BNPL and credit: amortization and interest that close every day

Credit is the most accounting-dense financial product that exists. Every installment generates interest on an accrual basis, amortization, occasional lateness, provisioning, and — when it comes to it — a write-off. All of it has to reconcile against the funding statement and the regulatory balance sheet. Without a ledger, closing the month inside the month is impossible.

The problem

Most BNPL platforms start by computing interest on demand: “when the customer pays, I’ll see how much it is.” That breaks at two moments. First, at month-end — interest revenue must be recognized on accrual, not cash basis. Second, at provisioning — expected loss has to be estimated and booked every day, not on the day of default.

Chart of accounts

Disbursing a loan

A R$ 1,000.00 loan over 10 installments at 3% monthly. On disbursement day, two entries:

Daily interest accrual

Every day, a job runs over every active loan and books interest on an accrual basis — even if the customer hasn’t paid yet. That is what lets you close the month on day 1: by day 30, revenue has already been recognized day by day.

The value is simplified for the example. In production, the calculation uses the contract’s exact convention (business-day pro-rata, 360-day base, etc.), but the posting pattern is always the same: debit interest:accrued, credit revenue:interest. When the customer pays the following month, the receipt debits pool:pix and credits interest:accrued — no revenue is recognized twice.

Installment receipt

Daily provisioning

Expected loss (PD × LGD × EAD) is computed per loan and booked every day as expense. If the risk model revises downward, the reversal also goes into the ledger — and the history shows, day by day, what the portfolio’s loss expectation was.

Write-off

When a loan is deemed lost (typically after 180+ days overdue), two things happen in one transaction: principal is written off against the already-provisioned allowance, and the case enters collections. If part is recovered later, it becomes “recovery” revenue — it does not reverse the write-off.

Invariants

FAQ

How do I handle renegotiations?

A renegotiation is a new transaction that extinguishes current balances and creates a new loan. The original loan’s history remains; the new one carries a renegotiated_from_loan_id. Audit can rebuild the chain.

What about securitization (FIDC) / portfolio assignment?

A cession moves principal + accrued interest from ops:funding:equity to ops:funding:fidc, recognizing the discount on the appropriate expense account. Nothing on the customer’s side changes.

Revenue over time or on payment?

Brazilian rule (and IFRS 9): accrual basis. Interest is revenue on the day it accrues, not on the day it hits cash. The ledger enforces this by construction.

When you need this

1. 1
   You lend your own money or a fund's

   A balance sheet with a credit asset has to be defensible.
2. 2
   You have more than 10,000 active loans

   That's exactly where spreadsheets stop scaling.
3. 3
   You need to close the month within two business days

   Without daily accrual, impossible.
4. 4
   You'll issue a securitization or sell part of the portfolio

   Auditors want entry-level history — or they don't sign.