Managing Fees: Late Payments, Delinquency & NSFs

Audience: Operations Managers, Servicing Agents, System Administrators

Topic: Servicing & Collections

Overview

Fees serve two purposes: they incentivize borrowers to pay on time and they compensate your business for the administrative cost of chasing missed payments.

PayPlan automates this process based on the specific rules you configure. This guide explains the three main fee types, Late Payment Fees, Days Delinquent Fees, and NSF Fees, and the logic the system uses to apply them.

1. Late Payment Fees (Schedule-Based)

A Late Payment Fee is charged when a specific scheduled payment is missed.

Key Rule: The payment must be part of the Payment Schedule to trigger this fee. If a customer makes a manual extra payment that fails, it will not trigger a Late Payment Fee because it was not part of the required schedule.

How Grace Periods Work

The system respects your Grace Period settings before applying a fee. The fee is only charged after the grace period expires.

Example Scenario:
- Due Date: Friday.
- Grace Period: 2 Days.
- Saturday/Sunday: The customer can make a manual payment without penalty.
- Monday: If the Friday payment is still unpaid, the Late Payment Fee is automatically charged.

The "Retroactive" Late Fee (ACH Returns)

If a payment initially succeeds but later bounces (e.g., an ACH Return), the system effectively "rewinds" time.

Customer pays via ACH on Thursday for a Friday due date.
The system marks the payment as "Paid."
On Tuesday, the bank returns the payment (e.g., Account Closed).
The system reverses the payment in the Ledger.
Because the grace period has passed, the system automatically applies the Late Payment Fee.

2. Late Fees (Days Delinquent)

Unlike the schedule-based fee above, a Days Delinquent Fee is triggered based on the overall status of the account. It looks at how long the account has been past due, regardless of specific payment dates.

Trigger Logic

You can configure this fee to charge when an account hits a specific number of days delinquent (e.g., 10 Days Late).

One-Time Charge: If an account goes delinquent and stays delinquent, the fee charges only once when they hit the trigger day.
Recurring Trigger: If a customer cures their delinquency (gets current) but then misses payments again later, they will be charged again the next time they hit the trigger day.

Configuration Warning: Grace Periods

The system does not consider an account "Delinquent" until the grace period is over.

Critical Rule: Your "Days Delinquent" trigger must be greater than your Grace Period.
Example: If you set a Grace Period of 5 days, but set a Late Fee to trigger at 3 days delinquent, the fee will never charge.

3. NSF Fees (Non-Sufficient Funds)

NSF Fees are penalty fees charged specifically for failed bank transfers.

Key Rules:

ACH Only: This fee is triggered ONLY by an ACH Return with a specific "Insufficient Funds" code (e.g., R01 or R09).
No Card Fees: NSF fees are not charged on failed Debit or Credit Card transactions.

Summary of Fee Logic

Fee Type	Trigger Event	Grace Period Logic
Late Payment Fee	A scheduled payment date passes without payment.	Applied immediately after Grace Period ends.
Days Delinquent Fee	The account remains unpaid for a specific number of days.	Applied only if the Trigger Days > Grace Period.
NSF Fee	An ACH payment returns with an "Insufficient Funds" code.	Applied immediately upon return (no grace period).

Next Steps

To verify or update your fee configurations, navigate to Product Settings in the Admin Portal. If you need to waive a fee for a specific customer (e.g., as a courtesy), you can do so manually via the Actions menu in the Servicing Center.