FAQ #: 40
How do I set my system up to calculate service charges?

The accounts receivable module provides the capability of calculating service charges on past due invoices. The service charge(s) levied are then placed onto the customer's account as an open item.

Service Charge Configuration

1. The Customer Master File contains a "Service Charges Apply" flag. This flag defaults onto each order entered for the customer through the Manual Transaction Entry and Order Entry. If can be overriden during entry of orders if necessary. This allows you to specify whether a particular invoice is service chargeable.

2. The monthly service charge amount is defined in the Accounts Receivable section of the ANSWERS Configuration. You may also define a minimum service charge amount. If an invoice is past due, and the service charge calculated is less than the minimum amount, the minimum will be levied as the service charge amount instead. You may also determine when service charges are levied. By default, it an invoice is thirty days past due, a service charge can be calculated on that invoice. The configuration allows you to choose which period, past 30 days, past 60 days, or past 90 days when you start levying service charges.

3. You can set up the number of past due days, 30, 60, or 90 by customer as well. This is only needed for customers who have a different past due days than the default set in #2 above. This option can be found in Customer Maintenance, Setup Options, and the Advanced button.

4. A service charge revenue account is set up using the General Ledger Maintenance program. This account number is then defined through the Application Interface Maintenance program. This account will be used to post service charges levied to the General Ledger.

Service Charge Generation

At the end of each month, or other appropriate time to levy service charges, the following steps must take place. These steps are included on the Accounts Receivable Month-End Processing Checklist:

1. Run the Detail Aging Report by Customer, instructing the program to calculate service charges. The program will then first check to verify that the "Service Charges Apply" flag is enabled on the Customer Master File. If so, each individual invoice will be checked to see if it is service chargeable. If so, and it is past due, it's total will be added to the service charge total for this customer. The service charge percent will then be applied to the total amount of invoices past due. A new open item, invoice, will be created for the amount of the service charge. Configuration options will allow creating an individual service charge for each past due invoice, if desired.

2. Print the Service Charge Invoices. This is an optional step and can be performed, if you plan to send your customer's an invoice for the service charge invoice created above.

3. Print and update the Service Charge Register. This report will update the General Ledger for the service charges levied against customers. The Accounts Receivable Master File and Open Item File are updated on-line by the Detail Aging Report, but the General Ledger will not be updated until the register is printed and updated.