Every payment on a promissory note can be split between three destinations: a policy loan repayment, a PUA (paid-up additions) deposit, or cash. Policy Stack stores the split as a per-note default and applies it automatically when you record each payment, with optional per-payment overrides when one payment needs to go somewhere different.
The Three Destinations
Each side of a payment — the interest portion and the principal portion — can be routed independently to any combination of the three destinations:
- Loan — applied as a loan repayment against a specified policy loan. The loan's balance decreases by the routed amount.
- PUA — recorded as a paid-up additions deposit on a policy. Increases the policy's paid-up additions and, in turn, future cash value.
- Cash — captured as cash received against the deployment, no further action. This is the default.
The percentages on each side sum to 100. New notes default to 0 / 0 / 100 on both sides — every dollar lands in cash unless you opt in.
The Two Sides
A single note carries two routing configurations:
- Interest routing — how the interest portion of every payment is split
- Principal routing — how the principal portion is split
The two are independent. A common arrangement is interest → cash, principal → loan repayment: you take the interest as income and use the returning principal to pay down the policy loan that funded the note. But any combination works.
Why Route Proceeds at All
Routing is opt-in because every banking system handles cash differently, and the routing decision affects three different downstream records on every payment:
- A loan-routed slice reduces the policy loan balance, contributes to loan repayment progress, and writes a banking ledger repayment row
- A PUA-routed slice flows into the policy's paid-up additions and shows up in the next snapshot as a paid-up additions deposit
- A cash-routed slice stays in the deployment's cash flow history without further linkage
Configuring routing once on the note means every future payment (including backfilled ones) gets handled correctly without re-deciding on each entry. Configuring it as 0/0/100 means you handle the destination decision manually, payment by payment, by editing the recorded entries afterward.
Setting the Default Routing
- Open the note — navigate to Capital → Notes and click the note
- Open Edit Routing — the dialog is launched from the note detail page
- Configure the interest side — set the percentage going to each of Loan / PUA / Cash. The three must sum to 100.
- Pick the loan — if any percentage > 0 goes to Loan, select which policy loan it routes to from the dropdown. Required when the Loan slice is non-zero.
- Configure the principal side — same three-way split, same loan selection if any principal routes to Loan
- Save — the new defaults are stored on the note. They apply to all future recorded payments and to any backfilled rows.
Per-Payment Override
When you record a single payment, you can override the note's default routing for that one payment without changing the saved defaults. Useful when a one-off payment needs to land somewhere different — a bigger-than-usual payment where you want the extra to clear a loan, or a final payment you want to take entirely in cash.
The override appears in the Record Payment dialog with the same three-way split. Setting an override only affects that one recorded payment.
Routing and Backfill
The routing default applies to backfilled payments the same way it applies to live ones. If you backfill a note with 50% interest → loan repayment, every backfilled interest payment routes 50% as a loan repayment, dated to that historical period.
If you want to record the history without triggering those routing actions retroactively — say, you've already manually repaid the loan elsewhere and the backfill would double-count — temporarily set the note's routing to 0/0/100 (all cash) before backfilling, then restore the routing afterward.
Editing Routing Later
You can change the default routing at any time using the same Edit Routing dialog. The change applies to future payments only; previously recorded payments keep the routing they had when they were saved. If you want to retroactively change how a past payment was routed, edit that individual cash flow / payment record.
What Loan-Routed Slices Look Like in the Ledger
A routed payment writes one ledger entry per destination:
- Interest slice to Cash → one ledger row, tagged as cash flow income
- Interest slice to Loan → one ledger row, tagged as loan repayment, linked to the specified loan
- Interest slice to PUA → one ledger row, tagged as PUA deposit, linked to the specified policy
- Principal slice splits the same way on its own configuration
So a single recorded payment with both interest and principal slices spread across multiple destinations can write up to six ledger entries — one per non-zero slice. They're all visible in the Banking Ledger and on the deployment's cash flow timeline.
Routing applies to promissory note payments specifically. Cash distributions from other deployment types (syndications, real estate, securities) are recorded as cash and managed individually — there's no comparable per-deployment routing configuration. If you want a distribution from another deployment to land as a loan repayment or PUA deposit, record the cash flow first, then create the matching loan repayment or PUA entry directly.