Setup Considerations: Interest and Late Fees

You can use this topic to help make decisions when planning your configuration and use of interest and late fees. It explains:

Why to set it up.

How it fits into the rest of Workday.

Downstream impacts and cross-product interactions.

Security requirements and business process configurations.

Questions and limitations to consider before implementation.

Refer to detailed task instructions for full configuration details.

What It Is

Workday enables you to calculate interest charges and late fees on past-due invoices and then apply them to the original invoice. To generate finance charges automatically, you can schedule the process after you configure the rules. We also enable you to report on the finance charges and print the finance charge invoices.

Business Benefits

The interest and late fee functionality:

Streamlines how you set up, calculate, and process finance charges on past due invoices.

Eliminates the need to calculate interest and late fees manually on invoices for each customer.

Enables you to recover costs incurred by carrying unpaid bills on your books.

Use Cases

You can configure interest and late fee rules to:

Calculate one-time or recurring finance charges on past-due invoices.

Print separate finance charge invoices to send to your customers.

Generate a report only without processing the finance charge calculations.

Apply the on-account amounts to finance charge invoices.

Questions to Consider

Questions	Considerations
What invoice types do you need to assess finance charges on?	When you want to generate finance charges for different invoice types, configure the default rules or the overrides at the individual customer level.
How do you want to configure your finance charges for direct intercompany transactions?	When you have direct intercompany transactions, Workday processes the finance charge as usual. When you want to exclude these charges, set the customer to Exempt on their profile.
Do you need to post interest charges and late fees to separate accounts?	To post finance charges to 2 different ledger accounts, specify revenue categories by company or customer.
How do you want to generate your finance charge documents?	After you calculate the interest and late fees, you can create: A new invoice document for finance charges. A new invoice adjustment document for finance charges. Two separate invoice adjustment documents: One for interest charges and another for late fee charges. A report, without generating any documents or accounting.
How do you want to configure your worktags for finance charges?	When you set up calculation options, Workday enables you to: Copy the worktags from the header of a past-due invoice. Copy customer worktags from the customer profile to the header of the finance charge invoice or invoice adjustment document. Copy header worktags from a past-due invoice to the new finance charge adjustment document. When you've worktag balancing enabled, you must specify a worktag for processing finance charges.

Recommendations

Run the

Maintain Interest and Late Fees

report to set up interest and late fees in the correct order.

When you want to apply the finance charge for a full month even if 30 days aren't complete, set the calculation option to monthly.

To make any changes to the original invoice, first cancel the associated finance charge invoices.

To view invoice adjustments from the customer invoice, access the

Late Fees

tab on the

View Customer Invoice

report and drill into the calculation runs.

Requirements

Configure at least 1 interest rule and late fee rule.

Specify a rule to define the default behavior for interest and late fee calculations. Determine if you want to override the default calculations for a customer.

Set up calculation options for generating finance charges.

To print the finance charge document, set the

Customer Invoice Layout Rule

to Finance Charges
. Also, set the

Business Form Layout

to Customer Finance Charge Invoice Printing Form
.

When you enable worktag balancing, you must define the primary worktag in case the original invoice or the customer profile is missing the primary worktag.

Configure the Interest and Late Fee Event
business process and approve the charges so that Workday can display the finance charges.

Limitations

Workday doesn't support these calculations:

Compound interest.

Interest charges for late payments.

Tiered interest rates and charges.

This feature doesn't support invoices originating from Grants or Student sponsors.

Once you generate a finance charge document, you can't change the company customer or currency fields.

When you process the finance charge for the same customer and company multiple times in the same period, the on-account amount doesn't change for the subsequent calculation runs.

You can apply only 1 interest rule and 1 late fee rule to the same invoice.

You can't use the auto-application process to distribute the customer payment between the original invoice and the related finance charge invoice.

The late fee can only be a flat amount. You can't specify the late-fee value as a percentage of the past due amount.

You can't collect tax on finance charges automatically.

Tenant Setup

To enable interest and late fees, select the

Enable Interest and Late Fees

check box in the

Customer Accounts

section on the

Edit Tenant Setup – Financials

task.

Security

Configure the Set Up: Interest Rate and Late Fee Rule
domain in the Common Financial Management functional area for workers who need to:

Configure finance charge rules, calculations, output options, and overrides for individual companies or customers.

View individual company or customer reports.

Business Processes

Configure the Interest and Late Fee Event
business process to define who can initiate, approve, and view the finance charges. When you revise the calculations or deny the business process event, Workday also cancels the calculation event.

Reporting

To review the details of the finance charges, access the

Find Interest and Late Fee Calculation Runs

report.

You can also create a custom report using the

Interest and Late Fee Calculation Run

report data source. When your reports are on

Customer Invoices

report data source, include the

Generated Customer Invoice

report field to view interest invoice adjustments.

Integrations

You can use these web services to upload or retrieve data through an EIB:

Web Services	Considerations
Get Finance Charge Rules Put Finance Charge Rule	Adds, retrieves, or updates a finance charge rule. When a rule doesn't exist, Workday creates it. If the rule is already in use, you can't update it.
Get Interest and Late Fee Calculation Options Put Interest and Late Fee Calculation Option	Retrieves or updates the interest and late fee calculation rules at tenant and company level. When a calculation rule doesn't exist for the tenant, Workday creates a new one. The Days in Year field value must be greater than zero. When Minimum Days for Partial Month has a value, set the Include Partial Month flag to true. There's only 1 interest and late fee calculation rule for the tenant, but you can create any number of rules for a company, with the lowest order value taking precedence.
Get Interest and Late Fee Defaults and Overrides Put Interest and Late Fee Defaults and Overrides	Retrieves or updates the interest and late fee rule default and override configurations. Default application rules are applicable to all customers. Workday applies override rules based on the company and customer category combination.
Get Interest and Late Fee Output Options Put Interest and Late Fee Output Option	Adds, retrieves, or updates the rules for generating interest and late fees invoice document for a company. These rules set the output options when you process the finance charges. Customer-level rules override the tenant rule for the company.

Connections and Touchpoints

Workday offers a Touchpoints Kit with resources to help you understand configuration relationships in your tenant. Learn more about the Workday Touchpoints Kit on Workday Community.

2020R1 What's New Post: Interest and Late Fees