Delinquency is a key concept to understand in Canopy that is relevant to program operators in a variety of contexts.
In this page, we'll cover the difference between delinquency and past due within Canopy's system, managing delinquency, and reporting.
Delinquency in Canopy refers to the operationally defined status of an account. Past due in Canopy refers to the state of an account any time a payment due date is missed.
Delinquent accounts strictly refer to when an account has had a sub-status of
DELINQUENT applied to it.
What Determines Account Delinquency?
Accounts delinquency status can be changed in two ways:
Manually set from CanopyOS or via an account status update API call.
Automatically applied based on your operational rules and policies.
As previously mentioned, past due refers to the state of an account any time a payment is missed.
Accounts in a past due state strictly refer to whether or not a borrower has any accrued balance that has not been paid in full once the payment due date has passed. The days past due is the number of days since the earliest due date in which a payment was missed.
What Determines Account Past Due State?
Past due is a calculation of days since the oldest statement in which the minimum due balance was not paid in full.
While the two terms refer to related concepts, it is important to note that the two are independent and follow different criteria and, therefore will not always match. Past due state does not take into consideration account sub-statuses of delinquent, late fee grace periods, or any other operationally defined policies that you may have in place.
For example, if a borrower is 2 days late on their payment, but you have a 5-day
late_fee_grace policy, then the account would be in a past due state, but not yet have a status of delinquent applied to it. If the borrower still has not paid after 5 days past their due date, then their account would have a delinquency status applied to it and would still appear in a past due state.
Similarly, this behavior can occur if manual changes have been made to change the status of an account through an API call or in CanopyOS.
Past due and delinquency data can be accessed in Canopy in the following ways:
- Through the
[GET /account](ref:getaccount)API call.
- The account_status_subtype field on the Account table in DataDirect
- As a tag on an individual account view in CanopyOS.
- In the deliquency_report in DataDirect.
- Although not directly accessible to view or interact with, it is important to note that if you opt into using our Credit Reporting integration, it will be using this past-due state for reporting purposes.
In an effort to reduce the possible confusion cased by the conflation of these terms, we will soon be deprecating the delinquency_report name in favor of more aptly naming it the past_due_report.
Understanding and managing delinquency is pivotal to your organization's ability to maintain healthy accounts. This includes establishing norms and controls, defining policies, and engaging with borrowers effectively.
Each organization can have unique operational processes around delinquency. These processes aim to prevent, manage, and resolve delinquency states while ensuring the borrowers' best interest.
You can define policies stipulating entrance and exit criteria for delinquency.
- You can define the
late_fee_gracevalue using the
fee_policieswhen creating a product
If you had the following configuration settings:
These settings tell the system that after the first time a borrower misses a payment, wait 3 days, and if the payment has still not been paid in full, apply an account status of
An account will automatically be returned to an
ACTIVE status when the entire minimum amount due has been paid in full.
As previously mentioned, an account being in a past due state is purely driven by a payment being missed and therefore is in part determined by the
Read more about minimum payment configuration here.
The exit criteria for the deliquency_report in DataDirect is that a payment in the amount of the cure amount is met; that is, the amount needed to be paid by the current cycle payment due date.
Policies also govern the communication strategies with your borrowers. As you understand your policies, you can send timely and accurate notifications to borrowers about their delinquency states, enabling them to take necessary action.
In order to communicate delinquency and past due status to your borrowers, Canopy provides notifications upon an account moving into a delinquent status as well as a configurable notification upon missed payment. These are provided through our
account_delinquency webhooks respectively. Read more about turning on webhook notifications and the data provided with each here.
Canopy also provides a configurable
minimum_payment_due webhook notification, which can alert you when an account's due date is approaching.
This can be utilized to proactively communicate with borrowers and increase repayment rates.
Updated 3 months ago