Find what drives finance cost.
Distinguish Estimated, Cashflow and Override calculations.
Begin the lessonThe selected method determines what drives the calculation.
Aprao / lender finance calculation method.
Sales moved. Finance costs didn’t.
You updated the programme and expected the finance calculation to follow the later receipts.
First check the affected lender’s calculation method in Finance. An Estimated calculation uses its assumed borrowing profile; it does not calculate from your timed cash flow. Cashflow is the method intended to use cash-flow timing. An Override uses the value entered manually.
The method you will practise
- Open Finance and the relevant lender, then inspect the Calculation method for interest on the drawn balance.
- If you need a timing-based calculation, review the timed cash flow and the lender’s setup before selecting Cashflow.
- Check the resulting drawdowns and finance costs. Review each lender separately; one lender’s setting does not establish another’s.
Aprao / lender finance calculation method.
Must every lender calculation method follow the timed project cash flow?
Choose what you expect. The feedback will help you test your starting idea.
Inspect the affected lender’s method
Compare the cases below. Notice what changes, then read the explanation of why.
A diagnostic example. No interest rate, borrowing amount or change in finance cost is assumed.
The affected lender is set to Estimated. What is the best next step?
Give me a hint
Open Finance and the relevant lender, then inspect the Calculation method for interest on the drawn balance.
Now try it in your software.
In Finance, inspect the affected lender’s method. Record the calculation basis and why it is appropriate before changing it. This sample calculates no interest or borrowing requirement.
You know whether your finance calculation is connected to the timing you changed.
Need help with your own example?
The Companion is where you ask about the task on your screen. Include your software version, what you changed and the result you expected.
Read this module’s Companion exampleThis sample checks your reasoning here. It cannot inspect or certify your work in another application.