Recurring Payment Adjustment on Renewal Date Returns Validation Error - Support Advisory

Issue

Customer is trying to record a recurring payment adjustment on a renewal date and the system returns a validation error and will not allow the payment adjustment to be saved.

A couple of scenarios that aren't error corrections include:

1. Recording a recurring payment adjustment under ASC 842 when there's been an index rate change on renewal date. In this scenario the delta needs to be expensed as incurred.

2. A RC renewal has been recorded, however there's been either a change in the underlying index rate or a contingency resolved and therefore a recurring payment adjustment needs to be recorded.

Recommended Solution

For both scenarios above, we recommend recording a one-time Payment Adjustment and then a recurring Payment Adjustment effective the following month.

Downside: Balance Sheet would be incorrect for a month. Also, for a Finance lease, the one-time Payment Adjustment would hit interest expense entirely.