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How Are Finance Charges Calculated?

edited Dec 23, 2019 11:01PM in Accounting / ERP 10 comments

Hi Everyone,

First of all, let me say I'm not an accountant, I don't even play one on TV. But, we've been using NetSuite for two months now and my collections person approached me with a concern that finance charges weren't being calculated correctly. I checked the setup and all of the parameters were correct - an 18% APR, 60 grace period, asses from due date.

Take for example this Customer. They have an overdue balance of $1,000.50 and NetSuite calculates the finance charge to be $32.07. Try as I may, there was no way I could reconcile this charge with an 18% APR. So I called support and here is what they gave me. The actual formula for calculating Finance Charges is not in the documentation but they looked it up and gave it to me and here it is:

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