Discount on tax is activated.
The early discount rate applied to the invoicing element is the negative rate which has the highest absolute value.
The discount calculation is carried out in the tax grid and in the invoicing element grid where it decreases the base subject to all the main taxes.

SEEINFOIn invoice entry, this invoicing element isonly used when the DEPMGTMOD - Early discounts management modecompany parameter (TC chapter, INV group) is set to 'Tax discounts' or 'Discount on tax (exempt)/Global' (for this last value: update 8.0.0 and higher).

Sales invoice element (field SFINUM)

This field makes it possible to link an invoicing element to the early discount code, in order to decrease the base subject to VAT, thus making it possible to apply the early discount on the VAT amount, directly on the invoice.
An invoicing element can only be entered if the indicator Discount on tax is activated. 
The early discount rate applied to the invoicing element is the negative rate which has the highest absolute value.
On the sales invoice, this invoicing element will not be displayed in the invoicing elements table (invoicing tab), nor in the invoice valuation table.
The discount calculation is carried out in the tax grid and in the invoicing element grid where it decreases the base subject to all the main taxes.

SEEINFOIn invoice entry, this invoicing element isonly used when the DEPMGTMOD - Early discounts management modecompany parameter (TC chapter, INV group) is set to 'Tax discounts' or 'Discount on tax (exempt)/Global' (for this last value: update 8.0.0 and higher).

Specific actions

Copy

Click the Copy action to copy this record to a different folder.

Simulation

Click this action to generate a simulation of early discounts or late charges. You can review the amounts before proceeding to the next step.

Local menus

In addition to the generic error messages, the following messages can appear during the entry :

Lead times must be increasing

Lead times (the number of days) must be entered in ascending order, from the earliest number of payment days to the latest number of payment days. For example, from 30 days early (entered with a negative sign as -30) to 547 days late (entered as 547).

Tables used

SEEREFERTTO Refer to documentation Implementation