You selected Principal Only Payment from transaction code field. But the batch effective date has passed the grace days for additional principal and payment rules. Select another value in the transaction codes or change the grace days in the payment rule.
 

Root Cause:

The transaction code you are using is 220 (Principal Only Payment), which for this loan payment conflicts with the grace days allowed in the Payment Rule associated with the loan.

Workaround:

You will need to either use a transaction code 221 (Principal Adjustment) instead of 220, or you will need to adjust the grace days allowed in the payment rule.

You can change the transaction code when creating your payment batch, from the drop down list of available transaction codes, select 221 - Principal Adjustment, and then post your payment batch.

1. Change your Payment Rule by first finding out which payment rule is associated with the loan in the Customer Service, Payment screen.
2. Edit your Payment Rule in Table Setup, Payment Rules.
3. In the Prepayments tab, Additional Principal section, change the Grace days to a number within the range of the loan payment dates.
4. After changing the Payment Rule, you can post your payment batch.

Notes on Grace Days: 

Grace days are defined as the number of days after the last paid installment date that an additional principal payment can still be posted.

The maximum number allowed is 99. If the range of the loan's last payment date already exceeds 99, then you have to use the first option to change the transaction code.

If you do change the grace days, after you have posted your payment, you can consider if you would like to keep the grace days at the current number or change it back to the original setting.

ArticleNumber:

000039371