Late Payment Interest - Revision history

Khkoh: /* Compounded Interest */

2026-07-24T05:36:52Z

Compounded Interest

← Older revision		Revision as of 13:36, 24 July 2026
Line 80:		Line 80:

	The Highnix LPI Module supports both non-compounded and compounded interest calculations.		The Highnix LPI Module supports both non-compounded and compounded interest calculations.
	# '''Note:''' When '''LPI on LPI''' is enabled, ~~any~~ '''new''' Late Payment Interest (LPI) invoices generated thereafter are ~~treated~~ as ~~normal sales invoices~~ for ~~the purpose of~~ future LPI calculations. If such an LPI invoice remains unpaid after the applicable grace period, its outstanding amount will be included in subsequent LPI calculations, resulting in compounded interest. LPI invoices generated before '''LPI on LPI''' was enabled remain non-compounded and are not retrospectively included in future LPI calculations.		# '''Note:''' When '''LPI on LPI''' is enabled, '''new''' Late Payment Interest (LPI) invoices generated thereafter are flagged as eligible for future LPI calculations. If such an LPI invoice remains unpaid after the applicable grace period, its outstanding amount will be included in subsequent LPI calculations, resulting in compounded interest. LPI invoices generated before '''LPI on LPI''' was enabled remain non-compounded and are not retrospectively included in future LPI calculations.
	= Configuring Late Payment Interest Terms =		= Configuring Late Payment Interest Terms =
	Before generating Late Payment Interest transactions, the interest terms must be configured.		Before generating Late Payment Interest transactions, the interest terms must be configured.

Khkoh: /* Compounded Interest */

2026-07-24T04:07:33Z

Compounded Interest

← Older revision		Revision as of 12:07, 24 July 2026
Line 80:		Line 80:

	The Highnix LPI Module supports both non-compounded and compounded interest calculations.		The Highnix LPI Module supports both non-compounded and compounded interest calculations.
			# '''Note:''' When '''LPI on LPI''' is enabled, any '''new''' Late Payment Interest (LPI) invoices generated thereafter are treated as normal sales invoices for the purpose of future LPI calculations. If such an LPI invoice remains unpaid after the applicable grace period, its outstanding amount will be included in subsequent LPI calculations, resulting in compounded interest. LPI invoices generated before '''LPI on LPI''' was enabled remain non-compounded and are not retrospectively included in future LPI calculations.
	## '''Note:''' When '''LPI on LPI''' is enabled, ~~the generated~~ Late Payment Interest (LPI) ~~invoice is~~ treated as a normal sales ~~invoice~~ for the purpose of future LPI calculations. If ~~the~~ LPI invoice remains unpaid after the applicable grace period, ~~the~~ outstanding ~~LPI~~ amount will ~~itself~~ be ~~subject to~~ subsequent ~~Late Payment Interest~~ calculations, resulting in compounded interest.

	= Configuring Late Payment Interest Terms =		= Configuring Late Payment Interest Terms =
	Before generating Late Payment Interest transactions, the interest terms must be configured.		Before generating Late Payment Interest transactions, the interest terms must be configured.

Khkoh: /* Compounded Interest */

2026-07-24T04:01:30Z

Compounded Interest

← Older revision		Revision as of 12:01, 24 July 2026
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	== Compounded Interest ==		== Compounded Interest ==
	Compounded interest occurs when previously charged interest becomes part of the ~~balance~~ used for ~~future~~ interest calculations.
			Compounded interest occurs when previously charged interest becomes part of the amount used for subsequent interest calculations.

	Example:		Example:
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	Month 2 Interest is calculated on $1,010 instead of $1,000.		Month 2 Interest is calculated on $1,010 instead of $1,000.

	Because compounded interest has legal and contractual implications, it should only be ~~used~~ when ~~explicitly~~ agreed upon and permitted by applicable regulations.		Because compounded interest has legal and contractual implications, it should only be applied when expressly agreed upon by the contractual parties and permitted under the applicable laws or regulations.

	The Highnix LPI Module supports both ~~methods~~.		The Highnix LPI Module supports both non-compounded and compounded interest calculations.

	'''Note: ~~Compounded~~ Interest ~~will treat the~~ invoice as normal invoice ~~when~~ the LPI ~~is included~~. ~~And therefore~~, the LPI amount will be ~~treated as a normal invoiced item which will incur LPI if it is not settled~~.~~'''~~		## '''Note:''' When '''LPI on LPI''' is enabled, the generated Late Payment Interest (LPI) invoice is treated as a normal sales invoice for the purpose of future LPI calculations. If the LPI invoice remains unpaid after the applicable grace period, the outstanding LPI amount will itself be subject to subsequent Late Payment Interest calculations, resulting in compounded interest.
	~~----~~

	= Configuring Late Payment Interest Terms =		= Configuring Late Payment Interest Terms =

Khkoh: /* Compounded Interest */

2026-07-24T03:56:45Z

Compounded Interest

← Older revision		Revision as of 11:56, 24 July 2026
Line 79:		Line 79:

	The Highnix LPI Module supports both methods.		The Highnix LPI Module supports both methods.

			'''Note: Compounded Interest will treat the invoice as normal invoice when the LPI is included. And therefore, the LPI amount will be treated as a normal invoiced item which will incur LPI if it is not settled.'''
	----		----

Khkoh: /* Mixing LPI with Normal Invoice Items */

2026-06-21T13:41:02Z

Mixing LPI with Normal Invoice Items

← Older revision		Revision as of 21:41, 21 June 2026
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	This supports customers who have expressly agreed to compounded interest arrangements.		This supports customers who have expressly agreed to compounded interest arrangements.

			== Examples of Late Payment Interest Calculation ==
			The following examples illustrate the difference between non-compounded and compounded Late Payment Interest (LPI) calculations.

			=== Example 1: Non-Compounded Interest ===
			Assumptions:

			* Outstanding invoice amount: $10,000
			* Interest rate: 12% per annum
			* Interest calculated monthly
			* Monthly interest rate: 1%
			* Customer setting: LPI on LPI = No

			Month 1

			Outstanding principal: $10,000

			Interest charged:

			$10,000 × 1% = $100

			Total outstanding:

			$10,000 + $100 = $10,100

			Month 2

			Outstanding principal used for interest calculation: $10,000

			Interest charged:

			$10,000 × 1% = $100

			Accumulated outstanding:

			$10,100 + $100 = $10,200

			Month 3

			Outstanding principal used for interest calculation: $10,000

			Interest charged:

			$10,000 × 1% = $100

			Accumulated outstanding:

			$10,200 + $100 = $10,300

			In this example, interest is always calculated based on the original overdue amount of $10,000.

			Although previous LPI charges remain unpaid, they are not included in subsequent interest calculations. This is known as non-compounded interest or simple interest.

			=== Example 2: Compounded Interest ===
			Assumptions:

			* Outstanding invoice amount: $10,000
			* Interest rate: 12% per annum
			* Interest calculated monthly
			* Monthly interest rate: 1%
			* Customer setting: LPI on LPI = Yes

			Month 1

			Outstanding amount subject to interest: $10,000

			Interest charged:

			$10,000 × 1% = $100

			Total outstanding:

			$10,000 + $100 = $10,100

			Month 2

			Outstanding amount subject to interest: $10,100

			Interest charged:

			$10,100 × 1% = $101

			Total outstanding:

			$10,100 + $101 = $10,201

			Month 3

			Outstanding amount subject to interest: $10,201

			Interest charged:

			$10,201 × 1% = $102.01

			Total outstanding:

			$10,201 + $102.01 = $10,303.01

			In this example, previously charged LPI becomes part of the amount used for future interest calculations. This is known as compounded interest or interest on interest.

			=== Important Note ===
			In many jurisdictions, Late Payment Interest is generally calculated on a non-compounded basis unless otherwise permitted by law or expressly agreed between the parties.

			For this reason, Highnix defaults the customer setting "LPI on LPI" to "No". Users should only enable "LPI on LPI = Yes" when compounded interest is legally permissible and has been contractually agreed by the relevant parties.
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Khkoh at 13:14, 21 June 2026

2026-06-21T13:14:23Z

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Khkoh: Created page with "FORCETOC"

2026-06-21T12:49:12Z

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Late Payment Interest - Revision history

Khkoh: /* Compounded Interest */

Khkoh: /* Compounded Interest */

Khkoh: /* Compounded Interest */

Khkoh: /* Compounded Interest */

Khkoh: /* Mixing LPI with Normal Invoice Items */

Khkoh at 13:14, 21 June 2026

Khkoh: Created page with "__FORCETOC__"

Khkoh: Created page with "FORCETOC"