3.15 Payment Hierarchy
The Payment Hierarchy screen facilitates to define hierarchy definition along with payment appropriation, excess payment handling, account selection criteria and sort order. These details are required by the system to allocate payments to the matching accounts of a customer, when customer based payments are being processed in Payment Entry screen.
Below is an illustration on how payment hierarchy is used to post customer based payments.
Figure 3-52 Payment Hierarchy - Illustration
- If payment is posted directly to an Account, the funds are allocated based on the defined spread with funds appropriation sequence of balance type i.e. Charges, Interest, Principle and so on.
- If payment is posted at Customer level having two accounts and if the payment amount is less than the due, then appropriation sequence is required. Else, one of the account can have a short fall with payment allocation.
In such case, the Payment Hierarchy determines the sequence of payment as to which account is to be appropriated first and which is to be appropriate next. This is based on order by clause and appropriation sequence defined.
- Equally to all the accounts
- Prorated by Due amount (i.e. highest due or lowest due first)
- Prorated by Outstanding Amount.
Once the account is narrowed down and payment amount is decided, then based on spread the payment is appropriated. This gives additional flexibility for defining payment modes at the master account level.
If Payment Hierarchy is not defined while funding an application or needs correction, the same can be done by posting MASTER ACCOUNT PAYMENT HIERARCHY MAINTENANCEnon-monetary transaction in Servicing > Maintenance > Transaction Batch Information section. At Customer level, Payment hierarchy can be updated by posting CUSTOMER MAINTENANCE transaction.
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