Installment, Payoff and Current Amounts

CAUTION: If you do not understand the difference between payoff balance and current balance, refer to Current Amount versus Payoff Amount .

When you set up a payment arrangement contract (PA contract), you transfer delinquent debt to the PA contract using transfer adjustments. After moneys are transferred, the system sets the PA contract's current balance to zero. At this point, there will be no overdue bills. If the customer neglects to pay bills containing charges associated with the payment arrangement, an overdue process will ensue.

PA contract's start their life with a non-zero payoff balance (i.e., they have debt when first started). This debt is transferred from the bills whose outstanding debt necessitated the creation of the PA contract.

The installment amount that the customer is billed is determined by the number of installments used to payoff the debt. For example, if the customer owes $500 and they want to pay this off in 10 installments, you'd set up the installment amount to be $50. The installment amount is saved on the PA contract's recurring charge amount. If the customer again falls into arrears on their bills, you can transfer additional bills to the PA contract. You can also change the installment amount as needed.

A PA contract's payoff balance typically differs from its current balance. The payoff balance is the amount of debt remaining to be paid off under the terms of the payment arrangement. The current balance is the installment amount that has been billed but not paid. For example, a customer who is paying off $500 with 10 installments of $50 would have an initial payoff balance of $500 and a current balance of $0. After the first bill, the PA contract would still have a payoff balance of $500, but its current balance would be $50. When the customer pays, the PA contract's payoff balance would fall to $450 and its current balance would return to $0.

The following table contains a financial example of a customer who sets up a payment arrangement to payoff $1,000 of debt in $10 installments:
Event	Normal Contracts GL Accounting	PA Contract's GL Accounting	Normal Contract's Current Balance	Normal Contract's Payoff Balance	PA Contract's Current Balance	PA Contract's Payoff Balance
Prior to creation of payment arrangement	N/A	N/A	1000	1000	N/A	N/A
Transfer debt from normal contract(s) to PA contract	Xfer 1000 A/R <1000>	PA A/R 1000 Xfer <1000>	0	0	1000	1000
Set current balance to zero on PA contract	N/A	N/A	0	0	0	1000
Customer is billed ($50 for new debt and $10 of payment arrangement debt)	A/R 50 Revenue <50>	N/A	50	50	10	1000
Customer pays $60	Cash 50 A/R <50>	Cash 10 PA A/R <10>	0	0	0	990

When the customer pays off the payment arrangement debt, the system automatically closes the PA contract after it final bills (assuming the PA contract's contract type references a bill segment type that has a bill segment creation algorithm of Recurring Charge With Auto Stop).