Guide for firms
Payment distribution records for debt mediation firms
When a client has several creditors, the practice needs a consistent way to record how each payment is allocated.
DebtDesk does not receive, hold, or transfer client money. The practice handles payments offline. DebtDesk can record the payment, apply the allocation rules configured by the practice, and produce a distribution record for review, reconciliation, and client communication. To test a split before recording it, use the payment distribution calculator.
Start with the accepted terms
The allocation should be based on the terms the practice and creditors have agreed to. Before recording a payment, check that the case shows:
- each participating creditor;
- the current agreed instalment;
- any account that has been closed or paid up;
- the fee treatment;
- VAT treatment, where applicable; and
- the effective date of the arrangement.
Do not distribute from an old proposal just because it is the version that is easiest to find. Keeping creditor proposals and responses current makes this step reliable.
A common proportional method
One common method is to allocate the amount available for creditors in proportion to the agreed instalments.
- Add the agreed instalments together.
- Divide each creditor's instalment by that total.
- Apply the resulting percentage to the amount available for distribution.
- Apply the practice's rounding rule consistently.
The allocation method should be clear in the client's agreement and applied consistently across the relevant files.
Worked example
These figures are illustrative.
A client pays R2,500 for the month. The agreed mediation fee is R300, leaving R2,200 available for distribution.
The agreed creditor instalments are:
| Creditor | Agreed instalment | Share | Amount allocated |
|---|---|---|---|
| Creditor A | R1,200 | 57.14% | R1,257.14 |
| Creditor B | R600 | 28.57% | R628.57 |
| Creditor C | R300 | 14.29% | R314.29 |
| Total | R2,100 | 100% | R2,200.00 |
In a live system, the practice should document how it handles cents and rounding so the final allocation always reconciles to the amount available.
Record the payment before the split
The distribution record should show:
- payment date;
- amount received by the practice;
- client and case reference;
- fee and VAT treatment, where applicable;
- amount available for creditors;
- amount allocated to each creditor;
- allocation date;
- rejected, short, or late-payment status; and
- remaining balances.
The record should make it possible to explain the result without repeating the calculation from scratch.
Handle exceptions deliberately
Not every month will be a full, successful payment. Decide how the practice records:
- a payment smaller than the agreed amount;
- a payment received after the expected date;
- a payment rejected by the bank or payment method used offline;
- a creditor that changes its agreed terms;
- an account that has been paid up; and
- a fee that is waived, changed, or charged on a different schedule.
Do not quietly adjust a percentage to make the total balance. Record why the rule changed and who approved it.
Give the client a readable record
A distribution statement should be understandable without a spreadsheet formula. Show the payment, any agreed deduction, the amount allocated to each creditor, and the balances that remain.
If a client asks why a creditor received a particular amount, the practice should be able to point to the agreed terms and the calculation used for that payment.
Keep the money boundary clear
DebtDesk is not a payment processor, bank account, or trust account. It does not custody or distribute mediation-client funds.
The mediation practice remains responsible for its bank accounts, payment instructions, offline transfers, reconciliation, refunds, and communications with clients and creditors. DebtDesk records and calculations must be reviewed before the practice acts on them.
How DebtDesk supports distribution records
DebtDesk lets the practice capture a payment, apply configured allocation rules, record fees and VAT treatment where applicable, and produce a distribution record linked to the client's case. For the consumer-facing explanation of this step, see how mediators distribute payments.
That gives staff a repeatable starting point each month. It does not replace the practice's review, accounting controls, or professional advice.
Common questions
How should one payment be split across creditors?
The practice should follow the method set out in the accepted arrangement. A common method is a proportional split based on each creditor's agreed instalment, applied to the amount available after any agreed deductions.
What happens if the client pays less than agreed?
Record the actual payment and apply the practice's documented short-payment rule. Do not present a full distribution as if the client paid the full amount.
Does DebtDesk send money to creditors?
No. DebtDesk does not receive, hold, or transfer mediation-client money. It records payment information and produces allocation records; the practice handles the actual payments offline.
How should fees and VAT be shown?
Show the agreed fee and any VAT charged separately from the amount available for creditor allocation. VAT treatment depends on the practice's tax position and the nature of the fee, so the practice should confirm it with its accountant or tax adviser.
What should happen when an account is paid up?
Record the final balance, date, and creditor confirmation. Update the current arrangement according to the practice's agreed process and keep the previous allocation history.
For mediation firms
See payment distribution records on a real file
Book a DebtDesk walkthrough to see how a payment record moves from capture to a reviewable distribution statement.
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