At certain times you may find it necessary to “charge off” a portion of a loan’s balance. AutoPal facilitates the charge off process through the posting of a special payment type. The charge off payment is generally used as a means to internally write off a balance and is most commonly used to close a non-recoverable loan. This article will cover the posting of both a standard “charge off” payment, and a “charge off payoff” type payment.
To post a charge off payment simply access the “Payments” tab within a loan. Once inside the payments tab, select the “Log PMT” icon from the right-hand side of the page.
After selecting the “Log PMT” icon, you will be redirected to the following page:
You will then access the “Type of Payment” field, and select “Charge Off” from the list. Once selected, a new dropdown will open up, where you can select the type of charge off payment you would like to post.
The options available in this section allow you to determine the application of charge off amounts to remaining loan balances.
- Charge Off – Regular: This will apply the posted charge off payment in the same fashion as a standard “regular” payment
- Charge Off – Principal: This will apply the posted charge off payment directly to the outstanding principal balance
- Charge Off – Discount: This will apply the posted charge off payment directly to the outstanding discount balance
- Charge Off – Fees: This will apply the posted charge off payment directly to the outstanding fee balance
- Charge Off – Payoff: This option is the most commonly used form of charge off. In essence, it allows you to post a charge off payment in the same amount of the loan payoff, closing the account in full. It is important to understand that when posting a charge off – payoff type payment you are closing the deal without receiving funds from a client. An example of when this would be used is in the example of a remaining balance post-repossession, and resale of an asset. Any balance remaining at that point in time would be charged off the books, through a Charge Off – Payoff type payment.
Posting a Charge Off Payment
To post a charge off payment, enter the following terms:
- Payment Method: Use this field to assign the payment method that will be used for the charge off. For charge off type payments, the standard selection is generally “Other”, as it is an internal closure
- Payment Date: Use this field to set the application date of the charge off
- Cash Drawer (if applicable): If you are utilizing the cash drawer tool, you can select a drawer to deposit this payment in
- Info: Use this field to record notes about this specific charge off payment
- Amount: Enter the amount you are charging off
- Type of Payment: In this circumstance, this will always be set to “Charge Off”
- Amount Quick Pay: This field allows you to select a predetermined amount of the payoff. Options include Due, Next, and Full (Due + Next)
- Charge Off Type: Select the desired application for the charge off payment
Once all of the required fields have been filled, you can select the Process Payment icon to apply the payment to the loan.
Once the payment has been posted, it will be viewable through the payments tab and the transactions tab.
Posting a Charge Off – Payoff
There may be circumstances where you may find it necessary to fully close a non-performing note. To facilitate this, AutoPal recommends posting a Charge Off – Payoff. In essence, this is a charge off type payment for the payoff amount, on the charge off date.
To process this payment, follow the steps outlined above by selecting the Payments > Log PMT options. From here, set your payment type to ‘Charge Off’ and your charge off type to “Charge Off – Payoff”.
You will notice that when the Charge Off Type is set to “Charge Off – Payoff” that the amount field is autofilled. The amount entered into this field is the exact amount needed to payoff the loan, as of the payment date entered. Select the Process Payment icon to continue the process.
Because the charge off amount is equal to the payoff amount, the system will give you a prompt ensuring you are wanting to post a payment in that amount. Because we are charging off the remaining balance, select the Continue Payment icon to finalize the process.
At this point, if you refer to the Loan Summary section of the account, you will see that the loan has been closed.