In the Payment Interest Rates window, you define interest rates Payables uses to calculate and pay interest on overdue invoices. Payables calculates interest on overdue invoices only if you enable both the Allow Interest Invoices Payables option, and the Allow Interest Invoices option for the supplier site of an invoice.

Payables calculates interest based on the rate you enter in this window in accordance with the United States Prompt Payment Act. The formula used compounds monthly, up to a maximum of 356 days interest.

For each rate you define, specify during which dates the rate is effective. Effective dates of rates cannot overlap. For example, the current interest rate is 7% for all unpaid balances. The interest rate on overdue invoices will rise to 7.5% on December 1, 2002. This new rate will be valid for four months. You enter two date ranges and interest rates, the first from today’s date to November 30, 2002 (interest rate 7%) and the next from December 1, 2002 to March 31, 2003 (interest rate 7.5%).

You can add or change a rate at any time. Payables uses the interest rate that is valid on your payment date to calculate and pay interest on overdue invoices.

If the system cannot find a rate then it uses zero as the rate.