Payment Schedules and Recurring Charges

Installment charges are modeled with cycle forward recurring processing; the recurring charge for a given cycle is processed at the beginning of the cycle period. However, the payment schedule provides an option to indicate if the first payment should be charged at the time of contract purchase or at the start of the next cycle after the contract is purchased.

If the first payment is to be charged at the start of the next cycle after purchase, the same number of payments are charged, but the time at which they are charged shifts by one cycle period. For example, if a contract payment schedule is for 3 monthly payments, and the contract is purchased on January 15, the dates the payments are charged will differ based on whether Delay Charges is selected on the payment schedule, as shown in Date Payments Are Charged.
Table 1. Date Payments Are Charged
Payment Number Charge Date when Option to Delay Charges is Selected Charge Date when Option to Delay Charges is Not Selected
1 February 15 January 15 (contract purchase date)
2 March 15 February 15
3 April 15 March 15
Note: When Delay Charges is selected on the payment schedule, the last installment and the final payment happen immediately following the end of the contract offer. In the example shown in Date Payments Are Charged, the last payment is on April 15 which is also the end of the contract offer.
The information populated in the normalization object for each recurring process differs based on whether the charges are delayed. If Delay Charges is selected, the information is populated based on which cycle period the charge is for, rather than when the charge is processed. For example:
  • A payment schedule has the following ranges to specify different amounts for each of the three months:
    • Range 1 — {Name = First Month, Id = 1234, UpperBound = 1, Amount 15}
    • Range 2 — {Name = Second Month, Id = 5678, UpperBound = 2, Amount 10}
    • Range 3 — {Name = Third Month, Id = 8765, UpperBound = 3, Amount 5}
  • For recurring payments on February 15:
    • Delay charges unselected — Normalization object contains information from range 2 because the charge is for the period beginning on February 15 (February 15-March 15)
    • Delay charges selected — Normalization object contains information from range 1 because the charge is for the period ending on February 15 (January 15-February 15)

The recurring events generated include additional data that indicates whether the charge is paying for the previous period or current period. The cycle start and end times in the recurring event remains unchanged: they still indicate the start and end of the cycle period in which the charge is applied.

Recurring Charge and Debt Balance

You must configure a recurring debt balance on a service contract offer with a payment schedule. Recurring charges that cannot be paid go into the recurring debt balance so that there is no recurring failure. For more information about debt balances, see the discussion about debt balance during purchase or recurring.