Loan Integration With Accounting

Integration with Accounting

If the loan product of a given loan has accounting enabled, then below is a matrix of support provided at present:

Portfolio: Loan Transaction TypeCash Accounting

Accrual Accounting Type 1

(upfront interest recognition for loans not involving interest recalculation)

Submit loan applicationN/AN/A
Approve loan applicationN/AN/A

Loan Disbursement

  • Fixed amount disbursed from MFI to Applicant
  • Single transaction are created to represent disbursement
  • Depending on loan product setting (default settings for now), transaction created to represent Interest applied
  • If charges are due at disbursement, another transaction is auto created to represent their payment
  • If charges that are not due at disbursement are present, another transaction is auto created to represent the "application" of this charge

(tick)

  • Only principal is accounted
  • Charges paid during disbursal are accounted

(tick)

  • Principal is accounted
  • Journal entries created for Interest Applied Transaction
  • Charges paid during disbursal are accounted (no control accounts used, cash gets debited directly)
  • Applied (expected) fees are accounted
  • Applied (expected) penalties are accounted

Undo Disbursement

  • Any transaction that exists is reversed

(tick)

  • All journal entries created for this loan are reversed

(tick)

  • All journal entries created for this loan are reversed

Loan Repayment

  • Fixed amount repaid to MFI from Applicant on given date
  • Amount broken down into principal/interest/fees/penalties
  • Single transaction created
  • Back-dated transaction allowed, these can affect the derived fields of other transactions.

(tick)

  • principal/interest/fees/penalties accounted for as configured
  • Accounting handles side affect on other transactions (for backdated entries)

(tick)

  • principal/interest/fees/penalties accounted for as configured
  • Accounting handles side affect on other transactions (for backdated entries)

Adjust Loan Repayment

  • Reverses original transaction
  • Creates new transaction to represent new details
  • Adjusting repayment can affect the derived fields of other transactions

(tick)

  • entries for original transaction reversed
  • entries for new transaction created
  • Accounting handles side affect on other transactions

(tick)

  • entries for original transaction reversed
  • entries for new transaction created
  • Accounting handles side affect on other transactions

Waive Interest

  • Transaction created to represent amount of interest being 'waived'
  • Waiving interest in the past, can affect derived fields of other transactions

(tick)

  • No impact on cash based accounting if waiver is done in the future
  • If waiver is done in the past, changes to derived fields of already paid installments are accounted for

(tick)

  • entries for interest waived
  • If waiver is done in the past, changes to derived fields of already paid installments are accounted for

Write off

  • Transaction created to represent outstanding balance of loan being written off

(tick)

  • principal/interest/fees/penalties accounted for as configured

(tick)

  • principal/interest/fees/penalties accounted for as configured

Add Loan Charge

  • Adding charge in past would affect derived fields of other transactions

N/A.

No impact on accounting in regular workflow

(tick)

  • If fee is applied in the past, changes to derived fields of already paid installments are accounted for
  • If penalty is applied in the past, changes to derived fields of already paid installments are accounted for

(tick)

  • applying a fee creates appropriate journal entries
  • applying a penalty creates appropriate journal entries
  • If fee is applied in the past, changes to derived fields of already paid installments are accounted for
  • If penalty is applied in the past, changes to derived fields of already paid installments are accounted for

Remove Loan Charge

  • Validations have been added to not allow removing loan charges once a loan is approved

N/A.

No impact on accounting

N/A.

No impact on accounting

Waive Loan Charge

  • Functionality has been changed to only allow waiving of charges after a loan has been disbursed
  • Waiver works only if the charges is not already paid
  • If the charge is partially paid, waiver waives only the unpaid amount

N/A.

No impact on cash based accounting

(tick)

  • entries for charges waived