SAP Financial Interest Calculation

SAP Financial Interest Calculation in R/3 supplies two kinds of interest calculation.Balance interest calculation is applied to the entire balance of a G/L or customer account, making use of a specific interest rate for a specified interval of time.Interest on arrears is applied to individual items in accounts receivable or accounts payable. A sure rate of interest is applied to the items which would possibly be still open or unpaid at a specified date.

Configuring the interest applications entails working with 5 main areas:
  1. Interest calculation sorts set basic parameters used in calculation. To calculate interest for an account (G/L, buyer, vendor), the grasp data for that account should embody the curiosity calculation indicator that applies.
  2. Normal terms specify further parameters about how each curiosity calculation indicator works.
  3. Time-based mostly terms set validity dates and relationships to curiosity rates.
  4. Rates of interest set up reference rates of interest (like LIBOR or Prime) that interest calculations will be tied to.
  5. Account dedication establishes which accounts the results of an interest calculation will likely be posted to (as needed).
Interest calculation indicators establish primary parameters for R/3 to make use of when calculating interest.Observe that every interest ID must be assigned an curiosity calculation type, indicating whether it is used for balance curiosity calculation or merchandise interest calculation.Each account for which R/3 will calculate interest will have to have an curiosity indicator in its master record.R/3 requires a separate curiosity calculation indicator for every combination of interest variables, such as calculation frequency, calendar sort, forex, interest rate, etc.

Common phrases set financial parameters for each interest calculation indicator.For example, every indicator makes use of a particular calendar type that governs the interest foundation and interval used for interest calculation.Different general terms management maximum / minimum limits on curiosity postings, blocks on outgoing funds, setting fee phrases, and varieties control. Time-dependent interest phrases differ from general phrases in having validity dates.They set, for example, the reference rate of interest that a calculation is tied to, and the premium (or spread) above that reference fee that applies. If the three-month LIBOR rate (London Interbank offered charge) is entered because the reference interest rate and a premium of 3.00% is entered, then with a LIBOR rate of 3.75%, the curiosity calculation rate will possible be 6.75%. When no reference interest rate is entered (as above), the premium rate alone (three%) is used in the calculation.The "amount from" subject specifies that the rate(s) apply solely to balances above a sure dollar amount. Along side the sequence numbers, an R/three user can use this function to construct "tiered' rates of interest, the place interest on balances as a lot as a given quantity calculate at one rate, and balances above that quantity calculate at a distinct one.

R/3 allows the user to arrange reference interest rates. In addition to an interest rate ID, the consumer can supply lengthy and quick text descriptions, an effective date, a currency and a financial center.Account willpower in R/three begins with predefined enterprise transactions which are accessed when the user runs the interest calculation programs.

Transaction 1030 in the instance above if the person needs to calculate the interest for a certain interval and needs to debit the account for which interest is calculated.When the business transaction is mixed with optionally available modifiers like the corporate code and curiosity indicator, R/three determines posting keys and account symbols.Account symbols, when mixed with modifiers like the chart of accounts and foreign money, point to G/L (or vendor or customer) accounts the place the curiosity transactions are posted. The use of account symbols allows corporations with totally different charts of accounts and currencies to use the identical enterprise transactions.

Restrict the variety of accounts included in the curiosity calculation by coming into intervals or individual values for the chart, account quantity, firm code, curiosity indicator and business area. Typically, solely accounts with an curiosity indicator within the master file and that are managed with line item show are included.You could also enter the curiosity calculation interval, date of final interest run, and other options.The output of the program displays an curiosity scale for every month. Select summarization ranges to determine how detailed the curiosity scale will be.To monitor the curiosity calculation run (or maybe explore why it didn't run as anticipated), you can have the system log the run. Limit the log to some G/L accounts - the printout might be lengthy.Run this system as a background job. Set the "Put up interest" indicator in order that posting is completed automatically.

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