Limit the liability of the company by setting a limit to the maximum outstanding principal any one customer can have. Sometimes nefarious customers travel from store to store racking up a large debt profile before leaving town. Limit the liability by setting a maximum outstanding principal any one customer can have. Loans can be written beyond this limit with manager approval. Additionally, some municipalities require a limit to the maximum outstanding principal or maximum outstanding total debt. Known municipalities that require this setting will be defined at the bottom of this document.
Index:
How and where to set the Maximum Outstanding Principal.
How to get it:
This configuration is located at the company level in the Information tab along with the company name and address. Make sure you have already setup your managers with the ability to override the maximum principal for those special customers.
Security Bit:
Name:
“Override Maximum Outstanding Principal per Customer”
Location:
(Main Menu -> Transactions -> Point of Pawn -> Pawn -> Just below “Authorized 3rd Party”)
How and where to set the Maximum Outstanding Principal.
Go to System Config:
Scroll up to the top the tree selecting on the left side of the configuration screen, then select the company.
Select the Information tab, then find the Maximum Outstanding Principal on the bottom left of the Information tab. Make sure to click the edit button at the top to enter edit mode, then save changes.
Concerns & Considerations:
The intent of this feature is to limit the liability of a pawn shop or group of stores to a large liability. This feature should only be enabled once all managers have been informed. Customer could get offended if no one in the store can write a loan because of some strange limitation.
Usage:
Once setup, only managers and key employees should have the security bit set to Allowed. All others should be set to Manager Approval. Goal here is to include the manager in decisions on loans that will raise the customers outstanding principal beyond the threshold set.
Usage Example:
Customer has been maintaining a loan balance below the maximum outstanding principal.
Customer suddenly adds more items.
Upon saving, an exception is raised. The exception will show the new outstanding principal and the maximum outstanding principal. This detail allows managers to make an informed decision to allow this new principal.
Municipality Requirement:
Hawaii:
As per the below link; “No pawnbroker shall Allow a customer's pawn account to exceed $10,000. For purposes of this paragraph, “pawn account” means the total accumulation of unpaid pawn finance charges for any single customer.”
https://codes.findlaw.com/hi/division-2-business/hi-rev-st-sect-445-134-13.html
In order to configure the Maximum Outstanding Principal to limit the “total accumulation of unpaid finance charges”, you will need to back calculate the pawn finance charge. For this calculation we will use the maximum 20% allowed. Divide the maximum pawn account by (1 + the maximum pawn finance charge percentage) $10,000.00 / 1.2 = $8,333. Therefore, if charging the maximum pawn finance charge, the Maximum Outstanding Principal per Customer should be set to $8,333.