Paying the bills

[Tychus]

So I was wondering... How does the crew of a free trader pay the mortgage on their ship?

Since there's no FTL communication, they can't just wire the payment to the bank at the beginning of the month. Do you assume the bank has branch offices in most major starports that will accept payment? Does the crew need to pay for several months in advance if they intend to leave their "home port" for an extended trip? Maybe interest is accrued monthly, but payments are typically made on an annual basis?

I'm curious how others handle this. It seems like the physical payment of bills could become a major hassle in the life of a free trader.

 

[kristof65]

I think there are a lot of different ways this can be handled, and more than likely any or all of them could show up in varous combinations. Just some of my initial thoughts:

- part of the purchase agreement has several months worth of payment built up into an escrow account. All a ship has to worry about is keeping enough balance in there to make the payments.

- payment date is reflected by when the bank recieves the payments - it's up to the ship owner to make sure their "check" is "mailed" on time to make each payment on time.

- larger banks will often have local branches to accept payment on various worlds.

- this is one of the important functions of "mail" delivery and the x-boat networks - making sure payments and bank balance data get's "syncronized" .

- different payment periods like you mentioned. Monthly accrual of interest, but annual or quarterly payments.

- authorized payment acceptance outlets. Much like you can often pay your utilities bills at places like drugstores and supermarkets, I envision a network of companies authorized to accept payments for various banks - particularly smaller ones - at various ports.

 

[darktalon]

IMTU you're likely to find, if not a full bank branch, then a financial services office that's able to arrange the transfer of the money to your bank at any D-class or better starport. Possibly for a surcharge that's quite small in comparison to the monthly payment on a starship - Cr1000 or so. Transporting the secure credit chips from these offices to the banks could be a job for a PC trader - they're likely to form part of a mail shipment.

 

[GypsyComet]

Free Traders have it a bit rough, as the assumption of "free" is that they go where the money is.

This ties into the nature of large-scale finance in the setting, and as such has seen some debate before.

My general assumption is that while the mortgage is presented at the game level as a monthly charge, in reality the institution that financed the mortgage only visits the books with a hard eye once a quarter or so. This gives a moving source of income time to get payments into the system and moving along the xboat lines.

Since they know where each payment was made, the path of the ship is fairly easy to establish, and the lag at the home office is predictable. If the mortgage servicer has enough offices scattered around, the home office may hand oversight off to a closer branch for a quarter or two to cut down the decision lag.

Also expect that there are "agents" of the mortgage servicer all over the place, and that any ship with a bit too much pay lag will go on their APB list.

Just because the Imperium is a "Men not laws" body doesn't mean the bank won't treat you like a horse thief should your behavior merit it...

Note that this problem is really the most focused in "Free Traders". By comparison, subsidized traders and corporate ships will generally have a home office with enough cushion to keep up payments while their ships in the field work predictable routes and pump money back into the system at a constant rate. The ships may never actually see the money directly.

 

[alex_greene]

You could stipulate that, as part of the mortgage contract, the Free Trader has to deposit the cash take every few months at a financial establishment on a certain world. Which world is generally unimportant, as long as it's within some form of civilisation.

For instance, a Free Trader captain might be forced to travel along a given Main, or within a cluster, and never be able to leave that Main or cluster due to the limitations of his Jump drive. The bank would take that into account, and give the ship's master a list of reputable financial institutions on every civilised world in that cluster or along that branch of the Main where the ship will be doing its trading.

Part of the contract must be that the ship's master, or some authorised party thereof such as the Purser, deposit that cash at a branch of one of the listed financial institutions once every month, season or six month period depending on the terms of the contract - and keep the receipt, because it's an essential document that proves that the ship's master is keeping up to date with the mortgage payments. Once a year, the banks' audit details are sent out to the subsector's central processing facility, where all those mortgage payments are tallied. If the ship's not been making those payments after a certain period, the company then sends out the skip tracers.

That way, the ship is allowed to keep moving, to keep on trading, but is still kept generally under the thumb of the finance company.

This is one reason why older traders are freer - their mortgages have already been partly or wholly paid off if they were forty years old or more. But being older, they'd be somewhat ... cranky. Set in their ways.

But at least they'd be free.

 

[hhawk]

This is how I handle it in my game.

If you are on communication lines, banks should broadcast transactions daily down the communication route. If you are off the communication route the banks will broadcast and receive updates via the closest path to the communication route. What this means is that it takes 1+ ( distance / 4) weeks for your deposit to reach the home bank.
Most banks are going to have a transaction agreement. It is pretty easy to set up a trader account that pushes your information onto the financial network along with a current balance, line of credit, and list of regular deductions (mortgage payments) this information would be used by local banks to extend lines of credit based on the account holder's credit history. Normally, a free trader will need to have X mortgage payments in the bank to get one of these accounts, and their line of credit will be a small amount (10 to 25%) of what they have deposited. If a free trader moves too far from the home bank, they can transfer their account to a local bank for a small fee.

Otherwise, the free trader uses cash.

 

[alex_greene]

That's basically it.

This is why Free Traders' documentation generally stipulates the world they are registered at. That's the location of the central branch of the bank that holds their mortgage.

So, for authenticity, your character could state that they are the crew of the Free Trader Oscar Wilde, say, "registered out of Regina."

And as for the act of physically paying the cash, think of the adventuring possibilities. Referees: I'm looking at you here.

 

[lurker]

IMTU you're likely to find, if not a full bank branch, then a financial services office that's able to arrange the transfer of the money to your bank at any D-class or better starport. Possibly for a surcharge that's quite small in comparison to the monthly payment on a starship - Cr1000 or so. Transporting the secure credit chips from these offices to the banks could be a job for a PC trader - they're likely to form part of a mail shipment.

Similar here. Money changing to/from local currencies, adding money to your credit stick and all kinds of banking functions are done at Government backed financial facilities at Starports and there is usually a facility at most bases.

I have methods of withdrawal and deposit. I like the prepaid escrow idea.

 

[alex_greene]

Basically, this whole process can be simply abstracted to "The bill gets paid here (indicate the end of a four week period)" and so on.

The process of paying that bill can easily be bluebooked, handled during downtime by the Referee and the player character who acts on behalf of the ship's crew (that's if one of the player characters actually owns the ship and holds the responsibility for the payments).

Or the process can be drawn out for an adventure during a given month, when for whatever reason the characters just have to deposit a wodge of the monthly mortgage at the bank, which takes the form of a big pile of cashy money ... and which the local rogues can smell from a mile away, like sharks scenting blood in the water ...

 

[Zowy]

I tend to use Letters of Credit for most interstellar trade.

http://en.wikipedia.org/wiki/Letter_of_credit

 

[dayriff]

Incidentally, I'm not happy with the fuzzy definition of a "month". I'm going to retool the payments as "every four weeks", with 13 payments a year. (Adjusted to be 12/13 of the standard monthly payment, of course.)

 

[alex_greene]

On the average, a "month" amounts to "every other Jump," going by the typical pattern of Free Traders of "one week in Jump space, followed by one week's layover and trading."

 

[Rikki Tikki Traveller]

Conveniently, the Annual audit of the books with the Bank can take place while the ship is in for it's annual overhaul.

Books aren't right, you don't get your ship back!

Since the overhaul has to take place at a Class B or A starport, odds are you will have the bank offices necessary to do the audits.

CJ Cherryh touched on this lightly in "Merchanters Luck", where the Free Trader has an escrow account that he can dip into and payments are made from.

 

[hdan]

Argh - RTT beat me to it, but I'll leave the text of my message anyway:

If we assume a captain only wires his payment once a year, that can make for some serious troubles when a pirate steals his stash of cache, or the captain gambles it all away on a bad trade. In fact, it can make the loss to a pirate damaging enough to encourage players to shoot it out - it's worth it to take some damage if the stakes are high enough!

Plus, it gives players some more freedom during the year to have losses without getting the repo man on their tail every month they can't make their payments.

In MTU, when it's time for the annual maintenance, the owner generally coughs up the maintenance fee and wires his yearly payment through X-Boat. During the year itself, the Captain has a little more leeway to try to find money however he can, and if all else fails, try to sell the ship or something.

I adopted this gaming philosophy after playing "Twight's Peak" many years ago - the crew can chase crazy rumors or whatever, hoping for the big payoff that will "save their bacon" at the end. Or they can do the responsible thing and move cargo and passengers until they get a hot enough lead to go treasure hunting.

 

[Rikki Tikki Traveller]

But, waiting a year to start tracking a Skip is going to be HELL.

While it provides flexibility to the crew, it also gives them a huge head start.

With a 1 year head start, even an A1 Free Trader could be a Sector away before anyone even starts looking for them.

 

[kristof65]

With a 1 year head start, even an A1 Free Trader could be a Sector away before anyone even starts looking for them.

True enough. My thinking is that despite payment terms, because of that factor (regardless if it's monthly, quarterly or yearly) most mortgages will have clauses in them that require periodic check in at 'approved' locations.

In the case of a megacorp bank, as the ship moves, responsibility for the ship will move along with it to various branches. So a missed payment will be noticed within 2-6 weeks.

For smaller banks, the region in which check ins are made will be much much smaller. Miss a check in, and in 2-6 weeks, the skip tracers are probably looking for you, even if your annual payment isn't due for awhile. If a smaller bank notices you are tending towards an area they don't serve, you could get a notice to not go there, or they could sell the mortgage to a bank that does serve that area.


The more I think about it, I think that will probably be common. If a ship is purchased in Subsector A, but after awhile it's noticed that it's operating mostly in Subsector B, the bank in Subsector A is probably going to offload the mortgage to a bank in Subsector B who can manage the risk better.

If someone does try and outrun the loan, there are probably companies that specialize buying up loans that appear to be headed for default, or are already defaulted, and then tracking the ship down. If the loans are bought at a small percentage of actual value, there can be some good money in that. Unless a ship is j4 or better, it's unlikely it can outrun the x-boat network.

 

[hhawk]

It is my feeling that banks being the risk adverse organizations that are (at least in theory) would require that the account balance is a certain percentage of the mortgage value. If you balance drop below a certain amount they either start looking for you before you own them money, or they sell your account to the debt collectors. This mitigates the advantages of trying to outrun your debt, and allows you to set a reasonable payment schedule.

My guess would be they players need to start with a balance of 6 months payments and their balance cannot drop below 4 months before action is taken. The account would allow a line of credit of 1/6th to 1/12th of the account balance. The mortgage payments are already reasonable enough ;-p the bank shouldn't be taking all the risk otherwise it wouldn't make any money ;-p

 

[kristof65]

True enough, but banks would rather not have to repossess or skip trace the ships in the first place, if they don't have to.

So I think you'll see a wide variety of means used. Those individuals and companies with really high credit scores and good reputations will have a lot of relative freedom. Other's may a variety of restrictions placed on them. Things like:

- no leaving the subsector/sector/etc
- approved check in points
- on board "tracking" equipment
- changes in interest rates if you start showing signs of deliquency
- larger down payments
- escrow funds
- non-payment insurance
- etc, etc. The list could get quite large.

One really only has to look at all the options available for financing houses and automobiles to get multitudes of ideas.

 

[GypsyComet]

The escrow fund that you can throw money at from any branch office is probably the best approach for free traders. Among other things, this allows a captain/owner to transfer money locally and immediately while working with startown brokers, so he isn't walking around with a huge wad of cash...

Look at it this way.
-You jump in with the cash (cargo) in the hold.
-You open a Local Escrow Account (LEA) in the startown branch of your mortage servicer or an approved affiliate.
-Sell your cargo, with the money going into the LEA.
-Use the LEA to pay for salaries, fuel, berthing, and a new cargo.
-Instruct the bank regarding the remaining balance: how long they keep the money locally, and where they send it when that time is up. This could also include an option to keep a little locally for far longer to keep the account open for the next time you come around.

Once the time is up, the remaining balance gets sent off to your mortgage servicer. Their main office also has an escrow account set up for your mortgage, and they draw the monthly from it on schedule. Of course, they might also gamble with your escrow money and try to earn interest on it, or you may have given them permission to make the attempt in your name in order to increase the balance without your direct input. Some Captains will appreciate the extra few percent, while others will reconize that their own efforts would make better use of that money. As a result, some Captains will send every last CrImp they can, while others will play the Main Office cushion close to the minimum.

 

[dayriff]

True enough, but banks would rather not have to repossess or skip trace the ships in the first place, if they don't have to.

I wonder if that's really true. A ship is a pretty valuable commodity. If the bank repossesses it, they get to keep everything you'd paid so far and put it up for resale at full price.

Mmm. And I'm considering an alteration to the "older ships" rule where it goes in one hundred year increments rather than ten year increments. I like the idea that ships are made to last and that you might pick up a ship with hundreds of years of history behind it.