Handling Delinquency

Delinquency management represents one of the most critical operational challenges in lending, directly impacting your portfolio's financial performance, regulatory compliance, and customer relationships. Rather than imposing a one-size-fits-all approach, Canopy empowers you to maintain complete control over your delinquency strategies while providing the robust data infrastructure and real-time insights necessary to execute those strategies effectively.

Think of Canopy's delinquency framework as your early warning system and command center combined. The platform continuously monitors account performance against your defined payment obligations, automatically categorizes accounts into delinquency buckets based on their payment behavior, and delivers actionable intelligence to your operations and collections teams precisely when intervention opportunities arise. This approach ensures that no account slips through the cracks while preserving your flexibility to apply collection strategies that align with your brand, customer base, and risk tolerance.

The system operates on three foundational pillars that work together to create comprehensive delinquency visibility.

Delinquency bucket segmentation via automated system tags
Historic and current days past due counter
Reports aggregating delinquency system data with the ability to calculate additional metrics

Managing Delinquency

The foundation of effective delinquency management begins with establishing real-time visibility into loan deliquency changes. This visibility operates through Canopy's notification system, which acts as your automated alert mechanism for all delinquency-related account transitions.

Understanding how delinquency categorization works provides essential context for configuring your monitoring effectively. When a borrower fails to meet their minimum payment obligation for a billing period, any remaining unpaid balance immediately becomes past due. Canopy's system automatically understands the account has past due obligations and applies the appropriate delinquency classification based on how long the obligation has remained unpaid.

The classification system follows industry-standard delinquency buckets that align with regulatory reporting requirements and collection best practices. Accounts with obligations past due for 1 to 30 days receive the 1-30 Days Delinquent system tag, indicating the earliest stage of delinquency where soft collection approaches typically prove most effective. As time progresses without payment resolution, accounts automatically advance to more severe classifications, with the 31-60 Days Delinquent system tag applied when obligations remain unpaid beyond the initial 30-day window.

To receive these critical notifications, you must subscribe to two specific notifications that work together to provide complete delinquency visibility.

ACCOUNT_SYSTEM_TAG_APPLIED notification triggers whenever Canopy's system applies a new system tag, in this case a delinquency tag to an account, immediately alerting your team that an account has either entered delinquency for the first time or progressed to a more severe delinquency category.
The ACCOUNT_SYSTEM_TAG_REMOVED notification fires when delinquency tags are removed from accounts, which occurs when accounts either cure their delinquency through payment or advance to the next delinquency bucket.

The interplay between these two notification types creates a complete picture of account movement through your delinquency pipeline.

Frequently Asked Questions

Q: How quickly do delinquency tags get applied after a payment becomes overdue?

A: Delinquency tag application occurs through Canopy's automated segmentation, which means tags typically apply within an hour of a payment becoming overdue. The exact timing depends on when your payment due dates fall relative to the system's processing schedule, but you can expect consistent, reliable tag application that ensures no overdue accounts go unnoticed. This processing approach balances real-time responsiveness with system efficiency, ensuring your collection teams receive timely notifications without overwhelming your webhook infrastructure with excessive traffic.

Q: What happens to days past due calculations when borrowers make partial payments?

A: Days past due calculations focus specifically on unpaid obligations rather than total account balances, which means partial payments can significantly impact the metric depending on how much the borrower pays. If a partial payment satisfies a past due obligation completely, the days past due count begins counting from the next latest unpaid obligation if any unpaid obligations remain on the account, if account only has current period obligations and has not yet passed the payment due date for the current period, the days past due count would be 0. This nuanced calculation ensures that days past due accurately reflects payment compliance rather than simply measuring total debt levels.

Q: Can I customize the delinquency bucket definitions or create additional categories?

A: Canopy's system tags follow industry-standard delinquency bucket definitions to ensure consistency with regulatory reporting requirements and collection best practices. While the core bucket structure remains standardized, you can leverage the comprehensive data available through the API endpoints to create additional custom classifications within your own systems. The precise days past due counts and historical data provide the granular information necessary to implement any specialized segmentation or classification schemes that align with your unique collection strategies or risk management approaches.

Q: How does the notification system handle high-volume portfolio changes?

A: Canopy's notification infrastructure is designed to handle enterprise-scale notification volumes reliably, with built-in retry mechanisms and delivery confirmation protocols to ensure critical delinquency notifications reach your systems successfully.

Q: What historical data retention policies apply to delinquency information?

A: Canopy maintains comprehensive historical records for all delinquency-related data points, including days past due counts, tag transitions, and associated account performance metrics. This historical data remains accessible indefinitely through API endpoints, supporting long-term analytical requirements, regulatory reporting obligations, and business intelligence initiatives.