Payment Tolerance
Payment Tolerance is the permissible amount of tolerance provided by a financial institution to clear the bills. Borrowers may request for specific periods of payment tolerance in their contracts. This can be done more than once in the life of the contract, and is enabled by setting up the tolerance start and end dates. Interest is accrued on the principal remaining, irrespective of the payment tolerance.
For example,
If the payment tolerance rate = 20%, and due amount = 2036.16.
If you make a payment of 1628.93 (80% of 2036.16), the bill is considered satisfied.
You can define the payment tolerance as a rate or a fixed amount. In addition, you can define it as the minimum or maximum of these two values by selecting the Payment Tolerance Type as Min or Max.
For example,
Tolerance = MIN (10% or 50). If bill amount = 400, tolerance is 40 (minimum of 40 and 50).
If bill amount = 600, tolerance becomes minimum of (60 and 50) = 50.
Payment tolerance is defined at the org level, and can be modified at the product or contract level. For information on payment tolerance at the org or product level, refer to section Setting Up Payment Tolerance in the CL Loan Administration Guide.
Prerequisites
The following are the prerequisites to change the payment tolerance rate:
Default Tolerance Rate is set at the org level and or defined at the product level.
Payment Tolerance Type is selected at the product level to define it as a minimum or maximum of the rate and amount values.
Steps
Perform the following steps to define or change the payment tolerance:
Login to your Salesforce account.
Click CL Contracts.
Select the required CL Contract ID.
Click Payment Tolerance Change.
Specify the Payment Tolerance Start Date and Payment Tolerance End Date.
If Payment Tolerance Type of Min or Max is selected in the product, specify the required Payment Tolerance Rate and the Payment Tolerance Fixed Amount. Else, specify one of these values.
Click Save.
Field Reference
| Field Name | Description |
|---|---|
| Payment Tolerance Start Date | The date starting which payment tolerance is applicable on the contract. |
| Payment Tolerance End Date | The date ending which payment tolerance ceases to apply on the contract. After this date, the borrower must make the full payment against each bill to avoid delinquency. |
| Payment Tolerance Rate | Payment tolerance rate is the rate of permissible payment tolerance provided by a financial institution to clear the bills. This is the maximum % by which a payment may be short, while still marking the bill as satisfied. For example, if payment tolerance is 15%, a borrower may pay 85% of the expected payment amount. The bill is marked satisfied, and the contract remains in Active status. |
| Due Amount | Due Amount is the total overdue amount on the lending account. |