This came from one of our service providers. Kay, maybe you can clarify? ----- A client is looking for the best practice/ most common way of calculating arrears days, considering partial repayments. Our thinking is that the following is the correct treatment but would be very curious to hear others thoughts on the matter. 1. arrears days is calculated as the number of days between the current date and the oldest installment which is not yet fully repaid.
2. The aging bracket is based on the arrears days- ie if arrears days = 45 then you are in the 30-60 bracket 3. Repayments are applied to the oldest overdue installment first 4. Based on point 3, if a partial payment is received which clears the oldest installment, but still leaves the client in arrears then the arrears days will decrease. Perhaps easiest to see this with an example · Client misses two installments which were due on 1/3/2010 and 1/4/2010 say for 1000KSH each. · So today on 27/4 they are 57 days in arrears. This is the number of days between 1/3/2010 and yesterday 26/4/2010. We don¹t consider today since the day isn¹t yet over. · Now if they come and pay 1000KSH this will be applied to the installment of 1/3/2010 which will now be fully paid · After his partial payment I then expect their arrears days to be 26 as the number of days between 1/4/2010 and 26/4/2010. As such they would move from the 30-60 aging bracket to 1-30. My tests of Mifos confirms that this is indeed how the system is operating but I¹m confused by some text on the site which says that partial payment does not affect the arrears days. http://www.mifos.org/knowledge/functional-specifications/miscellaneous/loan- arrears-aging Days in arrears is the same as the metric used in ³Performance history² for loan accounts and is = payment due date (for the first unpaid/partially paid installment) current date * When a client misses a payment, the counter for ³days in arrears² starts. * This counter is reset to 0 when a client makes a payment that completely pays off his/her overdue amount. The count is not altered if a client makes a partial payment. -- Ryan Whitney Mifos Technical Program Manager [email protected] Mifos - Technology that Empowers Microfinance (www.mifos.org) Our mission is to enable the poor, especially the poorest, to create a world without poverty. <http://grameenfoundation.org/take-action/ingenuity-fund-challenge/> P please consider the environment before printing this e-mail.
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