Interest Calculation
Interest Calculation
Interest calculation in SOFT4Factoring is flexible, automated, and adjusts in real time based on your agreement setup and debtor payments. Follow these steps to understand how it works.
1. Configure Interest Settings in the Agreement
When creating a Factoring Agreement, select a factoring type that includes a predefined interest and commission structure.
While the agreement is under Deliberation status, you can adjust these settings.
2. Choose the Minimum Interest Type
In the Interest Setup section of the agreement, you can define Minimum Interest behavior:
Not Applied – No minimum interest will be enforced.
Fixed Amount – Enter a minimum amount you'd like to receive, e.g., to cover admin costs for early payments.
Number of Days – The system ensures interest is charged for a minimum number of days, regardless of early repayment.
Example: Choose “Number of Days” and enter 2 days as the minimum interest period.
3. Activate the Agreement
Once all settings, vendors, debtors, invoices, and disbursements are in place, change the agreement status to Valid.
4. Check Interest Values in Open Invoices
Go to the Open Invoices section of the agreement.
Scroll to the Interest Amount column.
Click the value to open a detailed popup.
Example: On Day 1, the system calculates $2.46 interest. On Day 2, it updates automatically based on the minimum interest setup. Calculations happen in real time.
5. Understand How Interest is Calculated
Interest is calculated on the debtor's outstanding balance (typically the advance paid).
If the debtor makes a partial payment, the outstanding amount adjusts, and so does the interest.
6. Register a Debtor Payment (Demo Example)
For demonstration, record a partial payment from the debtor (e.g., $5,000).
Move the system date forward by a few days.
The interest value will have changed, reflecting the new outstanding amount after the partial repayment.
7. Track Interest Over Time
As time progresses, interest continues to accumulate based on:
The remaining balance
The time elapsed
The minimum interest setup
Click on the Interest Amount field at any point to see a breakdown of how the interest was calculated, including the daily accrual and current outstanding amount.
his is how interest calculation works in SOFT4Factoring—automated, transparent, and dynamic.
It ensures accurate, real-time accruals based on each invoice’s specific activity and repayment status.
Interest calculation in SOFT4Factoring is flexible, automated, and adjusts in real time based on your agreement setup and debtor payments. Follow these steps to understand how it works.
1. Configure Interest Settings in the Agreement
When creating a Factoring Agreement, select a factoring type that includes a predefined interest and commission structure.
While the agreement is under Deliberation status, you can adjust these settings.
2. Choose the Minimum Interest Type
In the Interest Setup section of the agreement, you can define Minimum Interest behavior:
Not Applied – No minimum interest will be enforced.
Fixed Amount – Enter a minimum amount you'd like to receive, e.g., to cover admin costs for early payments.
Number of Days – The system ensures interest is charged for a minimum number of days, regardless of early repayment.
Example: Choose “Number of Days” and enter 2 days as the minimum interest period.
3. Activate the Agreement
Once all settings, vendors, debtors, invoices, and disbursements are in place, change the agreement status to Valid.
4. Check Interest Values in Open Invoices
Go to the Open Invoices section of the agreement.
Scroll to the Interest Amount column.
Click the value to open a detailed popup.
Example: On Day 1, the system calculates $2.46 interest. On Day 2, it updates automatically based on the minimum interest setup. Calculations happen in real time.
5. Understand How Interest is Calculated
Interest is calculated on the debtor's outstanding balance (typically the advance paid).
If the debtor makes a partial payment, the outstanding amount adjusts, and so does the interest.
6. Register a Debtor Payment (Demo Example)
For demonstration, record a partial payment from the debtor (e.g., $5,000).
Move the system date forward by a few days.
The interest value will have changed, reflecting the new outstanding amount after the partial repayment.
7. Track Interest Over Time
As time progresses, interest continues to accumulate based on:
The remaining balance
The time elapsed
The minimum interest setup
Click on the Interest Amount field at any point to see a breakdown of how the interest was calculated, including the daily accrual and current outstanding amount.
his is how interest calculation works in SOFT4Factoring—automated, transparent, and dynamic.
It ensures accurate, real-time accruals based on each invoice’s specific activity and repayment status.