How To Make An Interest Adjustment

This topic discusses posting a transaction to adjust the interest amount on a Debtor account. It applies to Compound Interest calculations.

Requirements

- Setup Transaction Types
- Experience entering Transactions
- Original Principal was posted as a Transaction Type 196

Overview

When performing Compound Interest calculations on Debtor accounts, you may find that the numbers do not match amounts that you want to post for a particular account. It is possible to post a Transaction that adjusts the Interest amount. The new amount will be used for all future calculations on the account.

This adjustment routine applies to Compound Interest calculations. It only works when you have posted a Transaction for the Debtor's Original Principal as Transaction Type 196.

Transaction Type 401

Collect! uses Transaction Type 401 Interest Adjustment to handle adjustments that are made to automatic interest calculations. Collect! performs all necessary steps behind the scenes to correct the compounding amounts to reflect to new Interest amount.

Post A Transaction To Adjust Interest

1. From the Debtor form, select the TRANSACTIONS tab.

2. Choose New or press F3 when the list of Transactions for this Debtor is displayed.

3. Choose Transaction Type 401 for this new Transaction. Information is filled in automatically. Make sure you have the correct Debtor name.

4. Using the BACK [ << ] record navigation button, scroll through the Debtor transactions until you reach Transaction Type 196. Note the Payment and Posted Dates for this Transaction which posted the Original Principal.

Whenever you intend to use Compound Interest methods, the Original Principal must be posted as a Transaction Type 196. Your Adjustment Transaction MUST have the same Posted and Payment dates.

5. Using the FORWARD [ >> ] record navigation button, scroll forward to your new Transaction 401 and enter the SAME date in the Posted and Payment Date fields for your Interest Adjustment Transaction that you found on the Transaction 196 for the Original Principal.

6. Enter the amount that you want to add or subtract from the Interest either in the To Us or the Direct field, depending on your own business procedures. Be sure to enter a negative (-) amount to lower the interest amount.

Negative amounts are displayed in parentheses.

7. Click OK to complete the Transaction.

Collect! will automatically recalculate compounding figures to synchronize with this new amount.