Monthly Interest method in General Billing Settings

How does the 02 - MONTHLY INTEREST option for Interest method work in General Billing Settings. 

• General Billing
• General Billing Settings (gbparmnt)
• Interest

Would like to know the functionality of the 02 - MONTHLY INTEREST option in General Billing Settings. 

The 02 - MONTHLY INTEREST Interest method in General Billing Settings determines how interest will calculate for Accounts Receivable Category 01 Charge Codes that have been marked as Subject to interest within the Charge Codes program. This setting will accrue interest for eligible Charge Codes on the first day of each month after the Interest Date on the installment with the charge has passed. For example, if the interest date is 10/15, then interest will accrue on 10/15 and then again on 11/01, 12/01, etc. 

If a 30 day interest period is desired, then best practice is to set the Interest Date on the Invoice's installments to the first of a month, so that roughly 30 days will always pass before the system accrues interest. 

• Additional information about Bill Dates, including Interest Dates, can be found here: An Explanation of Bill Dates and Their Functions
• Additional resources for working in General Billing Settings can be found here: Master Article - General Billing Settings