Promise to pay payment arrangements
Promise to pay payment arrangements can be used to:
- make additional payments to pay for arrears or make up for missed payments
- make additional payments that are extra to the original payment plan
- early settle a finance agreement before the maturity /settlement date
When a promise to pay payment arrangement is created the payment dates for the finance agreement can be shifted for the remainder of the term. The instalment dates and capitalisation dates however do not change.
Promise to pay payment arrangements are not used for instances when the borrower has perhaps changed jobs and as a result is paid on a different day of the month. Example: borrower used to be paid on 25th of the month and the finance agreement was setup so that the payments took place on 26th of each month. Now the borrower changes jobs and is paid on the 30th of each month. Instead of going into arrears each month a change payment plan can be created.
A finance agreement may only have one "active" payment arrangement in place at any given point in time.
If a payment arrangement is activated and in place, no arrears letters will be sent out and no arrears fees will be charged as the account will be deemed to have a solution in place to resolve the arrears. Once at least one of the payments in the payment arrangement dishonour and is not paid, the payment arrangement will be "broken" and the arrears letters and fees will continue. Once a PTP is broken, it now longer applies and payments will return to take place as per the schedule that was in place prior to the payment arrangement
1. To create a payment arrangement on a finance agreement, navigate to Home pages -> Borrowing -> Finance Agreements
2 Use the filter options to filter the finance agreement that you need to apply the changes.
3. Once you have selected the finance agreement from the list there will be 3 options to create payment arrangements:
- New PTP - create a new payment arrangement from scratch
- Create PTP from an existing PTP - create new payment arrangement from an existing one
- New PTP after write off - which is used to create a payment arrangement on an account that has been written off
The rest of this article will deal with a "New PTP"
go to Actions menu -> Payment Arrangement > New PTP
4. The payment arrangement page will open and at the bottom the current payment details that exist on the finance agreement will be displayed so that they can be reviewed while creating the payment arrangement ,
Settlement Quote: If the payment arrangement is to settle the account, select the "settlement quote" checkbox. This will allow the user to supply a settlement date which is the date the borrower would like to settle the account in the future. Once this date is supplied, when you click the "calculate" button it will calculate exactly what the settlement amount would be including all interest as of the settlement date supplied. If however promise to pay lines are added, they will be included and the
settlement amount on the settlement date adjusted accordingly.
Pay additional amount for normal instalment: If checked, all payments that follow the new promise to pay payments added will
either be reduced or increased taking into account the new promise to pay
payments so that the original number of instalments as per the term on the
finance agreement, remains the same.
If unchecked, all payments that follow the new promise to pay payments added will remain as per the original instalment amounts. This will then either result in:
- the term
of the agreement could be reduced if new promise to pay payments are more
- the final instalment only will be adjusted if the new promise to pay payments are less
If a settlement quote is created, then the Pay Additional For Instalments is irrelevant
Promise to pay payments grid: The grid will allow the user to enter either additional payments by supplying a new payment date OR alter existing payments by supply an existing payment date.
Number: This will indicate the number of payments that will be altered. Example if the user entered the following details
Payment Date: 1 January 2020
Amount: $100
Frequency: Monthly
Number 3
Then 3 payments will be added for $100 using the payment frequency on 1 January 2020, 1 February 2020 and 1 March 2020
5. The calculate button will result in the payment details supplied being applied and presented at the bottom of the page. This allows the use to review and make modifications.
6. Once a payment arrangement is saved it will have a status of "Quote". Any payment arrangement with this status indicated that it is still under review and has not been finalised. While in this status the payment arrangement can be edited and modified.
7. Only once a payment arrangement is activated, the new payments will be applied to the finance agreement. Once activated if any of the payments have been setup as a BPAY payment, the BPAY
document will be generated against the individual payment. This can be viewed
in Clearmatch against the individual payment within the payment plan
Here is a video to show you how to create a promise to pay payment arrangement.
Related Articles
Payment holiday
A payment holiday can be created against a finance agreement, where the borrower will not have instalments raised and not be required to make payments during the holiday period. Interest will continue to be capitalised as per the original instalment ...Change payment plan
It could happen that a borrower has a change in circumstances and as a result they are not able to pay on the same date as when they first took out the finance agreement. As a result they will go into arrears every payment period. A change payment ...Process an investor payment run - pay the investors
When a payment run has been created either automatically or manually the status of the run will be "Pending", indicating that it is available for review. Once reviewed the payment run will need to be generated in order to make the payment to the ...Process a fees payable payment run - pay the parties
When a payment run has been created either automatically or manually the status of the run will be "Pending", indicating that it is available for review. Once reviewed the payment run will need to be generated in order to make the payment to the ...Investor payment runs
Investor payment runs can be generated in two ways: automatically by the platform manually by a user within Fusion Investor payment runs generated automatically A service exists that will automatically generate investor payments into a payment run ...