Here are steps for interest calculation:

1. Define terms of payments:
T.code: OBB8
path: img ->fin. accting -> AP AR :-> Business transactions :->outgoing invoice and credit memo :-> maintain terms of payment

2. Define Interest Cal indicators / type:
T.code: ob46
path: img ->fin. accting -> AP AR :-> Business transactions :-> interest calculation global settings :-> define interest cal types
here in int cal type select 'p' for int cal on line items

3. Make Interest Indicator Available to Interest Run Program:
T.Code: ob82
path: img ->fin. accting -> AP AR :-> Business transactions :-> interest calculation global settings :-> prepare int. on arreas

4. Create Reference Interest Rate:
T.code: OBAC
path: img ->fin. accting -> AP AR :-> Business transactions :-> interest calculation :-> interest calculation -> define reference interest rate

5. Assign interest indicators to ref. int rate or define time dependant terms:
T.code: ob81
path: img ->fin. accting -> AP AR :-> Business transactions :-> interest calculation :-> interest calculation -> define time dependant terms
here in sequnece #  always use 1 for line item interest

6. Interest calculation account assignment:
Here we will mention how and which accounts the interest program should post.
T.code: obv1
path: img ->fin. accting -> AP AR :-> Business transactions :-> interest calculation :-> interest posting -> prepare interest on arreas calculation (customers)

Tips by Radha

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