> ## Documentation Index
> Fetch the complete documentation index at: https://docs.lead.bank/llms.txt
> Use this file to discover all available pages before exploring further.
# Settlement Amount
> Understand how settlement works.
## Overview
The settlement amount is the total amount a client must send to Lead on the loan sale date. Lead expects this amount to be transferred to the Operating Account before the client sends a Sales Response.
settlement\_amount = outstanding\_principal + settled\_transactions\_amount + imputed\_interest\_accrued
There are other invoicing items besides imputed interest to which you are subject, per your Program Management Agreement. \
\
Reach out to your technical account manager for more details.\
\
Note: receivables sold and purchased do not include any fees or interest charged to your end customer. Since those funds are not originated by Lead, they will not need to be sold.
## Components of Settlement Amount
The total amount of disbursed transactions (type = `disbursement`) for each `balance_id` based on the receivables origination date. Receivables are created at Lead at the balance level when Lead receives a `Transactions` file with `type` = `disbursement`. Lead sells these back to the client after the hold period.
### Example
If the hold period is 3 business days, and the sale date is Thursday, then the outstanding principal will reflect receivables from disbursements with a settlement date of the prior Monday.
Lead uses gross settlement, meaning all payments that reduce outstanding principal during the hold period will still be collected from the client.
**Card refunds are the only exception and use net settlement:**
* During hold: Lead receives refunds directly from the network and nets them out of the settlement.
* After hold: Refund amounts are returned to your operating account.
Daily interest accrued on outstanding principal of receivables created during the hold period.
* **If interest-based:** Lead charges the same effective APR as the client charges the end customer.
* **If fee-based:** For fee-based products (with no end customer interest), the Program Management Agreement outlines the applicable imputed interest rate.
When applicable, the SOFR rate is set based on the rate published on the last business day of the month prior to the loan’s origination date. This rate remains fixed for the entire hold period, even if the hold period spans multiple months.
### Example
A loan originates on March 31 with a three day hold period. The applicable SOFR rate is taken from 2/28 (the last business day of the prior month), which was 4.39%. That 4.39% rate applies for all three days of the hold period.
Payments are applied on a first-in, first-out (FIFO) basis to non-Lead receivables before being applied to Lead receivables.\
\
Payment reversals are applied in a last-in, first-out (LIFO) order to Lead-held receivables up to the originated amount. \
\
Refunds and disputes affect specific transactions if the `original_transaction_id` is included.
## Origination & Sale Date
Assuming a three business day hold period (refer to your contract for your program's hold period), here is how origination and sale dates align:
| **Origination Date**
settlement\_date of type = disbursement | **Sale Date** |
| ----------------------------------------------------------------- | ------------- |
| Monday | Thursday |
| Tuesday | Friday |
| Wednesday | Monday |
| Thursday | Tuesday |
| Friday | Wednesday |
| Saturday | Thursday |
| Sunday | Thursday |
Weekend settlements do not occur because payment rails only operate on business days.
\
Note: Federal holidays are not business days. For example, on MLK day of January 20th (Monday), any receivables created on Friday (January 17th) will sell on Thursday (January 23rd).
## Examples
| **Field** | **Receivables Created** | **Outstanding Principal** | **Settled Transactions** | **Imputed Interest Accrued** | **Settlement Amount** |
| ---------------------------------------------------------------- | ----------------------- | ------------------------- | ------------------------ | ---------------------------- | --------------------- |
| Weekday Loan Hold | \$20.00 | \$20.00 | \$0.00 | \$0.02 | \$20.02 |
| Weekend Loan Hold | \$20.00 | \$20.00 | \$0.00 | \$0.04 | \$20.04 |
| Payment During Hold Period
(no prior outstanding principal) | \$20.00 | \$5.00 | \$15.00 | \$0.02 | \$20.02 |
| Payment During Hold Period
(prior outstanding principal) | \$20.00 | \$15.00 | \$5.00 | \$0.02 | \$20.02 |
| Refund During Hold Period | \$20.00 | \$0.00 | \$0.00 | \$0.01 | \$0.01 |
| Full Cancellation During Hold Period | \$100.00 | \$0.00 | \$100.00 | \$0.00 | \$100.00 |
| Partial Cancellation During Hold Period | \$100.00 | \$70.00 | \$30.00 | \$0.07 | \$100.07 |
Refunds are credited to the Network Settlement Account, so you are not responsible for repaying them if they occur during the hold period. If refunds occur outside of the hold period, Lead provides funds back to your Operating Account.
### Details
Example assumes origination date of Monday (March 31st, 2025), three business-day hold period, imputed interest rate of SOFR +10%.
* (T = Loan Origination Date) A \$20 card transaction occurs on John's Balance.
* `type` = `disbursement`
* `transfer_type` = `card`
* `settlement_date` = `2025-03-31`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 3 = Thursday) Lead sends Sales Request with following settlement summary:
| **Field** | **Value** |
| ----------------------------- | --------- |
| outstanding\_principal | \$20.00 |
| settled\_transactions\_amount | \$0.00 |
| imputed\_interest\_accrued | \$0.02 |
| settlement\_amount | \$20.02 |
* Imputed interest calculation is as follows:
| **Daily Imputed Interest** | **Calculation** |
| ----------------------------------- | -------------------------------------------------------------------------------------- |
| Imputed interest on 3/31 (Monday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/1 (Tuesday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/2 (Wednesday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Total | \$0.023655 and rounded to \$0.02 |
Example assumes origination date of Thursday (March 27th, 2025), three business-day hold period, imputed interest rate of SOFR+10%.
* (T = Loan Origination Date) A \$20 card transaction occurs on John's Balance.
* `type` = `disbursement`
* `transfer_type` = `card`
* `settlement_date` = `2025-03-27`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 3 = Tuesday) Lead sends Sales Request with following settlement summary:
| **Field** | **Value** |
| ----------------------------- | --------- |
| outstanding\_principal | \$20.00 |
| settled\_transactions\_amount | \$0.00 |
| imputed\_interest\_accrued | \$0.04 |
| settlement\_amount | \$20.04 |
* Imputed interest calculation is as follows:
| **Daily Imputed Interest** | **Calculation** |
| ----------------------------------- | -------------------------------------------------------------------------------------- |
| Imputed interest on 3/27 (Thursday) | \$20 of receivables created on 3/27 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 3/28 (Friday) | \$20 of receivables created on 3/27 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 3/29 (Saturday) | \$20 of receivables created on 3/27 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 3/30 (Sunday) | \$20 of receivables created on 3/27 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 3/31 (Monday) | \$20 of receivables created on 3/27 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Total | \$0.039425 and rounded to \$0.04 |
Example assumes origination date of Monday (March 31st, 2025), three business-day hold period, imputed interest rate of SOFR+10%. There was a payment of \$15 towards the credit balance on Wednesday (April 2nd, 2025).
* (Prior to T) There were no outstanding principal on John's account (`outstanding_principal` = \$0)
* (T = Loan Origination Date) A \$20 card transaction occurs on John's Balance.
* `type` = `disbursement`
* `transfer_type` = `card`
* `settlement_date` = `2025-03-31`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 2 = Wednesday) Client sends \$15 card payment on John's Balance
* `type` = `payment`
* `transfer_type` = `card`
* `settlement_date` = `2025-04-02`
* (T+Business Day 3 = Thursday) Lead sends Sales Request with following settlement summary.
| **Field** | **Value** |
| ----------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- |
| outstanding\_principal | \$5.00
*(\$20 - \$15 card payment) The entire \$15 is applied to the newly disbursed amount using FIFO logic (first-in, first-out)* |
| settled\_transactions\_amount | \$15.00 |
| imputed\_interest\_accrued | \$0.02 |
| settlement\_amount | \$20.02 |
* Imputed interest calculation is as follows.
| **Daily Imputed Interest** | **Calculation** |
| ----------------------------------- | ------------------------------------------------------------------------------------------------ |
| Imputed interest on 3/31 (Monday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/1 (Tuesday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/2 (Wednesday) | **\$5** remaining of \$20 receivables created x (4.39% as of 2/28 + 10%) / 365 days = \$0.001971 |
| Total | \$0.017741 and rounded to \$0.02 |
Example assumes origination date of Monday (March 31st, 2025), three business-day hold period, imputed interest rate of SOFR+10%. There was a payment of \$15 towards the credit balance on Wednesday (April 2nd, 2025).
* (Prior to T) There was outstanding principal on John's account of \$10 (`outstanding_principal` = \$10).
* (T = Loan Origination Date) A \$20 card transaction occurs on John's Balance.
* `type` = `disbursement`
* `transfer_type` = `card`
* `settlement_date` = `2025-03-31`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 2 = Wednesday) Client sends \$15 card payment on John's Balance
* `type` = `payment`
* `transfer_type` = `card`
* `settlement_date` = `2025-04-02`
* (T+Business Day 3 = Thursday) Lead sends Sales Request with following settlement summary:
| **Field** | **Value** |
| ----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| outstanding\_principal | \$15.00
*The \$15 payment is applied as follows using the FIFO method: \$10 reduces the pre-existing balance, \$5 reduces the newly disbursed \$20, and the remaining \$15 of the new loan is still outstanding* |
| settled\_transactions\_amount | \$5.00 |
| imputed\_interest\_accrued | \$0.02 |
| settlement\_amount | \$20.02 |
* Imputed interest calculation is as follows:
| Daily Imputed Interest | Calculation |
| ----------------------------------- | --------------------------------------------------------------------------------------------- |
| Imputed interest on 3/31 (Monday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/1 (Tuesday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/2 (Wednesday) | \$15 remaining of \$20 receivables created x (4.39% as of 2/28 + 10%) / 365 days = \$0.005914 |
| Total | \$0.021684 and rounded to \$0.02 |
This example shows how a refund during the hold period affects the settlement amount. If the refund is traceable to the original transaction using `original_transaction_id`, the associated receivable is reversed, and the client is not required to repay the amount.
* (Prior to T) There was outstanding principal on John's account (`outstanding_principal` = \$10)
* (T = Loan Origination Date) A \$20 card transaction occurs on John's Balance
* `client_transaction_id` = `txn_1`
* `type` = `disbursement`
* `transfer_type` = `card`
* `settlement_date` = `2025-03-31`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 1 = Tuesday) Client refunds the \$20 transaction.
* `client_transaction_id` = `txn_2`
* `type` = `refund`
* `transfer_type` = `card`
* `settlement_date` = `2025-04-01`
* `original_transaction_id` = `txn_1`
* (T+Business Day 3 = Thursday) Lead sends Sales Request with following settlement summary.
| **Field** | **Value** |
| ----------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| outstanding\_principal | \$0.00
*Given `original_transaction_id` of `txn_1` was provided, Lead is able to attribute this and bring down the receivables created to \$0. If you do not provide an `original_transaction_id`, Lead cannot attribute the refund accordingly.* |
| settled\_transactions\_amount | \$0.00
*Refund is the only transaction type that will be net settled with Lead.* |
| imputed\_interest\_accrued | \$0.01 |
| settlement\_amount | \$0.01 |
* Imputed interest calculation is as follows:
| **Daily Imputed Interest** | **Calculation** |
| ----------------------------------- | -------------------------------------------------------------------------------------------- |
| Imputed interest on 3/31 (Monday) | \$20 of receivables created on 3/31 x (4.39% as of 2/28 + 10%) / 365 days = \$0.007885 |
| Imputed interest on 4/1 (Tuesday) | \$0 remaining of \$20 receivables created x (4.39% as of 2/28 + 10%) / 365 days = \$0.000000 |
| Imputed interest on 4/2 (Wednesday) | \$0 remaining of \$20 receivables created x (4.39% as of 2/28 + 10%) / 365 days = \$0.000000 |
| Total | \$0.007885 and rounded to \$0.01 |
**Notes On Refunds**
* If a refund occurs during the hold period and is matched to a disbursement, the refunded amount is netted out of the settlement.
* If a refund occurs after the hold period, Lead will return the refund to the client’s Operating Account instead.
* Refunds must include `original_transaction_id` to ensure proper matching and netting. If there are no `original_transaction_id` referenced for refunds that occur during the hold period, then it will not be reflected in settlement\_amount calculation.
Example assumes origination date of Monday (March 31st, 2025), three business-day hold period, interest rate of 10%. There was a full cancellation of the loan on Wednesday (April 2nd, 2025).
For this scenario, we use a different example with a term loan, as cancellations do not apply to cards.
* (Prior to T) There is no outstanding principal on Sarah's account (`outstanding_principal` = \$0)
* (T = Loan Origination Date) Sarah originates a \$100 loan for 10% interest rate, increasing the balance by an equivalent amount.
* `client_transaction_id` = `txn_1`
* `type` = `disbursement`
* `transfer_type` = `internal_transfer`
* `settlement_date` = `2025-03-31`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 2 = Wednesday) Client sends a cancellation of the \$100 transaction.
* `client_transaction_id` = `txn_2`
* `type` = `cancellation`
* `transfer_type` = `no_money_movement`
* `settlement_date` = `2025-04-02`
* `original_transaction_id` = `txn_1`
* (T+Business Day 3 = Thursday) Lead sends Sales Request with following settlement summary.
| **Field** | **Value** |
| ----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| outstanding\_principal | \$0.00
*Given `original_transaction_id` of `txn_1` was provided, Lead is able to attribute this and bring down the receivables created to \$0. If no `original_transaction_id` is created, we will not be able to attribute the cancellation accordingly.* |
| settled\_transactions\_amount | \$100.00 |
| imputed\_interest\_accrued | \$0.00 |
| settlement\_amount | \$100.00 |
**Notes On Full Cancellations**
* The imputed interest calculation is unique in the case of a full cancellation. If a Disbursement Transaction is fully cancelled via a Cancellation Transaction with `original_transaction_id` provided during the hold period of the receivable created, Lead zeros out imputed interest accrued.
* Cancellations must include `original_transaction_id` to ensure proper matching. If there are no `original_transaction_id` referenced for refunds that occur during the hold period, then it will not be reflected in settlement\_amount calculation.
Example assumes origination date of Monday (March 31st, 2025), three business-day hold period, interest rate of 10%. There was a partial cancellation of \$30 on the loan on Wednesday (April 2nd, 2025).
For this scenario, we use a different example with a term loan, as cancellations do not apply to cards.
* (Prior to T) There is no outstanding principal on Sarah's account (`outstanding_principal` = \$0)
* (T = Loan Origination Date) Sarah originates a \$100 loan for 10% interest rate, increasing the balance by an equivalent amount.
* `client_transaction_id` = `txn_1`
* `type` = `disbursement`
* `transfer_type` = `internal_transfer`
* `settlement_date` = `2025-03-31`
* (Hold Period) Lead holds receivables for 3 business days. Example assumes 3-business-day hold.
* (T+Business Day 2 = Wednesday) Client sends a partial cancellation of \$30 of the \$100 transaction.
* `client_transaction_id` = `txn_2`
* `type` = `cancellation`
* `transfer_type` = `no_money_movement`
* `settlement_date` = `2025-04-02`
* `original_transaction_id` = `txn_1`
* (T+Business Day 3 = Thursday) Lead sends Sales Request with following settlement summary.
| **Field** | **Value** |
| ----------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| outstanding\_principal | \$70.00
*Given `original_transaction_id` of `txn_1` was provided, Lead is able to attribute this and decrease the receivables created to \$70. If no `original_transaction_id` is created, we will not be able to attribute the cancellation accordingly.* |
| settled\_transactions\_amount | \$30.00 |
| imputed\_interest\_accrued | \$0.07 |
| settlement\_amount | \$100.07 |
* Imputed interest calculation is as follows:
| **Daily Imputed Interest** | **Calculation** |
| ----------------------------------- | ------------------------------------------------------------------- |
| Imputed interest on 3/31 (Monday) | \$100 of receivables created on 3/31 x 10% / 365 days = \$0.027397 |
| Imputed interest on 4/1 (Tuesday) | \$100 of receivables created on 3/31 x 10% / 365 days = \$0.027397 |
| Imputed interest on 4/2 (Wednesday) | \$70 remaining of \$100 receivable x 10% / 365 days = \$0.019178 |
| Total | \$0.073972 and rounded to \$0.07 |
**Notes On Partial Cancellations**
* Cancellations must include `original_transaction_id` to ensure proper matching. If there are no `original_transaction_id` referenced for refunds that occur during the hold period, then it will not be reflected in settlement\_amount calculation.