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The Interest Detail form displays all the current settings
for calculating interest on the debtor's account. It also
holds any original interest or judgement interest amounts.
The Interest Detail form has many different fields, depending
on the type of interest you choose. You can simply record
Original Interest and note that there is No Additional Interest or
you can give Collect! the information needed to calculate any
standard type of interest.
Interest Detail form with No Additional Interest
Each type of interest requires different information and is
calculated in a particular way according to industry standards.
Since this can get quite complicated, topics are available to
explain each type of interest. Images are provided below to show
how the Interest Detail form fields change depending on your
choices.
Access the Interest Detail form by editing or clicking in the
Interest field on the Debtor form. Interest amounts are not
entered into the Interest field directly. This field displays
information taken from the Interest Detail form.
Original Interest
This is the amount of the interest already charged
on the account at the time the account was listed
with you. The amount is added to the debtor's owing.
It is included in the amount of Total Interest displayed
in the Interest Detail for this debtor. This field is
ignored if you have entered a judgement against
the debtor.
Judgement Interest
This is the amount of Original Interest permitted
in the judgement. The amount is added to the
debtor's Owing. If you entered a judgement amount
and date, the Judgement Interest field is used rather
than Original Interest when calculating the debtor's
Total Interest. When there is a Judgement, only the
Judgement Interest is displayed in the Interest field
on the Debtor form.
No Additional Interest
Interest Detail form with No Additional Interest
A very simple Interest Detail form is displayed if
you have never entered interest details for this debtor
or there is no additional interest. Select No Additional
Interest if you do not want Collect! to calculate interest
on this account.
Simple Interest
Interest Detail form with Simple Interest
When you set this switch Collect! calculates
Simple interest. You must also enter an
Annual interest rate and a Calculate interest
from date. You can choose a 360, 364 or 365
day calculation year.
Notice that the Reset Interest form is accessible
from this setting.
Simple Interest Improvement
Previously simple interest payment posting did not support
payment breakdown transaction types (Payment transaction
types with the Payment Breakdown radio button on.)
Now, if you post a payment breakdown transaction type,
the fees, interest, and principal components of a
transaction are automatically calculated when you post
the transaction.
The debtor's Interest field and the Total Interest field in the
Interest Details form reflect the Original Interest plus the
total amount of Accrued Interest calculated on this account
while the Accrued Interest field in the Interest Detail form shows
the outstanding interest to be paid, i.e. the Total Interest minus
all interest paid so far.
This makes the operation with Simple Interest more consistent
with operation under other interest modes and adds support
for automatic payment breakdown into fees, interest, and principal.
Compound Interest
When you set this switch Collect! calculates Compound interest
on this account.
Compound interest calculations are far more detailed and Collect!
allows you to enter all necessary information by displaying
additional fields on the Interest Detail form.
Options include:
* Revolving Compound Interest
* 360, 364 or 365 days or Ordinary
* Preamortized Loan - Normal or Rule of 78's
When you use Compound Interest, you MUST
post the Original Principal amount as a
Transaction (Type 196). Any Principal amount
entered into Original Principal directly is
overwritten as Collect! uses the total of all
Principal transactions to arrive at the Original
Principal.
Compound interest calculations produce a running balance of
principal, interest, fees and adjustments. You MUST use
Payment Breakdown transaction types for posting any
payments to an account with Compound Interest switched
ON. Please see the help topic Transaction Type for more
information and look for the section on Payment Breakdown.
Revolving Compound Interest
Interest Detail form with Revolving Compound Interest
When you choose Compound Interest and switch on
Revolving compound interest, the Period field becomes
visible. Refer to subheading Period below for details. Other
fields have been described above.
This switch causes Collect! to calculate compound
interest on a revolving basis.
Please enter an Annual interest rate. For instance,
enter 15 for 15%.
Choose a Period. This is the frequency for compounding
interest and converting it to principal.
Enter a 'Calculate interest from' date. If this is left blank,
Collect! will use the debtor's Listed Date. Setting this switch
disables the calculations supporting term payments.
When you use Compound Interest, you MUST
post the Original Principal amount as a
Transaction (Type 196). Any Principal amount
entered into Original Principal directly is
overwritten as Collect! uses the total of all
Principal transactions to arrive at the Original
Principal.
Compound interest calculations produce a running balance of
principal, interest, fees and adjustments. You MUST use
Payment Breakdown transaction types for posting any
payments to an account with Compound Interest switched
ON. Please see the help topic Transaction Type for more
information and look for the section on Payment Breakdown.
Preamortized Loan - Rule Of 78
Interest Detail form with Rule of 78's
See help topic Rule of 78's for details of this type of preamortized
loan calculation. To display information relating to fixed term
loans, click one of the Preamortized loan radio buttons.
Please see Preamortized Loan Requirements at the end
of this topic.
Preamortized Loan - Normal
Interest Detail form with Preamortized Normal
See help topic Preamortized Loan - Normal for details of this type of
preamortized loan calculation. To display information relating
to fixed term loans, click one of the Preamortized loan radio
buttons.
Please see Preamortized Loan Requirements at the end
of this topic.
365 Days
Interest is calculated on a 365 day year.
360 Days
Interest is calculated on a 360 day year.
Ordinary
Interest is calculated on a 12 month year
without considering number of days.
364 Days
Interest is calculated on a year of 7
days - 52 weeks, which totals 364 days.
This is used when you need weekly compounding
on daily interest. It results in 52 - 7 day
periods.
Compound Unpaid Interest
This switch is only visible when Preamortized Loan - Normal
is selected.
Turn this switch ON (check mark) to add unpaid interest
to the next month's Principal when a payment is missed.
This switch only applies to Preamortized Loan - Normal.
Set Terms Manually
This switch is only visible when Preamortized Loan - Rule of 78
is selected.
Turn this switch ON (check mark) to manually
enter the Payment Amount.
We use this amount to calculate the total
payments over the term (minus any periods
delayed for first payment). From this we then
derive the Total interest amount.
The Total interest amount is used when posting
payments to determine the amount of interest
due in the current period when the Transaction Type
specifies a Payment breakdown.
Late Fees Apply
Interest Detail form with Late Fees Apply
Check this box to enable Late fee details.
Late fee information currently is for informational purposes
only, and is not used for automation.
This will be developed further as time permits.
In reality, Collect! compounds interest on a periodic basis.
Missed payments simply cause the accrued interest to increase,
such that when the next payment is made, more interest is
deducted than would have been if the payment had been made
within the scheduled period.
What legal implications this has, we do
not know! Please review our legal disclaimers
before using interest calculation functions.
Grace Period Days
This is the number of days allowed from the payment
due date before a late charge is applied.
Lesser Of
The late fee will be calculated as the lower of either
the entered amount or the percent of the payment.
If you have entered only the percent, Collect! will
calculate only the one value. If both the percent
and entered dollar amount have been entered,
Collect! will apply the lower value.
Greater Of
The late fee will be calculated as the greater of either
the entered amount or percent of the payment.
If you have entered only the percent, Collect! will
calculate only the one value. If both the percent
and entered dollar amount have been entered, Collect!
will apply the higher value.
Late Fee Amount
This is the late fee amount.
Late Fee Percent
This is the percent of the scheduled payment that
is calculated as a late fee.
Principal
This is the Principal amount, or the original
loan amount. It is taken from the Debtor record
and cannot be changed directly from the Interest
Detail form. When there is a Judgement on an
account, this field displays the Judgement
Principal.
Annual Interest Rate
This is the Annual percent rate at which the account
is charged interest. This rate is divided into appropriate
periods for the interest calculations. This rate is used to
calculate the periodic interest rate and the equivalent
daily rate.
For example, when using a Monthly period, there are 12
periods per year, so the periodic rate is the Annual interest
rate divided by 12. Similarly, when using the Biweekly
period, the number of periods in a year is 26. The periodic
rate is therefore the Annual interest rate divided by 26. The
periodic rate is used to calculate interest payable over a period.
Period
This is the frequency for compounding interest and
converting it to principal. For preamortized loans, this
field also determines the frequency of payments due
on this account.
Calculate Interest From Date
In Simple and Revolving Compound Interest calculations,
this is the date from which interest will be calculated. It
is normally the Start Date for the loan. Collect! will
automatically use the debtor's Listed Date as the
calculation start date.
WARNING: When you enter a Judgement Date in
the Principal Detail form, the 'Calculate
interest from date' automatically changes to
the Judgement Date and previously accrued
interest is erased. If you wish to preserve a
record of any interest accrued prior to
Judgement, please refer below to the
section heading Reset Interest BEFORE
entering the Judgement Principal and
Judgement Date.
For Preamortized Loans, interest is calculated from this
date when 'Delay Payment' is switched ON. When 'Delay
Payment' is switched OFF, this field is ignored.
This date is actually related to the payment
and posted date of the principal transaction(s)
related to this debtor's owing. You could post
a loan in January and not start interest
calculations until March, simply by working
the transaction posting vs. interest
calculation dates.
See Total Term Calculations below.
Term
This is the term of the Preamortized loan. For example,
a 2-year loan with a monthly payments (a monthly Period)
has a Term of 24.
Similarly, a loan with a Biweekly Period and a Term of 52
is a 2-year loan, since there are 26 bi-weeks (heh heh)
per year, and 52 of them makes two years.
This is used to calculate the payment amount, the
total plan payments and the early payoff amount.
See Total Term Calculations below.
First Payment Date
You can optionally delay the date of the first payment
for a Preamortized loan.
From the date one period before the First Payment Date,
the loan is calculated as per the term and interest rate defined.
The amortization schedule is calculated using the original
principal plus the accrued interest compounded daily on
the original loan amount from the date one period before
the specified First Payment Date.
Normally, the system expects the First Payment Date to
be one period after the Calculate Interest From Date.
See Total Term Calculations below.
Payment Amount
When you are using No Interest, Simple Interest or
Compound Interest -- Revolving Compound Interest, use
this field to type in an amount you want the debtor to
pay on a term basis. You must also create a Promise Contact
and set the Repeat Period. Then Collect! can automatically
manage the promise payments, underpayments and
overpayments. Please refer to Promise Contact Topics
for details.
When you are using Compound Interest -- Preamortized Loan, this
is the amount of the payment for a term loan. It is calculated from
the information entered in the Interest Detail form.
You can manually enter a payment amount if you
switch ON ' Set Terms Manually '. This is only an
option when you are using preamortized loan.
See Total Term Calculations below.
Total Plan Payments
This is the total principal and interest that will have been
paid upon completion of all payments in an orderly manner.
TOTAL TERM CALCULATIONS
We calculate the total term payments using the
Calculate interest from date and standard
amortization equations. From there we calculate
a periodic payment amount based on the number
of periods in the total payment schedule (factoring in a
First payment date, if entered) and then the total
plan payments are calculated by multiplying the
periodic payment amount by the number of
payments. This takes care of rounding details to
give accurate total payments.
Please refer to help topics on the different types
of interest.
Early Payoff Discount
Enter an amount charged to pay off the account
in full. The rule of 78's is applied. The amount in
this field is an additional service charge which is
included in the interest savings calculation.
Usually, you would leave this field empty.
Early Payoff Savings
Early payoff savings is the amount the debtor will save
in uncharged interest if the account is paid in full on the
current date. This calculation uses the Rule of 78's
based on the loan term.
The Early payoff discount amount (service charge) is
subtracted from the amount calculated using Rule of 78's
to produce the final savings amount.
In the case of a term account with a
delayed first payment, interest is calculated
for the term, and then the rule of 78's is
applied over the reduced term when the
first delayed payment is made. In other
words, a 36 month term loan where the 1st
payment is delayed for three months uses
the rule of 78's, based on 34 actual
payment terms.
Early Payoff Amount
This is the amount the debtor would need to pay to
completely pay the loan off before the current period end.
This is actually the amount of Original Principal
remaining on the loan, minus any Early payoff discount.
Accrued Interest
This is the amount of interest that is outstanding
to be paid on this account. This reflects the
Original Interest plus the all the Accrued Interest
minus all interest paid to date.
If no interest is calculated, then this field displays zero.
In the case of Revolving Compound interest, this
represents the amount of interest that will be paid
when the next payment is made. In the case of a
Preamortized Loan, this is the amount of interest
currently due, based on the Rule of 78's and the
date of the most recent payment.
The Accrued Interest field shows the outstanding
interest on this account, while the debtor's Interest
field and the Total Interest field in the Interest Details
reflect the Original Interest plus all the Accrued Interest
that has accumulated over the time that interest is
being calculated on this account.
When there is a Judgement, all interest is
calculated from the Judgement Date and
prior activity on the account is ignored.
Please refer to the section heading
Reset Interest for more details.
Total Interest
This is all the interest that has accrued over the time
that the interest is being calculated. This is the sum
of Original Interest plus all Accrued interest. The
Interest field on the Debtor form displays this Total
Interest amount.
For Term Loans, this is the total amount of interest
to be paid over the term of the loan.
When there is a Judgement, Judgement
Interest is used rather than the Original
Interest. All accrued interest is
calculated from the Judgement Date
and prior activity on the account is
ignored. Please refer to the section
heading Reset Interest for more details.
Reset Interest
This button is only visible when using Simple or
Revolving Compound Interest. Select Reset Interest
to change the dates and interest rate used in
interest calculations for this account. Collect!
prompts you to capture the interest accrued to stop
date as a transaction of Type 499. Then you can enter
a new interest rate, if necessary, and a new date to
restart interest calculations. This is useful for recording
interest accrued prior to Judgement, but you must do
it BEFORE putting in your Judgement Principal and
Judgement Date! Please see the help topic
Reset Interest for more details.
Amortization Schedule
This button is only visible when using Preamortized
Interest. When you select the Amortization Schedule
button, the Amortization Table Summary is displayed
with all scheduled payment details based on your
settings. Please refer to
How To Use the Amortization Schedule for more information.
Calculate Delinquency Date
This field is only visible when 'Report as credit grantor'
is switched ON in the Credit Bureau Setup form.
When this is switched ON, Collect! will calculate
the Delinquency Date in the following manner. If there is
a promise that is at least 31 days past due, Collect!
will calculate the Delinquency Date as the Promise
Date plus 31 days.
If this is not switched ON, Collect! will not calculate
the Delinquency Date.
Help
Select this for help on the Interest Detail form
and links to related topics.
Calculators
Select this to open a help topic with links to very
useful calculators and other math tools.
Cancel
Select this button to ignore any changes you may have
made and return to the previous form.
OK
Select this button to save any changes you may have made and
return to the previous form.
From the Debtor screen, you can click the field
labelled Owing to display the
Debtor Financial Summary. This form shows all
the financial details for the debtor's account,
including total charges, total payments and
total owing amounts for principal, interest and
fees. Overpayments and adjustments are
displayed. For interest and loan accounts, any
amounts needed to bring the account to current
are also shown. Click into the Owing field to
open the Debtor Financial Summary.
Preamortized Loan Requirements
1. Please enter an Annual interest rate. Collect! will
divide this rate appropriately when you choose a Period.
2. Choose a frequency Period for compounding interest and
scheduling debtor payments.
3. Enter a Term. This is the total number of payments. For instance,
a 4-year loan paid monthly has a Term of 48.
4. Enter a Calculate interest from date. If this is left blank, Collect!
will use the debtor's Listed Date.
5. Optionally, you can define a First payment date. Interest is accrued
on a daily basis from the date of the loan (Calculate interest from date)
to the date one period before the First payment date.
See Also
- Debtor Financials Basics - Introduction/Accessing
- Judgement Information
- Debtor Financial Summary
Interest Topics:
- Preamortized Loan - Normal
- Rule of 78's
- Revolving Compound Interest
- Simple Interest
- How To Make An Interest Adjustment
- How To Setup Preamortized Interest
- How To Use The Amortization Schedule
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