Projected accruals

Since some clients need to estimate revenue in advance, the Pismo platform provides a way to automatically project the accruals on an unpaid balance at statement closing time. The platform uses the refinancing rate and overdue rate to calculate the accruals that would be charged between the cycle closing date plus one day and the due date (assuming the cardholder doesn't make any payments before the due date). It does this for each debit transaction separately. For each transaction type, it adds up the projected accruals for the refinancing rate and posts one transaction for that amount to the statement. It then adds up the projected accruals for the overdue rate and posts another transaction for that amount.

To enable the Accrual projection feature, use the Pismo Control Center to set Accrual projection calculation method to 1.

Projected accruals example

Suppose the cardholder makes two purchase transactions during Cycle 1 β€” one for $100.00 and another for $150.00. Suppose also:

  • Both transactions have transaction type ID 7001.
  • The cycle closing date for Cycle 1 is the 10th day of the month.
  • There are 10 days between the Cycle 1 closing date and the Cycle 1 due date. So, the Cycle 1 due date falls on the 20th day of the month.
  • There are 19 days between the Cycle 1 due date plus 1 day and the Cycle 2 closing date.
  • The refinancing rate is %1.
  • The overdue rate is %2.
  • Accrual projection is enabled.

If the cardholder makes no payments, daily charges begin to accrue the day after the due date (Day 21). Assume that the cardholder makes no payments for the rest of the cycle. The following table shows the daily charges that the transactions accrue during Cycle 2.

Daily charges for the $100 transaction:

Unpaid balanceAccrual rateDay 21Day 22Day 23Day 24Day 25Day 26Day 27Day 28Day 29Day 1Day 2Day 3Day 4Day 5Day 6Day 7Day 8Day 9Day 10Total
Refinancing$1000.011111111111111111111$19
Overdue$1000.022222222222222222222$38

Daily charges for the $150 transaction:

Unpaid balanceAccrual rateDay 21Day 22Day 23Day 24Day 25Day 26Day 27Day 28Day 29Day 1Day 2Day 3Day 4Day 5Day 6Day 7Day 8Day 9Day 10Total
Refinancing$1500.011.51.51.51.51.51.51.51.51.51.51.51.51.51.51.51.51.51.51.5$28.5
Overdue$1500.023333333333333333333$57

At the end of Cycle 2, the Pismo platform calculates the projected charges for the two transactions.

Projected charges for the $100 transaction:

Unpaid balanceAccrual rateDay 11Day 12Day 13Day 14Day 15Day 16Day 17Day 18Day 19Day 20Total
Refinancing$1000.011111111111$10
Overdue$1000.022222222222$20

Projected charges for the $150 transaction:

Unpaid balanceAccrual rateDay 11Day 12Day 13Day 14Day 15Day 16Day 17Day 18Day 19Day 20Total
Refinancing$1500.011.51.51.51.51.51.51.51.51.51.5$15
Overdue$1500.023333333333$30

On the Cycle 2 closing date, the Pismo platform must post a transaction with transaction type ID 401 for the refinancing accruals. To calculate the amount of the transaction, the platform adds up the following values:

  • Daily refinancing accruals from the $100 transaction: 19
  • Daily refinancing accruals from the $150 transaction: 28.5
  • Projected refinancing accruals from the $100 transaction: 10
  • Projected refinancing accruals from the $150 transaction: 15

19 + 28.5 + 10 + 15 = $72.5. So, the platform posts a transaction with transaction type ID 401 for $72.5.

On the same day, the platform must post a transaction with transaction type ID 402 for the overdue accruals. To calculate the amount of the transaction, the platform adds up the following values:

  • Daily overdue accruals from the $100 transaction: 38
  • Daily overdue accruals from the $150 transaction: 57
  • Projected overdue accruals from the $100 transaction: 20
  • Projected overdue accruals from the $150 transaction: 30

38 + 57 + 20 + 30 = $145. So, the platform posts a transaction with transaction type ID 402 for $145.

Reversing projected accruals

If the cardholder makes a payment between the closing date and the due date, any refinancing or overdue projected accruals should be reduced by that amount. To enable this feature, use the Pismo Control Center to set Interest projection reversal to 1.

The Pismo platform creates reversal transactions to reduce the projected accruals. Projected accrual reversal, in part or in whole, occurs when the cardholder's account is credited.

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The Pismo platform only reverses projected accruals for refinancing and overdue transactions. Other types of accruals are projected, but are not reversed.