[Mifos-users] Questions around how mifos handles arrears

[Ryan W. <rwh...@gr...>]

This came from one of our service providers.  Kay, maybe you can clarify?
-----
A client is looking for the best practice/ most common way of calculating
arrears days, considering partial repayments. Our thinking is that the
following is the correct treatment but would be very curious to hear others
thoughts on the matter.
 
1.       arrears days is calculated as the number of days between the
current date and the oldest installment which is not yet fully repaid.

2.      The aging bracket is based on the arrears days- ie if arrears days =
45 then you are in the 30-60 bracket

3.      Repayments are applied to the oldest overdue installment first

4.      Based on point 3, if a partial payment is received which clears the
oldest installment, but still leaves the client in arrears then the arrears
days will decrease.

 
Perhaps easiest to see this with an example
 
·        Client misses two installments which were due on 1/3/2010 and
1/4/2010 say for 1000KSH each.

·        So today on 27/4 they are 57 days in arrears. This is the number of
days between 1/3/2010 and yesterday 26/4/2010. We don¹t consider today since
the day isn¹t yet over.

·        Now if they come and pay 1000KSH this will be applied to the
installment of 1/3/2010 which will now be fully paid

·        After his partial payment I then expect their arrears days to be 26
as the number of days between 1/4/2010 and 26/4/2010. As such they would
move from the 30-60 aging bracket to 1-30.

 
My tests of Mifos confirms that this is indeed how the system is operating
but I¹m confused by some text on the site which says that partial payment
does not affect the arrears days.
 
http://www.mifos.org/knowledge/functional-specifications/miscellaneous/loan-
arrears-aging
 
Days in arrears is the same as the metric used in ³Performance history² for
loan accounts and is = payment due date (for the first unpaid/partially paid
installment) ­ current date
* When a client misses a payment, the counter for ³days in arrears² starts.
* This counter is reset to 0 when a client makes a payment that completely
pays off his/her overdue amount.
The count is not altered if a client makes a partial payment.
-- 
Ryan Whitney  
Mifos Technical Program Manager
rwh...@gr...
Mifos - Technology that Empowers Microfinance (www.mifos.org)
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