Proposal Summary
This proposal outlines the functionality for automatically applying a penalty/interest to invoices overdue by 45 days or more.
Requirement
The client wants to automatically calculate a 5% penalty on the invoice amount once it reaches 45 days overdue and add an additional 1.5% interest every 30 days thereafter.
Deliverables
- We will develop a functionality that automatically adds a 5% penalty to invoices that remain unpaid in full even after 45 days from their creation.
- In addition, every 30 days after the initial 45-day period, an additional 1.5% interest will be applied to these invoices.
- To implement this, we will create a new item of type ‘Other Charges,’ named ‘Order Penalty,’ which will be added to the invoices to apply the penalty.
- We will develop and deploy a scheduled script that runs once every day. During each execution, it will identify the invoices that have been open for 45 days and are not yet paid in full. For each of these invoices, a 5% penalty of the invoice ‘Amount Due’ will be calculated and added to the invoice. The penalty is applied by adding the ‘Order Penalty’ item to the invoice, with the item’s amount representing the penalty.
- This way, the payable invoice amount will reflect the original invoice amount along with the applied penalty.
- If the invoice remains unpaid in full even after 30 days from the initial 45 days, an additional interest of 1.5% of the current invoice amount due will be added to the invoice. This process will continue every 30 days until the order is paid in full. The interest for each 30-day period will be applied by calculating 1.5% of the invoice amount due and then adding the calculated amount to the ‘Order Penalty’ item.
- Adding an example scenario:
- The initial invoice total was $150, and $50 was paid before reaching 45 days after the invoice was created.
- On the 45th day, 5% of the invoice amount due(which is now $100) will be added to this invoice, so that the new invoice total will be $100 + (5% of $100) = $105.
- From this $105, $35 was paid by the customer, so the current invoice amount is $70.
- On the 30th day after the initial 45th day, if the invoice is still not paid in full, 1.5% of $70 will be added to this invoice, which is $1.05 (1.5% of $70). So, the new invoice amount due will be $70 + $1.05 = $71.05.
- After applying the penalties to invoices, a notification email will be sent to the customer regarding the updated invoice amount.
- So, emails will be sent on the 45th day of an open invoice and every 30th day thereafter until the invoice is fully paid. Corp will be providing the email subject and content.
- In the future, if Corp wants to change the penalty percentage from 5% or 1.5%, they can do so themselves. For this purpose, we will include ‘script parameters,’ and they can simply update the new percentage values in these script fields.
Assumptions
- The penalty will be calculated based on the ‘Amount due’ in the invoice, representing the remaining unpaid amount:
- We will create a new item of type ‘Other Charge’ named ‘Order Penalty’ to apply penalties to open invoices.
- So, emails will be sent on the 45th day of an open invoice and every 30th day thereafter until the invoice is fully paid. Corp will be providing the email subject and content.
- In the future, if Corp wants to change the penalty percentage from 5% or 1.5%, they can do so themselves. For this purpose, we will include ‘script parameters,’ and they can simply update the new percentage values in these script fields.