When Current Balance Differs From Payoff Balance

For some contracts, payoff balance and current balance differ (or in colloquial speech ‑ the amount the customer thinks they owe differs from what they would owe if they wanted to payoff their account).

Let's run through an example of a customer on a budget to illustrate a classic contract where these two balances are not the same. The values in the payoff balance and current balance columns reflect the amount due after the financial transaction has been applied:

The following table illustrates an example where the payoff and current balances are different:
Date Financial Transaction Payoff Balance Current Balance
1-Jan-99 Bill: $125, Budget $150 125 150
15-Jan-99 Payment: $150 -25 0
2-Feb-99 Bill: $175, Budget $150 150 150
14-Feb-99 Payment: $150 0 0
3-Mar-99 Bill: $200, Budget $150 200 150
15-Mar-99 Payment: $150 50 0
2-Apr-99 Adj: Mar 3, 97 bill incorrect due to discrepancies; manual correction of -$33. 17 0

Notice the adjustment of -$33 affects only payoff amount. This is because the customer is on a budget. The adjustment will not affect their monthly payment and therefore it doesn't affect how much they think they owe.

The following table lists the various types of contracts where the payoff and current balances may differ:
Type Of Contract What Payoff Balance Holds What Current Balance Holds
Deposit Payoff balance holds the amount of deposit you are holding on behalf of the customer's debt. This amount is showed as a credit (with a negative sign) because you truly owe the customer this money. Current balance holds the amount the customer owes for a deposit.
Charitable contribution N/A - charitable contribution contracts never have a payoff balance. Current balance holds the amount the customer owes for a charitable contribution.
Payment arrangements Payoff balance holds the total amount of delinquent debt that remains unpaid. When a payment arrangement is started, you transfer the payoff balance from the financial services contract to the payment arrangement contract. Each billing period, the customer pays down this balance. Current balance holds the amount the customer owes in respect of the billed payment arrangement amounts.
Financial service agreements on a budget plan Payoff balance holds the actual amount owed (actual bills minus payments). Current balance holds the amount the customer owes in respect of the billed budget amount.
Loans Payoff balance holds the payoff amount for the loan, which is the current balance (the billed loan amount) plus the principal balance (the unbilled loan amount) and any accrued interest charges. Current balance holds the amount the customer owes in respect of the billed amount (the periodic payment amount).