DMBM402080 - Interest: Charging interest – by IT system: Charging interest in SAFE: Auto clearing process

The SAFE system includes an auto clearing process which will normally run as a background process and be invisible to users. The process is run overnight and is responsible for automatically allocating payments from the Unallocated Payment suspense account to outstanding charges. Set out below are some examples of when the process is used

• Where a payment includes settlement of a charge and an amount of accruing interest, the payment will be processed in SAFE by clearing the tax/duty charge and the excess is allocated to Unallocated Payments. SAFE will calculate the amount of interest due and where the amount due is not more than £32.00 above the amount of accrued interest paid, an interest charge will be created for the amount of interest paid. On the next occasion that auto clearing runs the accrued interest payment held in Unallocated Payments will be allocated against the interest charge. When viewing the Customer Record over this period users need to be aware that the process may take up to two working days to complete. Where the additional interest due is £32.01 or more above the amount of accrued interest paid an interest charge will be raised for the full amount of interest due. Auto clearing will allocate the amount of accrued interest paid as a payment on account of the interest charge. A charge notification will be issued for the interest.
• To accommodate a charge amendment (decrease) any payments allocated against the charge will be transferred to Unallocated Payments. Once the revised charge is in place auto clearing will return sufficient payments to clear the charge
• Where auto clearing has returned payments to a revised charge, if the charge is cleared and not subject to clerical interest an automatic interest charge will be raised. When auto clearing is next run any payments held in Unallocated Payments will be allocated against the interest charge
• When an EDP needs to be amended Reset Payment is used to transfer the payment from the charge record to Unallocated Payments. The EDP can then be amended and if the user chooses not to reset the payment against the charge auto clearing will return the payment when it is next run.

Auto clearing will look for any new charges that have been received since the process was last run and will automatically allocate any payments held in Unallocated Payments that have not been specifically identified as appropriate to another charge, to the new charge. Payments specifically identified as appropriate to another charge will include payments that are in the process of being automatically reallocated on an existing charge. – Payments of duty and interest are identified separately for repayment interest purposes.