Penalty Post Upon Collection (PPC): How It Works?

Penalty Post Upon Collection (PPC): How It Works?

Penalty Post upon Collection (PPC) is a method in which ADDA calculates penalty interest on delayed payments but posts the interest to the member's ledger only when the payment is received.

Until the payment is collected, the calculated penalty is shown as Accrued Interest. No penalty or interest entry is posted to the member's ledger or accounting books while the amount remains unpaid.



How does PPC work? 

When PPC is enabled:
  1. ADDA calculates interest on the outstanding amount for the delayed payment period.
  2. The calculated amount is shown as Accrued Interest.
  3. No ledger or accounting entry is created while the amount remains unpaid.
  4. When the member makes the payment, the applicable accrued interest is posted to the ledger.
  5. If the payment is not received, the interest continues to remain as accrued interest and is carried forward.

In simple terms: Interest is calculated regularly but posted only when it is collected.


How does PPC work when the Association charges GST?
If your association charges GST on penalty interest:
  • ADDA calculates the applicable interest and GST.
  • The accrued amount shown includes the applicable GST.
  • Until payment is received, no ledger or accounting entry is created.
  • Once the payment is received, the applicable interest and GST amounts are posted accordingly.

How does PPC work when the association does not charge GST?
If your association does not charge GST on penalty interest:

    • ADDA calculates only the applicable penalty interest.
    • No GST is added.
    • The amount remains as Accrued Interest until payment is received.
    • Once the payment is received, the applicable interest is posted to the member's ledger.
    • If payment is not received, it continues to be carried forward as accrued interest.

    How can I enable PPC?

    To enable the Penalty Post upon Collection (PPC) feature, kindly connect with our Support Team by sending an email to Support@adda.io.    Our Support Team will assist you with enabling the feature.

    What are the benefits of PPC?

    1. Penalty is posted only after collection: No penalty entry is posted to the ledger until the applicable amount is collected.
    2. Easy tracking of accrued interest: Members and the society can easily track the interest calculated on outstanding amounts as Accrued Interest.

    3. Supports GST and non-GST societies: The system automatically calculates the applicable amount based on whether GST applies to penalty interest.

    4. No unnecessary ledger entries: Unpaid penalty interest does not create premature entries in the member ledger or accounting books.

    5. Simplified accounting and reconciliation: The applicable penalty amount is posted when the payment is collected, making it easier to track and reconcile transactions.

    Author: Mahesh