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How to account for payment holidays?

Payment holidays, various terms - what to do?

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Hi

i work for a company which has a lot of finance agreements with various different providers.  Payment holidays have been granted on various different bases....

- some pushing out the term for 3 or 6 months,

- some keeping the term the same but increasing payments afterwards,

- some paying 50% of payment and then ....no idea etc etc.  

So, I feel like the accounting needs to change for these holidays.  I presume if extending the term then the payments are just spread over the increased term?....but that otherwise if the term is unchanged then it’s just a timing difference in when the repayments are made?

Please could someone clarify the point?  I think I’m panicking at the thought of reworking literally dozens of finance agreements for payment plans over various periods but maybe I’m overcomplicating it?  Many thanks 

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By Cheshire
08th Jun 2020 08:08

Quote:

Hi

i work for a company which has a lot of finance agreements with various different providers.  Payment holidays have been granted on various different bases....

- some pushing out the term for 3 or 6 months,

- some keeping the term the same but increasing payments afterwards,

- some paying 50% of payment and then ....no idea etc etc.  

So, I feel like the accounting needs to change for these holidays.  I presume if extending the term then the payments are just spread over the increased term?....but that otherwise if the term is unchanged then it’s just a timing difference in when the repayments are made?

Please could someone clarify the point?  I think I’m panicking at the thought of reworking literally dozens of finance agreements for payment plans over various periods but maybe I’m overcomplicating it?  Many thanks 

You should know by now not to presume anything in accounting.

You need to get the facts, then deal with each scenario on those facts.

Not sure why this need to be anon, it's not exactly sensitive info (per the sift rules of anon posting) is it?!!!

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Scalloway Castle
By scalloway
08th Jun 2020 08:20

Have the finance providers given you revised repayment schedules?

In the abscence of information from the finance providers how I would deal with it is accrue the unpaid instalments then clear the balance as payments are made.

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Replying to scalloway:
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By paul.benny
08th Jun 2020 10:20

Accruing doesn't seem to fit: payment holidays mean that the payments are no longer due.

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