Payment Pouring

Understanding Payment Pouring

Our system handles payment allocation at the transaction level, where financial obligations are created based on the specific type of lending product. For term loans, obligations are established at origination since the repayment structure is predetermined. In contrast, products like lines of credit generate obligations at statement creation, when all balances and associated charges can be accurately assessed.

📞
Payments can be applied via Canopy's create a payment endpoint

Default Payment Pouring Configuration

Our standard payment pouring configuration follows a carefully designed sequence that prioritizes both obligation type and age. The system allocates payments in the following order:

Fees (starting with the oldest)
Interest
Principal

This default configuration has been developed in consultation with industry experts and is optimized for most credit and installment-based products.

Age-Based Payment Pouring

For clients who prefer a simpler approach, we offer an age-based payment allocation option. In this configuration, the system allocates payments strictly based on the age of obligations, regardless of their type. This means the oldest outstanding obligation will always be satisfied first, providing a straightforward and chronological approach to debt resolution.

APR-Priority Pouring

The default for credit card based products, payments are configured to target high-APR obligations first which follows regulatory and compliance rules set forth by the CARD Act and Reg Z. Although our commercial credit card clients aren't strictly forced to adhere to the above regulations, we find that most of the time they prefer to be aligned with consumer regulations.

📣
Transaction-Specific Allocation
Our system supports directing payments to specific transactions when needed. This capability is particularly valuable for lending programs that allow borrowers to make targeted payments, such as early principal payments or prepayments on specific obligations. This flexibility ensures that lenders can offer various repayment options while maintaining accurate records of how payments are applied.