Fee behavior
Overview
With Q2 Loan Servicing, you can define if the fees generated during a billing cycle are to be added to the dues or not. This behavior is managed using the Add Fee Amount to Bill and the Included in Dues flags.
Here are a few examples to explain how the two flags work in tandem with each other.
Examples
The following examples describe the impact of this fee behavior on the bills and the payments.
Scenario1
Add Fee Amount to Bill = True, Included in Dues = True, Payment Order = FIP
| Bill # | Fees | EMI | Bill Amount (EMI + Fees) | Payment Made | Bill Components Satisfied | Balance (Bill Amount - Payment Made) | Delinquent Amount (Balance amount of bill 1 + balance amount of bill 2 +...) |
|---|---|---|---|---|---|---|---|
| 1 | 150 | 2500 | 2650 | 2500 | F = 150 P + I = 2500-150 = 2350 | 2650 - 2500 = 150 | 150 + 0 = 150 |
| 2 | 100 | 2500 | 2600 | 2700 | F = 100 P + I = 2700-100 = 2600 | 0 Note: Excess payment made in this case. |
Scenario 2
Add Fee Amount to Bill = False, Included in Dues = True, Payment Order = FIP
In this scenario, the Bill Amount = EMI because the Add Fee Amount to Bill flag is set to False.
| Bill # | Fees | EMI | Bill Amount = EMI | Payment Made | Bill Components Satisfied | Balance (Bill Amount - Payment Made) | Delinquent Amount (Balance amount of bill 1 + balance amount of bill 2 +...) |
|---|---|---|---|---|---|---|---|
| 1 | 150 | 2500 | 2500 | 2500 | F = 150 P + I = 2500-150 = 2350 | 0 | 0 + 100 = 100 |
| 2 | 100 | 2500 | 2500 | 2400 | F = 100 P + I = 2400-100 = 2300 | 100 |
Scenario 3
Add Fee Amount to Bill = False, Included in Dues = False, Payment Order = FIP
| Bill # | Fees | EMI | Bill Amount = EMI | Payment Made | Bill Components Satisfied | Balance (Bill Amount - Payment Made) | Delinquent Amount (Balance amount of bill 1 + balance amount of bill 2 +...) |
|---|---|---|---|---|---|---|---|
| 1 | 150 | 2500 | 2500 | 2500 | P + I = 2500-150 = 2350 Note: The amount of 150 is paid towards the fees, but that is not a part of the bill because the Include in Dues flag is set to False. | 150 | 150 + 0 = 150 |
| 2 | 100 | 2500 | 2500 | 2600 | P + I = 2600-100 = 2500 Note: The amount of 100 is paid towards the fees, but that is not a part of the bill because the Include in Dues flag is set to False | 0 |
Scenario 4
Add Fee Amount to Bill = True and Included in Dues = False
This scenario is invalid because the fee is not added to the bill amount so it will not impact the billing and the payments.
Configuring the Fee Behavior
You can configure the Include in Dues flag while defining a fee from Servicing Configuration > Manage Fees. The configured behavior applies only to the fee defined with this behavior.
You can configure the Add Fee Amount to Bill flag while creating a lending product. The configured behavior of the flag applies to all the fees associated with the product.
Include in Schedules and Include in Dues
There are two fields named Include in Schedules and Include in Dues. Both the fields are similar in nature but are being used for the following two different purposes:
Include in Schedules: This means that the payment amount in the schedules will be shown taking into consideration the fee amount as well. It means that the payment amount will always be the sum of P, I, and F. This doesn’t facilitate the inclusion of the fee amount in the bills generated.
Include in Dues: If this flag is checked, It would mean that you are including the fee amount in the bills but it doesn’t assure the inclusion of the same in the schedules.