All the loan providers know this situation. The customer’s payment is after the due date, and it seems it is also not on its way.
For these purposes, it is necessary to have the functionality to calculate these extra charges. Every loan management software should offer this option so do our OneCore Loans App. Our lending solution is built on Microsoft Dynamics 365 Business Central and there are several ways how to do extra interest. Today we would like to show you one of them - the Reminders.
Generally, a reminder is a letter sent to remind someone of an obligation, in the financing sphere especially to pay a bill. The benefit of reminders is that we can use them just to remind customers or add some additional interest charge to this reminder.
Setting up reminders
If we want to use reminders in our environment, the first step is to set up “Reminder Terms”. Reminder terms are a set of rules for how we want to create reminders. So basically, as in the picture below we have set up two general types of reminders: DOMESTIC and FOREIGN.
On each reminder term, we have the ability to set up reminder levels that tell us WHEN and HOW the system creates reminders and if we want to add some additional fee, etc. Each level has its own additional fee, grace period, loan calculation type, and ability to use the calculation of extra interest.
As usual, the lending system allows us to create reminders automatically as a batch action by the wizard or manually per customer. For automation we must go to the “Reminders” page, then choose option “Process” > “Create reminders”. In the new popup window, we can set up general conditions for reminder creation: Posting Date, Document date, and possibly choosing the customer.
When a reminder is created, we see there all the necessary information about customers, their late payments with amounts, and the extra fee amount if it is set up in the reminder level. After this, we can issue the reminder and it is linked to the customer ledger entries. If the reminder for the same invoices is created again (unpaid reminder No. 1), the system will automatically bring the values from level 2 and a new reminder is created by level 2 conditions.
From our experience, this is a very common way for loan providers how to charge customers in case of late payments. The reminder feature has a very important role in our loan management software which can ease your daily routine.