Free of Payment

In the business sectors Export Collection, Import Collection, Import Documents, Export Documents and Documents under a Transfer a checkbox named “Free of Payment” is available.

The meaning and usage of this option is as follows:

In the settlement transactions a reduction amount (SETMOD\REDAMT) can be entered via the “The Settlement Details Panel”. This amount can be a partial amount of the document amount (SETMOD\DOCAMT) and as such it reduces the settlement amount (SETMOD\SETAMT).

As a basic principle, the following equation is true for settling the contract in the settlement module:

Document Amount - Reduction Amount = Settlement Amount

i.e.

(SETMOD\DOCAMT) - (SETMOD\REDAMT) = (SETMOD\SETAMT)

If the document amount equals the reduction amount, the settlement is free of payment.

Presented documents are intended to be forwarded, a payment is not made by the payer (e.g. applicant, drawee). Possibly, the payment is made outside of the application.

In the following transactions the option “Free of Payment” is used:

Import Collection

• Accept and Settle Documents (BCTPAY)
  
• Settle Usance Documents at Maturity (BCTSUS)

Export Collection

• Accept and Settle Documents (BOTPAY)
  
• Settle Usance Documents at Maturity (BOTSET)

Documents under an Import L/C

• Send, Accept and Settle Documents (BRTPAY)
  
• Settle Usance Documents at Maturity (BRTSUS)

Documents under an Export L/C

• Send, Accept and Settle Documents (BETPAY)
  
• Settle Usance Documents at Maturity (BETSET)

Export Documents under a Transfer

• Send, Accept and Settle Documents (BTTPAY)
  
• Settling Funds (BTTSET)

The settlement is made for the reduced settlement amount of the transaction.

• If the “Free of Payment” checkbox is unchecked, the document amount can be reduced by a partial amount (hence 'reduction amount').
• If the reduction amount equals the settlement amount, the system issues an error message, which prompts the user to check the checkbox “Free of Payment”.
• If the reduction amount is greater than the settlement amount, the system issues an error message as well.

• If a reduction amount has been entered, this has the following effects on the Liability Concept:
  • For sight documents:
    The total document amount will be booked out of the liability.
  • For usance documents, if the “Free of Payment” checkbox has not been checked:
    Only the settlement amount that was reduced by the reduction amount will be booked into the liability (DPU, DPZ, AKZ). Reason: For follow-up transactions, like e.g. loans or advances, it is essential that the loan/advance must be handled only via the reduced amount.
    The document amount will be booked out of the main contract (liability types INT, AVL of the parent contract (*)) and the INT booking of the subsector.
    If the checkbox “Free of Payment” is checked, the reduction amount is used as default value for the document value and field “Reduction Amount” is disabled. The booked liability will be booked out, a rebooking in the liability classes DPU, DPZ, AKZ will not be made.
  • For Mixed Payment documents:
    The entered reduction amount reduces the sight amount valid for this contract (SETMOD\DOCAMT). The remaining usance portion will be rebooked into the liability (liability types/liability classes DPU, DPZ, AKZ).

(*) - Details about contract types can be found in the Developer Documentation under “Contract Status Control” in section “Defined Terms for Contracts”.