NetLoan - Record a Decapitalization Payment

Overview

The Decapitalization payment type (new in 2026.1.1.0) is a cash payment that pays down accumulated capitalized interest before applying to current period interest or principal. It is the counterpart to the Capitalize Accrued Interest payment type and is typically used when a borrower who had been capitalizing interest resumes making cash payments and needs to clear the accumulated capitalized balance. This article covers the three workflows for recording a Decapitalization payment, the allocation order, and how it affects the schedule line fields.

Prerequisites

• Standard NetLoan access with permission to create loan modifications
• The loan must have an accumulated capitalized interest balance — this payment type is most useful after the Capitalize Accrued Interest payment type has been applied or a capitalization frequency setting other than "Never" has been selected. See NetLoan — Record a Capitalize Accrued Interest Payment.
• For Workflow 3 (direct payment entry + automod): access to the Update Schedules suitelet, or the automodification MR must be scheduled to run automatically — see NetLoan - Automatic Modifications

Step-by-Step

Navigation

• Modify button: Click Modify on the loan record header to open the Modify Loan suitelet
• Modification proposal: Click Create Modification Proposal on the loan record, or navigate to NetLoan > Loan Management > Modification Register > New
• Amortization tab: Open the loan record in edit mode and scroll down to the Amortization tab > Payments subtab

Via the Modify Button on the Loan

1. Open the loan record in NetLoan.
2. Click Modify in the loan record header to open the Modify Loan suitelet.
3. Set the Modification Type to Adjust Loan Balance.
4. Go to the Payments subtab.
5. Set the Payment Type to Decapitalization.
6. Set the Effective Date of the payment.
7. Enter the cash payment amount.
8. Click Add to add the payment line.
9. Click the Modify button to process the modification.

📷 Screenshot recommended: Modify Loan suitelet with Adjust Loan Balance selected and a Decapitalization payment line showing a cash amount on the Payments subtab

Via a Modification Proposal Record

1. Open the loan record. If the Create Modification Proposal button is visible in the record header, click it. If the button is not shown, navigate to NetLoan > Loan Management > Modification Register > New to create a new modification proposal.
2. Set the Modification Type to Adjust Loan Balance.
3. Go to the Payments subtab.
4. Set the Payment Type to Decapitalization.
5. Set the Effective Date of the payment.
6. Enter the cash payment amount.
7. Click Add to add the payment line.
8. Save the proposal.
9. The modification proposal must have a status of Approved before it will process. If the status was not set to Approved during entry, it will need to be updated before the modification runs. There is no out-of-the-box approval workflow in NetLoan — an approval process must be configured by you or your implementation partner.

Via Direct Payment Entry on the Loan

1. Open the loan record and click Edit (edit permission on the loan record is required). Scroll down to the Amortization tab.
2. Go to the Payments subtab.
3. Set the Payment Type to Decapitalization.
4. Set the Effective Date of the payment.
5. Enter the cash payment amount.
6. Click Add on the payment line, then save the loan record.
7. Process the modification using one of the following:
8. Navigate to NetLoan > Mass Update Loans > Update Loan Schedules and manually trigger the automodification mass results (MR).
9. Wait for the automod MR to run on its scheduled frequency.

This is the recommended approach for processing these payments via API. Payment records can also be uploaded in mass via CSV using NetLoan - Loan Payment Data Upload.

Considerations

Payment allocation order: The Decapitalization payment type allocates cash in this order: (1) accumulated capitalized interest, (2) current period interest, (3) accrued interest, (4) remaining principal. The full payment amount is applied before any remainder moves to the next bucket.

Allocation examples (current period interest = $5, accrued interest = $3, accumulated capitalized interest = $11):

Schedule line fields after a Decapitalization payment: After processing, the schedule line for the payment period will show:
- Capitalized Interest (custrecord_da_lse_cap_interest): A negative value equal to the amount of accumulated capitalized interest paid down that period.
- Accumulated Capitalized Interest (custrecord_da_lse_accum_cap_interest): Decreases by the same amount, reflecting the reduced running balance.
- Principal: The loan's outstanding principal balance decreases by any amount applied to principal after accumulated capitalized interest, current interest, and accrued interest are covered.

GL impact: Decapitalization payments post to the same accounts as regular interest, accrued interest, and principal accounts selected on the loan type. No separate GL account is needed or created.

Schedule Calculation Type determines the downstream effect: The Schedule Calculation Type configured on the loan controls how paying down the accumulated capitalized balance affects the amortization going forward — specifically whether it adjusts the recurring payment amount, shortens the loan term, or changes the balloon payment. Confirm the correct Schedule Calculation Type is set before applying this payment type.

Payment amount is required: Unlike Capitalize Accrued Interest, Decapitalization is a real cash payment — the amount field must be filled in. If the accumulated capitalized interest balance is $0, this payment type has no special effect beyond a standard payment allocation.

This action can be reversed: Like other modification types, a Decapitalization modification creates a reversible record. See NetLoan - Modification Reversals if you need to undo it.

Related Articles

• NetLoan — Understanding Interest Capitalization
• NetLoan — Record a Capitalize Accrued Interest Payment
• NetLoan - Loan Balance Adjustment
• NetLoan - Modification Reversals
• NetLoan - Automatic Modifications
• NetLoan - Update Loan Schedules

Record Structure

NetLoan Payment Record (for API)