Finance Charge Computation

NetSuite computes finance charge as follows:

(Annual Rate/365) x age of invoices x amount of outstanding invoice being assessed.

Age of invoices is counted from transaction date or due date which depends on finance charge setup. To revisit the same, navigate to Setup > Accounting > Finance Charge Preferences.

To assess a customer for finance charges involving several invoices, calculations are done per invoice, accumulating the total of finance charges per invoice in the end.

Example on how Finance Charges are computed:

1) Finance Charge Preferences

Annual Rate % = 12
Grace Period = 0
Minimum Finance Charge = 0.00
Assess From = Due Date

2) Sample Past Due Invoices:

Invoice #1:
-Date = 6/1/2017
-Due Date = 6/1/2017
-Amount = $500

Invoice #2:
-Date = 8/15/2017
-Due Date = 8/15/2017
-Amount = 1000

3) Navigate to the customer record > Sales tab > Transactions subtab. Notice the following Days Overdue details:
-Invoice #1 = 181
-Invoice #2 = 106

4) Navigate to Transactions > Customers > Assess Finance Charges (Assessment Date = 11/29/2017).

5) Locate the specific customer.  In the Fin. Chrg. Due column, notice that the calculated amount should be 64.60, computed as follows:

Formula: (Annual rate/365) x age of invoices x amount of outstanding invoice being assessed.
 
Invoice #1: 29.75 [(12%/365) x 181 x 500]
Invoice #2: 34.85 (12%/365) x 106 x 1000]
Total Final Charge Due =  64.60