Information about how the payment amount for a scheduled payment is calculated in Receivables Management in Microsoft Dynamics GP


Source: Microsoft Support

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INTRODUCTION


This article contains information on how the system calculates the payment amount for a scheduled payment in Receivables Management in Microsoft Dynamics GP and in Microsoft Business Solutions – Great Plains 8.0.

More Information


Information about the scheduled payment

A scheduled payment is created from a posted sales/invoice document, a debit memo document, or a service/repair document in the Receivables Scheduled Payment Entry window. To open this window, on the Transactions menu, point to Sales, and then click Scheduled Payments.

Consider the following example: If you keyed a sales document for $10,130.64, you can make it a scheduled payment in the Receivables Scheduled Payments Entry window by entering this additional information:

  • Interest Type
    : Compound
  • Schedule Amount: $ 10,130.64
  • Schedule Interest Rate: 20%
  • Payment Frequency: Monthly
  • Number of Payments: 60


Click Calculate and then click Amortization to view the 60 lines in the amortization schedule. The first 5 lines will be displayed as follows:
PaymentDue DatePayment AmountPrincipalInterestPrincipal Balance
15/12/2009$268.40$99.56$168.84$11,131.08
26/12/2009$268.40$101.12$167.18$9,929.86
37/12/2009$268.40$102.90$165.50$9,826.96
48/12/20009$268.40$104.62$163.78$9,722.34
59/12/2009$268.40$106.36$162.01$9.615.98

First payment interest information


The following equation is used to calculate the first payment interest amount:
Interest amount = schedule amount  x schedule interest rate / payment frequency
The following example shows how the first payment interest amount is calculated:
Interest  =  $10,130.64 x .20 /12(monthly)
The interest amount in this calculation is $168.84.

Monthly payment amount

The following equation is used to calculate the monthly payment amount:
Monthly Payment amount = Principal amount 
/ (1 + monthly interest rate) to the N power - 1
/ monthly interest rate X (1 + monthly interest rate) to the N power.

Note In this equation, replace the placeholder N with the number of payments.

The following example shows how the monthly payment amount is calculated:
  • principal amount: $10,130.64
  • monthly interest rate: 0.20/12 = 0.016667
  • number of payments: 60


By using the information in this example, the following equation is used to calculate the monthly payment amount.
monthly payment amount = $10,130.64 / (1.016667) to the 60th power - 1 / .01667 x (1.016667) to the 60th power.

The payment amount in this calculation is $268.40.

Note The last payment will make a decimal adjustment on the Payment Amount if it is needed. In this example the Payment Amount for Payment 60 is $268.32 instead of $268.40. The last payment will also show the Principle Balance as $0.00 as it has been fully paid.

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