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Learn about Late Charges Functionality in Receivables

Michele Casey
Principal Technical Support Engineer

Late Charges is an area of functionality that has steadily been enhanced since it was first introduced as Finance Charges in Release 11i.  In Release 12, it now includes both interest and penalty charges, and has more flexibility in calculation, documentation and storage of the charges.  Additionally in Release 11i, users had to run the Dunning or Statement process to kick off calculation of finance charges, but in Release 12 late charges is a standalone process.

You can assess late charges against past due debit items for each customer, account, or site.  The calculation of late charges is determined by your late charge policy. You can set up your policy to control various decisions, such as whether you assess late charges, and how those late charges are calculated.  Another step of the setup defines how you want to document your late charges and present them to the customer.  The options are:

  • Adjustments
  • Debit Memos
  • Interest Invoices 

You can customize the way Late Charges are created by defining Interest Tiers and Charge Schedules, then associate these records to the customer profile.  You can define a different late charge policy per customer profile class.  When you assign a customer profile class to a customer, the late charge policy is defaulted to the customer account, but you can change those values.  You can also define a late charge policy at the site level.  Additionally, this functionality allows further customization of calculation based upon transaction types.

Use the Generate Late Charges program to calculate late charges according to your organization's defined late charge policy.  You can submit this program in Draft mode to create a batch of draft late charges that you can first review.  If you wish to amend any of the calculations, or even delete a charge, you can do this via the Late Charges batch screen.  Once you are happy with the final listing of charges, you change the status and mode of the batch and the revised charges will be applied.

Additional Resources

The following documents provide an excellent insight into this functionality:

  • Late Charges Calculation And Set Up: A Guide For Oracle Receivables Users (DocID 1269062.1)
  • How to enable additional debug messages in Generate Late Charges (ARCALATM) (DocID 985589.1)
  • FAQ: Late Charges Problems and Questions (DocID 1325078.1)

Additionally, we recorded a webcast on Late Charges Functionality, which is available for playback   (DocID 740966.1)
- Choose Oracle E-Business Suite in the List of Values
- Choose Financials
Topics included in the Webcast:
  • Overview of Late Charges Functionality
  • Defining Organizational Late Charge Policy
  • Set up Customers & Sites for Late Charges
  • Generate Late Charges
  • Run Diagnostics

Join the discussion

Comments ( 3 )
  • guest Thursday, June 12, 2014


    I hav created late charge batch, but interest invoice not generated

    At last concurrent of "Create Late Charge Documents per worker and batch" end with warning..

    Log file stating as follows error " Some Charge invoice, debit memo have failed please verify the data in ar_interest_headers and lines tables with the batch_id :10053 "

    Kindly advise.


  • guest Thursday, June 12, 2014

    Hi Agilan,

    Based on your error message I think your Transaction type for Interest Charges needs to be looked at.

    An invalid segment value has been used in the Revenue Account GL Code Combination assigned to the Interest Invoice Transaction Type that was used for Late Charge Interest Invoice creation.


    Change the segment value for the Transaction Type used.

    Responsibility: Receivables

    Navigation: Setup > Transactions > Types



  • guest Monday, January 16, 2017


    How to enable the late charge policy on organization's wise.I am unable to find out the option to enable for oraganization wise.



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