11.10 Define Payment Patterns

A prerequisite for transfer pricing your product portfolio is capturing instrument behavior. Payment and repricing characteristics for most instruments can be accommodated through the data attribute values in the Instrument tables. However, certain instruments may not have contractual cash flows or may have cash flows that are based on unique payment and repricing patterns that are too complex to be accommodated in the standard fields of the Instrument tables. Oracle Funds Transfer Pricing allows you to define custom behavior, payment, and repricing patterns to accurately model the unique characteristics for such instruments.

In a user-defined payment pattern, you can assign a unique Amortization type code to a set of payment events, which may include some of the following customized features:

• Changes in payment frequency
• Seasonal payment dates
• Nonstandard or variable payment amounts

After you create a payment pattern, you can use it by entering the payment pattern code as the Amortization type code for the instrument.

• Payment Pattern Structure
  Oracle Funds Transfer Pricing allows you to build of the following payment patterns:
• Payment Events
  You must define one or more payment event to complete a payment pattern. A payment event is a set of payment characteristics, which define the timeline and amount of a specific payment in the payment pattern.
• Value
  The value reflects the percentage or payment amount based on the method chosen for the payment event. Value is disabled for phases using the Interest-Only payment method.
• Absolute Payment Patterns
  Absolute Payment Patterns are commonly used for instruments that pay on a seasonal schedule, such as agricultural or construction loans that require special payment handling based on months or seasons.
• Relative Payment Patterns
  Relative Payment Patterns are commonly used for modeling instruments with irregular payment frequencies or for instruments where the payment type changes over time.
• Split Payment Patterns