Balance Interest Calculation in SAP FICO

You can calculate interest on the balance of those of your G/L accounts which are managed with open item display by using the balance interest calculation function in the FI system. This function can be used, for example, to double-check the interest calculated on your accounts by the bank.

You can also use balance interest calculation in accounts receivable and accounts payable. In these areas it is used, for example, to calculate interest on the staff loan accounts managed in accounts receivable and payable.

The following topics describe what options you need to consider before carrying out a balance interest calculation, and how this type of calculation is executed.

Introduction to Interest Calculation in SAP FICO

When you calculate interest on G/L accounts, a graduated list is produced. You can also have the balance interest calculation run logged by the system. This is especially useful if the run does not produce the result you expected. By checking the log, you can find out why interest was not calculated for a certain account.

The balance interest calculation program is controlled using the following specifications:

• data from the G/L account master record. This includes, for example, the interest indicator which the report uses and data used for determining the interest calculation period for the account.
• Specifications stored in the interest indicator. These include, among other things, the interest rates to be used.
• Specifications made for the balance interest calculation run, such as selection criteria which limit the accounts to be included in the run.

The following topic deals with those fields in a G/L account master record which are relevant for balance interest calculation. The topics after it explain how the interest indicator works and how the interest calculation period for the balance interest calculation run is determined. You may have to modify the interest rates defined in the system before running the balance interest calculation program. For more information on this, see Modifying Interest Rates.

The last topic in this section describes how to carry out a balance interest calculation run and how you can control this procedure.

Interest Calculation: Fields in the Master Record in SAP FICO

There are four fields in the company code-dependent data area of a G/L account master record that are relevant for balance interest calculation.

Interest indicator

In order to calculate interest on G/L account balances, the interest calculation report references the interest indicator from the account master record. The most important specifications for interest calculation are stored in this indicator, such as the rules used for calculating interest and the interest rate.

The interest indicator must belong to the interest calculation type "balance interest calculation".

Interest calculation frequency

In this field you enter a number of months, which determines how often the interest calculation program is to be run. However, it is only necessary to make an entry in this field if you are planning to have the system determine the interest calculation period automatically. The interest calculation period always refers to the field Key date of last int.calc. You can also define an interest calculation frequency under an interest indicator. However, the entry in the master record has higher priority.

Key date of last int.calc. (interest calculation)

After the interest calculation program has been run in the background, it enters in this field the upper limit of the interest calculation period. This date is used by the system to automatically determine the interest calculation period for an account.

Date of last int.calc. run

In this field the report enters the CPU date of the last balance interest calculation run. This information is necessary in order to determine whether interest must be calculated for items with a value date in the past. These are items which are posted to a period for which interest has already been calculated. You can find more information on this special case in the program documentation.

All accounts that you want to be included in the interest calculation run must have an entry in the field Interest indicator in their master record. If you want to block an account for interest calculation, you should remove the interest indicator.

You can find out how to change or display a master record in G/L Account Master Data.

Specifications Stored Under the Interest Indicator in SAP FICO

The interest indicator controls interest calculation. The following data is stored in the system under the interest indicator:

• The calendar type used for defining the days due for interest. You can choose between the bank, French, Japanese, and Gregorian calendars
• Interest rates and conditions (see
Modifying Interest Rates)
• Form for the lists

You can also specify under the interest indicator that the program should use an interest calculation numerator to calculate the interest. Otherwise, the program calculates the interest directly.

Note that, under certain circumstances, no interest is calculated for an account:

• If a maximum amount is specified under the interest indicator, an interest scale is only displayed if the interest amount calculated exceeds this.
• If you have specified under the interest indicator that no credit interest payments should be made, interest is only calculated if the account is in debit.
• The account must be specified for interest calculation either in the interest calculation period which you specified or that determined by the system. For information on this, read
Determining the Interest Calculation Period.

In general, all the specifications regarding interest calculation are made during the configuration of your system. You can find more information on this topic in the General Ledger IMG under "Bank Account Interest Calculation".

Determining the Interest Calculation Period in SAP FICO

The interest calculation period is demarcated by an upper and a lower limit (i.e. dates). The days in between these two dates are those for which interest is calculated.

There are two methods for determining the interest calculation period in the SAP system:

• You always determine the interest calculation period
manually. In this case, you must enter the period yourself for every interest calculation run. You do not need to enter any additional data when determining an interest calculation period.
• You let the system determine the interest calculation period
automatically. In this case, the system determines the period according to rules you have specified. You can define these rules either per account or per interest indicator.

Defining the Interest Calculation Period Manually

Automatic Determination of the Interest Calculation Period

Defining the Interest Calculation Period Manually in SAP FICO

If you want to define the interest calculation period manually, you must enter it for every interest calculation run you carry out. You do not need to fill any extra fields when defining the interest calculation period. In particular, you should not make an entry in the field Key date of last int.calc.

The system does not recognize overlaps with previous balance interest calculation runs. You thus have be sure that you do not enter a period for which interest has already been calculated.

You can use this method if you always calculate interest on accounts for periods of the same length, for example, once every month.

Automatic Determination of Interest Calc. Per. in SAP FICO

To ensure that interest calculation periods do not overlap, you can have the interest calculation period determined automatically. This is especially useful if you want to charge interest on accounts at irregular intervals. The interest calculation program then determines which accounts should be included in the respective calculation run.

For some of your accounts you run the interest calculation program every month; for others every three months. This can easily lead to overlaps if you enter the calculation periods manually.

If you want the interest calculation period to be determined automatically, you must carry out the following steps in the system:

• You must enter the interest calculation period. The program needs this information in order to determine whether an account is to be included in this interest calculation run or not until the next run.
• The field Key date of last int.calc in the account master record must have an entry. You can have the batch input make the entry in this field using the upper limit of the last interest calculation run, or you can enter it manually.
• There must also be an interest calculation frequency specified in the master record, providing this has to be determined per account. As an alternative, you can define this frequency under the interest indicator. However, the entry in the master record has higher priority.
• You must have entered an interest calculation day under the interest indicator. For example, if you always want to run the interest calculation program on the 15th of the month, enter this date. However, if you want the run to be on the last day of every month, enter 31.

The system uses this data to determine the upper and lower limit of the interest calculation period.

It does so in the following way: The program adds one day to the data in the field Key date of last int.calc. and uses the result as the lower limit for the interest calculation period.

The upper limit is determined as follows:

• The program determines the month by adding the interest calculation interval (frequency), which you have defined in the system, to the month of the above-mentioned key date.
• The program determines the day by using the interest calculation date defined in the system.

You have defined the following data in the system:

Key date of last int.calc. (interest calculation) 5/31/94
Interest calculation frequency in months 3
Interest calculation day 31

From this data, the system determines a lower limit of 6/1/94 and an upper limit of 8/31/94.

An account is only included in the interest calculation run if the upper limit you specify in the program is not later than the upper limit specified for interest calculation. You can thus carry out the interest calculation independently of the specified frequency with which interest is calculated on the accounts.

The system has determined 8/31/94 as the upper limit for this account. If you are calculating interest for the period 7/1/94 to 8/15/94, the account is ignored. However, if your calculation is for the period 7/1/94 to 9/1/94, the account is included.

Interest Calculation in SAP FICO

This following topics describe how to modify the interest rates defined in the system. This may be necessary before running the interest calculation program. It also describes how to run this program.

Modifying Interest Rates

Running the Interest Calculation Program

Modifying Interest Rates in SAP FICO

It may be necessary to update the interest rates defined under the interest indicator before running the interest calculation report. Interest rates can be defined in various ways, such as the following:

• You can enter a fixed interest rate for each interest indicator and currency, and for one validity date

• You can enter an amount-dependent interest rate for each interest indicator and currency, and for one validity date

• You can use reference interest rates. To do this, enter a key for the interest indicator under which the relevant rates are stored. You can also enter the reference interest rate dependent on a validity date.

To change a fixed interest rate or enter a different reference rate, proceed as follows from the Accounting Configuration menu:

1. Select Business volume
® Interest calculation ® Time-dependent cond.
2. Select the interest indicator you require for the interest calculation run by double-clicking on it.

Reference interest

If you want to use another interest rate as a reference, enter it in this field. This reference rate must be defined in the system already. To define a reference rate, go to the General Ledger IMG and select Define reference interest rates. You can find more information on system configuration in Configuring the System Using the Implementation Guide

Surcharge

If you want to use a fixed interest rate, enter it in this field. You can, however, use both a fixed rate and a reference rate. In this case, the surcharge is added to the reference rate during the interest calculation run.

Amount from

If you want the choice of rate to be dependent on the amount
involved, enter that amount here.

3. Save your entries by selecting Table view
® Save.

posts Running the Interest Calculation Program in SAP FICO

You start the interest calculation program from the General Ledger menu as follows:

1. Select Periodic processing
® Interest calculation ® Bal.interest calc.

The first screen for entering the selection criteria appears.

Your entries in this screen define the following:

• Selection

You can limit the number of accounts included in the interest calculation by entering an interval for the chart of accounts, G/L account number, company code, interest indicator, and business area, or an individual value. Note that, generally speaking, only those accounts which have an interest indicator for balance interest calculation in the master record, and are managed with line item display, are included in the calculation.

• Interest calculation period

The period you enter here determines the calculation period for the interest calculation run. If the field Key date of last int.calc. in the master record is filled, the system determines the interest calculation period automatically. For more information on this, refer to Determining the Interest Calculation Period.

• Day of last interest run

This entry is important if you have not entered this date in the master record. The date is used to decide whether items should be treated as value dates in the past. These are items that are posted to a period for which interest has already been calculated. For more information on this special case, refer to the program documentation.

• Reference date

This field lets you determine whether the program takes the value date, posting date or document date as the reference date for interest calculation. For balance interest calculation for customer and vendor accounts, the report uses the baseline date for payment as the reference date.

• Calculation

You can select whether, when calculating interest using either the Gregorian or the Japanese calendar, the system should calculate for 366 days (leap year). If you mark the field Standard int.calculation with a X , the interest calculation period is put back by one day. This means that the system also calculates interest on the carry forward balance. Those items for which interest would usually be calculated up to the period upper limit are not included in the run.

• Output

The system displays an interest scale for each account. The form that is used for this is stored under the interest indicator in the system. In addition to this, you have the option of requesting an interest rate overview. This is printed after the interest calculation run, with the interest broken down into debit and credit interest. By selecting a certain summarization level, you can determine how detailed the interest scale should be. If you want to be able to monitor the interest calculation run, you can have the system log the run. However, if you request a log, this should not be for more than a handful of G/L accounts. To this end, you should always enter the names of the appropriate accounts in the field Accounts for additional log.

• Updating information in the master record

The interest calculation data in the G/L account master records (see Interest Calculation: Fields in the Master Record ) is only updated if you enter X in the Update master record field and specify a session name for the background run in the Batch input session name field. You should always choose to update if you want to have the settlement period calculated automatically.

1. Enter the required data.
2. To run the interest calculation program, select
Program ® Execute.