PURPOSE

Inertia billing applies to a contract when a lease term has ended but the customer has not yet returned the leased asset. For as long as the asset stays with the customer, the system keeps billing them, using whichever Inertia Method is configured on the Financial Product. Two methods are available:

• Last Installment Amount repeats the customer's last regular installment amount unchanged, for every period, for as long as the asset isn't returned.
• Declining Balance Until Flat Fee treats the inertia period as a continuation of the loan itself: interest is calculated on the remaining outstanding balance each period and principal reduces that balance further, the same way a normal installment works, so the amount owed keeps shrinking over time. Once the balance reaches a configured threshold, this recalculation stops and every period from then on simply bills a fixed administrative fee instead.

This lets a leasing company choose, per Financial Product, whether inertia billing behaves as a flat recurring charge or as a genuine wind-down of the remaining balance.

SETUP

Relevant fields in the Inertia section on the Financial Product card:

• Inertia Allowed – enables inertia billing for this Financial Product. Required for either method to apply.
• Inertia Method – chooses which of the two billing methods above is used once a contract enters its inertia period.
• Inertia Threshold Amount – only used with Declining Balance Until Flat Fee. The outstanding balance level at which billing switches over from the declining-balance calculation to the flat fee.
• Inertia Flat Fee – only used with Declining Balance Until Flat Fee. The fixed amount billed each period once the balance has reached the threshold. Set this to 0 if billing should simply stop once the threshold is reached, rather than continuing with a fee.
• Inv. Type For Inertia Instal. – the invoice type used for inertia installments, regardless of which method is selected.

Inertia Rental Applies, a separate Full Service Lease asset-return setting, stays in the Asset Assessment on Return section — it is not part of the Inertia Method choice.

Inertia Method can only be set to Declining Balance Until Flat Fee when Inertia Allowed is enabled.

There is also one accounting field on the Leasing Posting Setup page: Inertia Revenue (PL). This is the G/L account inertia billing recognizes as revenue whenever an installment isn't posted like a regular repayment — that is, every installment under Last Installment Amount, and, under Declining Balance Until Flat Fee, every installment billed after the balance has reached the threshold (the flat fee stage). It must be set up before inertia billing is used with either method. While the balance is still being paid down under Declining Balance Until Flat Fee, this account is not used — those installments post like a regular installment instead (see HOW TO USE below), including to the Financial Product's dedicated RV account when one is configured for that product.

HOW TO USE

No day-to-day action is needed once Inertia is configured on the Financial Product — the Invoicing Run automatically applies whichever method is selected every time it bills an inertia installment for a contract.

Last Installment Amount: the customer's last regular installment simply repeats each period, for as long as the asset remains unreturned.

Declining Balance Until Flat Fee: each inertia installment's interest is calculated from the remaining outstanding balance, and principal reduces that balance further, so the split between principal and interest shifts each period even though the total billed stays the same — exactly like a normal amortizing loan repayment. The balance is never allowed to go negative: if a period's calculated principal would overpay it, principal is capped at whatever remains and the difference is added to interest instead, so the balance lands on exactly zero rather than going below it. Once the balance reaches the Inertia Threshold Amount, this recalculation stops: the balance is held fixed at that point, and every installment from then on simply bills the Inertia Flat Fee instead, for as long as the asset remains unreturned. If the Inertia Flat Fee is set to 0, no further installments are billed once the threshold is reached — billing simply stops.

For accounting purposes, both stages of Declining Balance Until Flat Fee post correctly: while the balance is still being paid down, the principal portion reduces the receivable balance (using the Financial Product's dedicated RV account instead, if one is configured) and the interest portion is recognized as interest revenue, exactly like a regular installment. Once billing has switched over to the flat fee, that fee is recognized as revenue through the Inertia Revenue (PL) account set up on Leasing Posting Setup.

Each contract's inertia billing follows whichever Inertia Method is set on its Financial Product at the time — Financial Products using Last Installment Amount are unaffected by anything described above for Declining Balance Until Flat Fee.

INERTIA AMOUNT VARIATION

The Manual Inertia Amount overrides the installment amount for both Inertia Methods: when it is set on a contract, that amount is billed each period instead of the amount the method would otherwise use. It is set with an Inertia Amount Variation, which is available on contracts whose Financial Product has Inertia Allowed enabled:

• Open the Contract card and choose Variations > Inertia Change.
• Enter the New Inertia Amount (including VAT) and the Effective Date, the first billing date the new amount applies to. Enter today's date to apply it starting with the next billing run.
• Choose Confirm. Invoices already issued are not changed, and until the Effective Date the amount last billed keeps being billed.