This is a step-by-step guide on creating a payment transaction to advance funds to an investor on a payment that is yet to be received from the borrower. And once the payment is received from the borrower record it to remove the advance.
💡 In this process the funds are being advanced by the Investor(s) that are receiving the spread.
You may see who is receiving the spread in the funding table of a loan.
Investors with the ℹ️ are assigned to receive spread
Advance Payment to Investors
Navigate to the loan and the payment tab.
Click Add a Payment
In the payment box, select type and method as other
Click on Interest to expand and view the investors in a loan.
Add the amount to distribute to each investor in the investor column and add the negative of that amount in the unpaid interest column.
Ideally, it is important to track the source of funds. To do so, add the negative of the total distribution amount to the spread row in the interest column, with the positive in the Unpaid interest column.
⚠️By doing this, the system records who is being advanced by adding a negative balance to the unpaid interest and who is advancing the money by adding the positive balance to unpaid interest to the spread.
Then Click Record Payment
By following these steps, you have recorded the advance along with who is receiving interest in excess of what has been received from the borrower and who provided those funds using the unpaid interest column.
Investors will only see the paid-out funds; they will not have the context that it was advanced.
Record the Borrower Payment after an Advance
When the borrower makes the payment, we need to clear the balances and record who is receiving the funds.
Navigate to the loan and the payment tab.
Click Add a Payment
Select Regular payment type and borrower's deposit method in the payment box.
Click on Interest to expand and view the investors in a loan.
Set the amount to distribute for each investor who received the advance to $0.00 in the interest column and add the positive amount of the advance in the unpaid interest column.
Then, assign all the distributed amounts to the spread and add the negative of the total advance in the unpaid interest column.
This will process will create the record in the payouts that mimics the reality.
Advance
A negative transaction coming out of the spread, to then,
Positive transaction to an investor as interest
Payment from the Borrower
Sending the advanced interest back to the spread plus additional interest assigned to the spread.
