Credit Allocation

Credit allocation is the process of taking credits within an obligation and applying business rules to allocate them against tax, penalty, interest and fees.

Credit allocation sequences specify an order to apply the credit against liability types. This is usually very specific. For example, you could set up the credit allocation sequence to allocate credits in the following order:

1. Defective check fee

2. Failure to pay penalty

3. Interest

4. Failure to pay penalty

5. Tax

6. Outsource collection agency fee

They may also differ based on the type of credit. For example,

• Withholding credit may be allocated differently than a payment

• Payment received before the due date may be allocated differently than a late payment

• Individual payments may have unique priorities dictated by a court order or overridden by a user

The following sections provide more information about credit allocation.

Contents