In addition to providing merchant service integration, Geek Pay handles all the accounting for your loans. This is done through the concept of "Journal Entries". Yes, we are using the term loosely based on the actual accounting concept.
In Geek Pay, we have the following types of Journal Entries:
Interest Entry - If your loan has interest, we will generate Interest Entries at the beginning of each period of the loan.
Penalty Fees Entry - When you first set up a loan you are able to specify the "Late Fee Amount". Should a loan be marked as "Late" we will automatically increase this balance. This fee will be applied once until the loan is brought back into good standing.
Principal Entry - This is used to track the remaining Principal on a loan.
Service Fees Entry - You have the option of charging borrowers monthly service fees on a loan. Every time a scheduled payment occurs we automatically increment the service fees balance before applying the payment to the loan balances.
Transaction Fees Entry - If you wish to charge your borrowers for making payments through your merchant account, you have the ability to do so. When we generate a payment we automatically increment the amount by the calculated transaction fee amount.
The Geek Pay system is designed to keep a running ledger for each of the entries listed above. If you are familiar with accounting practices, some accounts are credit and others are debit. That's loosely how our various accounts function. Feel free to read more about common accounting practices here.
When a loan is first initialized we automatically generate two Journal Entries:
First Principal Entry - This is the total amount of the loan. This will be paid off over-time by the Borrower.
First Interest Entry - If your loan has interest, we will automatically generate interest for the first month of the loan. Whenever the borrower makes a payment this will be paid off first and then the principal.
When you visit an active loan's overview page you'll notice the following items:
Amount - This is the original amount of the loan and is what we use for the first Principal Entry.
Total Balance - This is equal to the Interest Balance + Principal Balance + Penalties Balance + Service Fees Balance - Overpayment Balance.
Outstanding Principal - This is the current Principal Balance.
When a Payment is posted to a loan, we pay off the loan's balances in the following order:
If an individual payment is greater than the sum total of all these balances, we will generate an Overpayment Entry. You will be responsible for paying this back to the borrower as we do not currently automate the repayment of overpayment balances.