Overdue Charges

In MYOB Advanced, you can set up the functionality that makes the system to calculate overdue charges and show them on customer statements to inform customers of additional charges they have incurred for documents that are past due.

You can define multiple overdue charge codes (particular overdue charge IDs) with their own rates and other settings that affect when and how overdue charges are applied. Thus, you can adjust MYOB Advanced to fit your existing policies and any policies you want to implement in the future.

This functionality is available only if the Overdue Charges feature is enabled on the Enable/Disable Features (CS100000) form.

Setting Up the Overdue Charge Collection Process

You perform the following steps to configure the collection and processing of overdue charges:

1. On the Overdue Charges (AR204500) form, you configure at least one overdue charge code, which defines the calculation method and the criteria for collecting charges. For details, see Overdue Charge Code Definition.
2. On the Customer Classes (AR201000) form, you do the following for each customer class whose customers you want to be subject to overdue charge collection:
   1. Select the Apply Overdue Charges check box.
   2. Associate the overdue charge code you created with the customer class by specifying the code in the Overdue Charge ID box.

   When a new customer account is created on the Customers (AR303000) form and a customer class is selected, the customer class supplies the default value of the Apply Overdue Charges check box (on the General tab). You can change this default value for any customer account. If the customer account is subject to overdue charge collection (that is, if this check box is selected for the customer), for all of the customer's debit documents, the system displays the Apply Overdue Charge check box on the Financial tab of the Invoices and Memos (AR301000) form. By default, the check box is selected, but you can clear the check box for a particular document.

The following options, located on the Accounts Receivable Preferences (AR101000) form, affect all customers that are subject to overdue charges and can be set to fit your company's policies:

• Apply Payments to Overdue Charges First: If this check box is selected, payments will be applied first to overdue charges and only then to outstanding invoices, starting with those having the earliest dates. Payment can be applied to a particular invoice only if the Auto-Apply Payments check box is selected for a customer on the Customers form.
• Calculate on Overdue Charges Documents: If this check box is selected, overdue charges will be calculated on overdue charge documents as well as on invoices; thus, the amount of overdue charges compounds.

After configuration is done, you use the Calculate Overdue Charges (AR507000) form to process the overdue documents of customer accounts that are associated with the statement cycle you select on this form. For details, see To Calculate Overdue Charges.

Setting Up the Calculation of Overdue Charges by Statement Cycle

By default, the system uses the overdue charge code specified in the applicable customer class to calculate overdue charges. Alternatively, you can indicate to the system that the code should be taken from the applicable statement cycle to calculate charges.

Customer accounts are initially assigned the statement cycle, if any, specified for their customer class. But specifying a statement cycle in a customer class is not mandatory, as it is for a customer account. Additionally, for each customer, you may override the statement cycle that was assigned by default. Therefore, customer accounts within the same customer class may have different statement cycles.

You perform the following steps to set up overdue charge calculation by using the code specified in the statement cycle:

1. On the Statement Cycles (AR202800) form, you specify an overdue charge code for each statement cycle used in the system. You may associate different codes with different statement cycles or use the same code for all statement cycles.
2. On the Accounts Receivable Preferences form, you select the Set Default Overdue Charges by Statement Cycle check box, to indicate to the system that the source of the overdue charge code is the statement cycle of the customer account.

After you have performed these configuration steps, the system will use the overdue charge code assigned to the applicable statement cycle to calculate overdue charges for customers and documents included in the charge collection process.

Processing Overdue Documents

You process the calculation of the overdue charges for the overdue documents (that is, invoices and debit memos) on the Calculate Overdue Charges form. On this form, once you specify the criteria in the selection area, the system displays the documents that comply with the following requirements:

• The customer of the document is subject to overdue charges—that is, the Apply Overdue Charges check box is selected for the customer account on the Financial tab of the Customers (AR303000) form.
• The document is subject to overdue charges—that is, the Apply Overdue Charge check box is selected for the document on the Financial tab of the Invoices and Memos (AR301000) form.

To run the calculation process, you click Calculate on the form toolbar. If the Calculate on Overdue Charges Documents check box is cleared on the Accounts Receivable Preferences form, the system calculates simple charges by doing the following:

• Checking whether an invoice or a debit memo is past due by using the associated credit terms
• Calculating the charges for the days past due (if there are no previous overdue charges for the document)
• Calculating the charges since the date of the last overdue charges (if overdue charges have been recorded for the document)

After the calculation is done, the system displays the list of overdue documents with the relevant details for each document, including the amounts of calculated overdue charges. You review the calculation results and process either the overdue documents you select (by using the unlabeled check boxes) or all of the documents by clicking either Process or Process All, respectively, on the form toolbar.

The result of processing is an Accounts Receivable document of the Overdue Charge type with the Balanced status (or the On Hold status if Hold Documents on Entry is selected on the Accounts Receivable Preferences form).

If the system finds multiple overdue documents for the same customer account, it creates for this customer one document of the Overdue Charge type that lists the charge amounts for each invoice.

You further process this document of the Overdue Charge type by using the Invoices and Memos form.

If the Calculate on Overdue Charges Documents check box is selected on the Accounts Receivable Preferences form, the system searches for documents of the Overdue Charge type as well and calculates charge amounts the same way as it does for the invoices and debit memos.

Releasing Documents of the Overdue Charge Type

You release a document of the Overdue Charge type by using the Invoices and Memos form. When you release an overdue document, the system generates a batch with the GL transactions. One transaction debits the Accounts Receivable account referred to in the original document (which is usually the default Accounts Receivable account for the customer), and the other transaction credits the Overdue Charges account specified on the Overdue Charges form for that charge, as shown in the following table.

If the system finds an unreleased overdue charge document for an overdue document (among other overdue documents of the particular customer), this document is marked with an error and no new overdue charge document is created for overdue documents of this customer account. You can select this document and click View Last Charge to view and release the existing overdue charge document. Then you can calculate and process overdue charges for overdue documents of this customer account again.

Overdue charges may be numbered differently from invoices or memos. Taxes are not calculated on overdue charges, and discounts are not applicable to overdue charges.

Excluding a Customer or a Document from the Charge Collection Process

To exclude a customer account from the charge collection process, you clear the Apply Overdue Charges check box for the customer account on the Financial tab of the Customers (AR303000) form.

To exclude a particular document from the process, you clear the Apply Overdue Charge check box for the document on the Financial tab of the Invoices and Memos form.