Payment tolerance
By default, an account with an unpaid balance accrues interest according to the rules laid out in Calculating interest accruals. The payment tolerance feature enables you to set up additional rules to specify that an account should not accrue interest if the outstanding balance is less than a certain amount.
To configure payment tolerance, use Pismo Control Center to set the following program parameters.
| Parameter name | Definition |
|---|---|
| Payment tolerance percentage | A percentage of the total amount due (TAD) that is used by the Payment tolerance method to determine if the account should accrue interest. Must be greater than 0 and less than or equal to 100. |
| Payment tolerance amount | A fixed amount that is used by the Payment tolerance method to determine if the account should accrue interest. For example, $70. |
| Payment tolerance method | The method to apply: 0 — Do not use. 1 — Maximum value. Between the Payment tolerance amount and (Payment tolerance percentage x TAD), use whichever value is higher. If the difference between the payment and the total amount due is less than or equal to this value, no interest is accrued. 2 — Minimum value. Between the Payment tolerance amount and (Payment tolerance percentage x TAD), use whichever value is lower. If the difference between the payment and the total amount due is less than or equal to this value, no interest is accrued. |
Examples
Example 1
Suppose you set up the program parameters as follows.
| Parameter name | Value |
|---|---|
| Payment tolerance percentage | 10% |
| Payment tolerance amount | $70 |
| Payment tolerance method | 1 (Maximum) |
Suppose also that TAD = $250.
Since Payment tolerance method is set to 1, the Pismo platform uses the higher of the following values:
- Payment tolerance amount: $70
- Payment tolerance percentage x TAD: 10% x 250 = 0.1 x 250 = $25
$70 is greater than $25, so the platform uses $70 as the actual tolerance value. So, after the due date, if TAD - payment <= $70, no interest is accrued.
Example 2
Suppose the program parameters are set to the same values as in Example 1, except that Payment tolerance method is set to 2:
| Parameter name | Value |
|---|---|
| Payment tolerance percentage | 10% |
| Payment tolerance amount | $70 |
| Payment tolerance method | 2 (Minimum) |
Since Payment tolerance method is set to 2, the Pismo platform uses the lower of the following values:
- Payment tolerance amount: $70
- Payment tolerance percentage x TAD: 10% x 250 = 0.1 x 250 = $25
$25 is less than $70, so the platform uses $25 as the actual tolerance value. So, after the due date, If TAD - payment <= $25, no interest is accrued.
Updated 5 days ago