RE: How is Interest Calculated by month and day
Hi,
The time unit of interest calculation is month, it will calculate interest on the first day of each month. Simply treat it as amount * month * Monthly interest.
Day: calculate interest each day; interest for partial months is calculated at a rate of 1/30 of the monthly interest for each day.
Month: calculate interest on the first day of each month; interest is calculated as 1/1 of the monthly interest rate.
For example, an invoice for 1,000.00 is created on January 1 in a leap year. The due date is February 15. For the interest code, the debit percentage is 0.5 percent (6 percent annual interest/12 months). Interest is calculated on February 16, which spans two intervals of 15 days. The calculations are as follows. If Day is selected, 1,000.00 * .005 * (30/30) = 5.00. If Month is selected, 1,000.00 * .005 * (1/1) = 5.00.
