Hi Ashok, Thank you for reviewing and sharing the valuable feedback
BuyDown fees implemented at FINERACT-2311 are currently configured to support merchant lending where the merchant module and accounting module is handled outside the Fineract system. Hence the system has been configured to affect the EXPENSE account. However, for non-merchant products the system should affect the ASSET account as you rightly pointed out. We have this story on the radar and scheduled to be picked up in the coming few sprints. I have created a Fineract JIRA ticket also for the same: https://issues.apache.org/jira/browse/FINERACT-2330 On charge-off suggestion you made Buydown fees is Implemented such a way that every day it is being amortized (from deferred income -> Income from amortization) When charge-off happens the unamortized fees will only be marked as expense and no changes on the amortization schedule/Income. hence(remaining deferred income will be moved to Expense account). You can check the following UC for more information https://docs.google.com/spreadsheets/d/1qjJj-Yl6UOiiEMNnKufltDT8aNdYjxLB6DtSRsue910/edit?gid=718453492#gid=718453492&range=A1 Regards, Bharath Lead Implementation Analyst | Mifos Initiative PMC Member | Apache Fineract Mobile: +91.7019635592 http://mifos.org <http://facebook.com/mifos> <http://www.twitter.com/mifos> On Fri, Jul 18, 2025 at 8:58 AM Ashok <ashoku...@gmail.com> wrote: > Hi team, > >> >> I’ve reviewed the accounting entries for the Buy-Down Fee feature >> (FINERACT-2311 https://issues.apache.org/jira/browse/FINERACT-2311 ) and >> would like to suggest the following corrections to align with standard >> accounting practices: >> >> --- >> >> 1. *At Disbursement* >> >> *Current*: >> DR: BuyDown Expense (Expense) >> CR: Deferred Income (Liability) >> >> *Suggested*: >> DR: Cash or applicable Asset Account (Asset) >> CR: Deferred Income (Liability) >> >> *Reason*: The buy-down fee is received by the institution. If collected >> upfront, it should be recorded in Cash. If collected later, it should be >> posted to a Receivable or net-off account. >> >> --- >> >> 2. *At Loan Charge-Off* >> >> *Suggested*: >> DR: Deferred Income (Liability) >> CR: Buy-Down Fee Reversal (Income) >> >> *Reason*: Any unearned portion of the buy-down fee should be reversed >> when the loan is charged off to avoid recognizing future income. >> >> --- >> >> 3. *Adjustment to Buy-Down Fee* >> >> *Suggested*: >> DR: Deferred Income (Liability) >> CR: Cash or applicable Asset Account (Asset) >> >> *Reason*: If the fee amount is corrected after disbursement (e.g., due >> to a merchant dispute), the adjustment should reverse part of the original >> asset entry, not affect income. >> >> --- >> >> These changes will help ensure accuracy in accounting and consistency >> with how the buy-down fee is operationally collected and tracked. >> >> Happy to connect and provide further clarification on these accounting >> entries if needed. >> >> >> Regards, >> Ashok >> >
