Anticipation credit is a reward that selected customers can receive if they pay an invoice before it is due. The system bases this credit on a fixed percentage of the amount paid and the number of days before the invoice is due that the customer paid it. When the system calculates anticipation credit, the credit can be applied against the customer's open accounts receivable balance to reduce their debt overall.
The system calculates anticipation credit and applies it when a user completes a cash receipts entry, provided that the user requests that the system check for it, and that the following invoice eligibility criteria are met:
The invoice amount is greater than zero.
Invoice terms are not listed in the Terms Code To Exclude From Anticipation Credit Eligibility control maintenance record.
The invoice has not had a previous anticipation credit applied to it.
The invoice balance is zero because of this payment.
The system calculates the amount of anticipation credit given to each invoice using the following algorithm:
[Invoice Amount - (Discount taken + Miscellaneous Adjustments)] x Anticipation Credit Percentage x # of Days Early / 365
The following table describes how the system arrives at each value:
|
Value |
Description |
|
Invoice Amount |
The amount of the purchase, including tax, shipping, handling, etc. |
|
Discount Taken |
The amount of the discount established for that customer in Terms Maintenance. |
|
Miscellaneous Adjustments |
Any adjustments made to the invoice. |
|
Anticipation Credit Percentage |
The amount of the discount established in the Anticipation Credit Percentage control maintenance record. |
|
# of Days Early |
The number of days before a discount or net due date that the invoice is paid in full. |
|
365 |
The number of days in a year. |
Assume that you have set up the Anticipation Credit Percentage in the customer's maintenance record as 0.1%. In addition, assume that the Discount Taken terms are as follows:
15 days from invoice date = 2.75% discount
45 days from invoice date = 2% discount
75 days from invoice = net payment due
In this example, your customer, Loomis Siding, has purchased $100 worth of drywall. After tax and handling, the total invoice comes to $129.00. The purchase was made on the 18th of January and comes due on the 7th of March.
Loomis Siding pays the total invoice when they pick up their drywall. What sort of anticipation credit should they get, considering that they paid 15 days before the first discount date? Following the algorithm given above, their anticipation credit would be 52 cents.
This is how the system calculates the anticipation credit:
[129.00 - (2.75 + 0)] x 0.10 x 15/365 = $0.52
Loomis Siding pays the total invoice on the 28th of February. This pay date falls after the first discount date, but still qualifies for the second discount date. Specifically, the pay date is five days before the second discount date. The anticipation credit would be 17 cents.
This is how the system calculates the anticipation credit:
[129.00 - (2.00 + 0)] x 0.10 x 5/365 = $0.17
Loomis Siding pays the total invoice on the 31st of March. This pay date is not eligible for a discount, but it is 2 days early on the net due date, so the anticipation credit of 7 cents is applied.
This is how the system calculates the anticipation credit:
[129.00 - (0 +0)] x .10 x 2/ 365 = $0.07
In order to use anticipation credit, do the following:
See Also: