Financial instruction line items are generated for all three deduction categories (applied, un-applied, third party) by the processing of secondary financial components. Secondary financial components are processed as part of the Generate Financial Line Items batch process. This occurs after all payment instruction line items have been generated, i.e., after the primary financial component has been processed. The amount of the deduction is checked against settings that are configured as part of system administration. Based on this comparison, the system determines whether or not the secondary financial components are processed.
For example, before processing the secondary financial components, the system determines whether or not there are sufficient funds in the payment amount to cover the deduction amount. All deductions have a setting that determines the action to take if there are insufficient funds available to process the full deduction amount. Depending on this setting, part of a deduction may be processed against the amount that is available or the deduction may not be processed at all.
Deductions can be prioritized by the organization in order of importance. For example, it may be more important to process a deduction that is used to pay housing costs than a deduction that is used to repay a liability owed to the organization. Based on its priority, each deduction is applied to the total deductible amount calculated for the nominee who receives the benefit payment. For each applied, stand alone, or utility payment deduction that is processed, two line item records are created. The first of these is a debit against the benefit. As described in the following section, the second is applied toward a liability, stored on the system, or paid toward a utility, depending on its type.
Configuration is also available which provides the ability for the agency to define whether or not overlapping deductions are allowed. If a deduction is configured to prevent overlapping deductions, a validation will be displayed if a user tries to activate a deduction which already exists on the case for an overlapping time period. This can be configured for all categories of deductions (applied, un-applied and third party).
The two instruction line items created are related to each other by a relationship record that is automatically created by the system. This allows for traceability back to the case nominee whose payment the deduction was made from. For example, when a bulk payment is issued to a utility (see below), each line item in that payment will be traceable back to a case nominee.