Payments in Canopy are intelligently allocated through a process called "pouring," where funds are distributed across balance-bearing transactions (e.g., fees, interest, principal) based on predefined policies.

The pouring algorithm ensures consistent and transparent application of payments throughout the lifecycle of a line or loan. For example, a policy might prioritize allocating payments first to fees, then interest, and finally principal, while also considering the age of obligations (oldest first).

This flexibility allows lenders to configure pouring algorithms to maximize revenue generation, comply with regulations, or create borrower-friendly repayment structures. By automating and standardizing this process, our system ensures accuracy, fairness, and efficiency in payment application for both lenders and borrowers.