Late Charge Maintenance

This document provides technical guidance for configuring and managing late charge methods within the FLEX system. Late Charge Maintenance allows for the creation and application of various late fee calculation methods to different loan types, ensuring flexibility in managing delinquent accounts.

Accessing Late Charge Maintenance

Late Charge Maintenance is located within the System Administration section of the FLEX Main Menu.

• Navigation Path:
  • System Administration
    • FLEX Vault
      • General Configuration
        • Configuration
          • Managerial
            • Profitability Ratios
              • Card Advances Configuration
              • Check Order Configuration
              • ChexSystems® Configuration
              • Credit Bureau Configuration
              • Generic List Configuration
              • Icon and Message Configuration
              • IRA Contribution Limit Configuration
              • Late Charge Maintenance
              • Loan Modification Configuration
              • Loan Purpose Code Configuration
              • Loan Ratio Configuration
              • Loan Security Code Configuration

Overview of Late Charge Maintenance Screen

The Late Charge Maintenance screen displays all currently configured late charge methods. From this screen, you can perform the following actions:

• Add: Create a new late charge method.
• Copy: Duplicate an existing late charge method.
• Edit: Modify the details of an existing late charge method.
• Delete: Remove an existing late charge method.
• Audit: View the audit trail for late charge method changes.

The screen presents a table with the following columns:

• Method ID: A unique identifier for the late charge method.
• Description: A descriptive name for the late fee calculation method.
• Grace Days: The number of grace days allowed before a late fee is charged.
• Active: A checkbox indicating if the late charge method is currently active.

Editing/Adding a Late Charge Method

When adding a new method or editing an existing one, the “Edit Late Charge” screen appears, divided into several sections for detailed configuration.

General Information

• Method ID:
  • A unique code for the late charge method.
  • This code can be set as the default in loan type control files.
  • Can also be manually entered for individual loans during loan processing and maintenance.
• Description: A text field to enter a clear description of the late fee calculation method.
• Active: Check this box to enable the late charge method for use.

Control Parameters

This section defines the core rules for when and how late charges are applied.

• Grace Days:
  • Specifies the number of days allowed past the due date before a late fee is incurred.
• Minimum Percent of Payment Allowed:
  • Indicates the minimum percentage of a payment that must be made for a late fee to still be charged.
  • The system compares the received payment (transaction amount) against the calculated late charge. If the payment is less than the specified percentage, a late charge will still be collected.
• Increment Paid Ahead Counter / Simple Method:
  • Increment Paid Ahead Counter:
    • If checked, the system increments a “Late Charge Paid Ahead” counter each time a late charge is collected.
    • This is used for loans delinquent for multiple months. When a payment is received, the system collects late fees for the delinquent months and updates the counter. Subsequent payments will not collect late charges for months already covered.
    • Example: If a loan is delinquent for January, February, and March, and a payment is made on April 15th, three late fees are collected, and the counter updates to 3. A payment on May 15th will not incur another late fee for February or March, and not for April if the payment is on time.
  • Simple Method:
    • Check this box if Increment Paid Ahead Counter is not used.
    • This provides a simpler paid-ahead counter, showing any late fees already paid at that point.
• One Fee Per Frequency:
  • Determines whether the number of late fees charged to a member should be restricted.
  • Yes: The system reviews loan history backwards from the transaction’s effective date to determine if a late fee should be applied based on the loan frequency.
  • No: The “One Fee Per Frequency” restriction is not in effect.
  • Due Date: A late fee is only applied if the loan’s due date advances.
  • Monthly: Uses a 30-day frequency to determine late fee application based on the transaction’s effective date.
• Single Charge Per Transaction:
  • Check this box if only one late charge should be collected when a payment is made to a delinquent loan, regardless of how many months it is late.
  • Uncheck this box to collect a late charge for each month the loan is delinquent.
  • Behavior based on Late Charge Method Code:
    • If the Late Charge Method is not fixed and this box is checked, only one fee is collected, regardless of delinquent periods.
    • If the Late Charge Method Code is ‘P’ (Payment), the system multiplies the base late fee by the number of delinquent periods.
    • If the Late Charge Method Code is not ‘P’ (Payment), only the base late fee is charged.
• Number of Fees before using Alternate Maximum / Per # of Months:
  • Allows for an alternative maximum late charge after a specified number of late charges have been collected.
  • Enter the number of months for which the regular maximum applies. Once this number is exceeded, the system will use the alternative maximum defined in the “Definition Parameters” section.
• Maximum Payment Amount to use Alternate Maximum:
  • Specifies the maximum payment amount allowed for the alternate maximum late charge to still be applied.
• Collection Method:
  • Applicable to credit card and HELOC loans.
  • Indicates whether the late charge should be collected via a batch late fee process or during a payment transaction.
• Late Charge subject to Wisconsin Consumer Act:
  • Check this box if the late charge method is subject to the regulations of the Wisconsin Consumer Act.

Special Conditions

This section handles specific scenarios for late charge application.

• Tiered Late Charges:
  • Check this box to enable tiered late charges.
  • If checked, an additional tab will appear, allowing configuration of up to 5 tiers.
  • For each tier, you will enter the maximum number of delinquent days and the specific late charge method to be used for that tier.
  • The main late fee method determines which tier an account falls into, then defers to the late fee method defined within that tier.
  • Grace days in the main late fee method are generally overridden by the grace days set in the specific late fee configuration for the applicable tier, unless a tier is blank or the defined late fee code is invalid.
• Subtract from Escrow:
  • Applicable if the Late Charge Method Code is ‘P’ (Payment).
  • If checked, any escrow amounts will be subtracted from the total payment amount before late fee calculations are performed.
• Memo Code:
  • If the transaction amount is less than or equal to the payment amount, the late fee will be “memoed” (recorded but not collected).
  • If the transaction amount is greater than the payment amount, the excess amount will be used to pay the late charge. Any remaining late charge will be memoed.

Definition Parameters

This section defines the actual calculation of the late charge.

• Late Charge:
  • Percentage:
    • Enter a percentage if the late charge is calculated as a percentage of the transaction, interest due, payment due, or delinquent amount.
    • Leave blank if a percentage is not used.
  • Calculate Code:
    • Indicates which amount the percentage should be multiplied by to calculate the late charge.
    • D: Delinquent Amount
    • I: Interest Due Amount
    • P: Payment Due Amount
    • T: Transaction Amount
• Minimum Late Charge:
  • Specifies the minimum dollar amount that will be charged as a late fee per transaction.
• Maximum Late Charge:
  • Specifies the maximum dollar amount that may be charged as a late fee per transaction.
• Alternate Max Late Charge:
  • This is the alternate maximum late charge to be used if the “Number of Fees before using Alternate Maximum” (configured in Control Parameters) is reached.
• Increment Amount:
  • Indicates an increment amount for rounding the calculated late charge.
  • The calculated late charge will be rounded up to the next even multiple of this amount. This rounding occurs before minimum and maximum tests are performed.
  • Example: If 1.00 is the increment amount and the calculated late charge is $4.58, the final late charge will be rounded up to $5.00.
• Additional Surcharge:
  • Specifies a flat dollar amount to be added as an additional fee to the calculated late charge.
  • This surcharge is added before minimum and maximum tests are performed.