SAP Loans Management

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LOAN MANAGEMENT

WELCOME
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INTRODUCTION
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} Introduction:} Purpose} The Loans Management component offers functions for

mapping the complete loan process for loans given andloans taken, from entering data on a potential contract

right through to contract disbursement and the datatransfer to Financial Accounting. It supports for decision-making and a range of options for tailoring your contracts.

} SAP Loans Management enables you to manage andmonitor the entire life cycle of a loan contract, includingorigination activities and all subsequent transactions,agreements, statements, and other life-cycle tasks. Thisincludes functions for loan administration and monitoring,the handling of payments, interest and other transactions.


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} Business Process details:}

} This process covers process of Loan Management towards the followingpurposes:

} Loans For Purchase of Project} Loans For Construction Of Property/Building/Flats

} Mortgage Loan} Loan Against Mortgaging of Buildings under progress} Loan Against Capital Asset Building such as Hotels/Service Apartments} General Loans}

} Integration} Cross-application functions, such as SAP Business Partner Management

or the Information System provide you with a comprehensive overview ofthe business relationships maintained with your loan partner.


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} Long Term Loans:

} There are different types of loans taken by the company like

} 1. Mortgage Loans

} 2. Project Financing

} 3.Subordinated Debt

} 4.General Purpose Loans

} 5.Syndicate Loans.} Short Term Loans:

}

There are different types of loans will taken by the company like} 1.Pre-delivery loans} 2.working capital loans.}


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} These loans have cash flows like

} Cash Inflows:

} Loan Amount

} Cash Outflows:

} Interest} Guarantee fee} Commitment Charges

} Installment} Syndication charges} Other charges

} These Charges are differ from each Loan contract.


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} The following details regarding loans need to be maintained.} Name of the lender} Purpose of Loan} Payment Details} Day Count for Interest Amount Calculation

} Reference Interest rate} Repayments terms} Interest Rate/term} Date of Drawl} Amount of Drawl} Currency} Various Dates Contract date, Start Date, End date, Interest

Payment dates} Schedule of payments


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} Accounting} Accounting of flows generated from the contracts

need to be posted to the books. The flowsinvolved are principal disbursed amounts in the

nature of receipts, arrangement fees, othercharges related to loan syndication, legalcharges, interest outflow, and principal outflow.

} Principal receipt for loans related to projectfinancing are directly paid out of the loan

contract to project supplier In case of other loansthe amounts are posted to the bank sub-ledgeraccounts.


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} At the time of interest payments, interest accrualaccounts are debited and bank sub-ledger account arecredited, then the sub-ledger account is cleared. Forprincipal/installment repayments, the posting are made

to the bank sub-ledger accounts and then the sub-ledger accounts are cleared.

} For project financing each project has an individualoutstanding loan contract. The interest from each loanin such cases needs to be taken to an individual cost

centre. In case of general purposes loans and otherloans a common account assignment reference will beused.


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} For reporting and controlling purposes to computeprofitability at Project or tail level, each loan will need tobe assigned to an individual cost centre. There are someGeneral loans which are not assignable to any Project, inthese cases loan will need to assign common cost center.

} Steps}

} Application of loan} Sanction of Loan} Disbursement of loan

} Accounting of the Disbursement} Periodical Accounting of interest} Periodical Accrual/Deferral} Periodical Valuation of loans


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} The following steps will be performed:}

} Creation of a Facility for the amount of loan sanctioned by the Bank/FII/Third Partyetc.

}

} No Accounting entry at the time of sanction of Loan.

}

} Disbursement of the Sanctioned Loan:}

} FOR INITIAL DISBURSEMENT} A. PROJECT LOANS} DEBIT ASSET} CREDIT LOAN A/C}

} B. FOR OTHER LOANS} DEBIT BANK} CREDIT LOAN A/C


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} FOR REPAYMENTS} A. PROJECT LOANS AND B. OTHER LOANS} DEBIT LOAN A/C} CREDIT BANK}

} 3 FOR INTEREST ACCRUALS} DEBIT INTEREST A/C} CREDIT MONTHLY ACCRUALS}

} 4 FOR INTEREST PAYMENT} DEBIT MONTHLY ACCRUALS} CREDIT BANK}

} 5 FOR CHARGES} A. PROJECT LOANS AND B. OTHER LOANS} DEBIT BANK CHARGES} CREDIT BANK


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} FOR FOREIGN EXCHANGE VALUATION

} IN CASE OF ANY UNREALIZED LOSSES

} DEBIT ASSET

} CREDIT LOAN

}

} IN CASE OF ANY UNREALIZED GAINS

} DEBIT LOAN

} CREDIT ASSET


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} Requirements:} Loan Application:} What is the nature of loans to be captured?} Describe the procedure through to contract disbursement.} Should unsuccessful loan applications be saved?

} Do you enter clerk information for the loan? What information isrecorded and for what purpose?} What other information should be entered in relation to the loan?

What information should be entered at which steps in the loanprocess?

} Process Disbursement:} Which incidental costs are incurred upon disbursement?

} What "payment methods" (check, bank transfer, telegraphictransfer, and so on) are used for disbursement?} Enter Charges and Commission:} Which postings are entered manually


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} Enter Unscheduled Repayments} How do you treat unscheduled repayments?} Rollover} How do you adjust the conditions for loans due to expire (rollover)?

Describe the phases/steps.} Do you accept unscheduled repayments during the rollover phase?

} Who is responsible for processing rollovers in your company?} Accounting} How many position accounts do you use? According to which criteria are

they managed?} To which CO account assignment objects do you need to make

assignments?} Preparations for Posting

}

} Do you have foreign currency loans?} Describe the relevant valuation principles?} Do you work with reference interest rates (such as LIBOR)?


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} How many contracts do you want to manage?} According to which criteria do you select the data to be posted?} Describe the relevant valuation principles?} Manual Posting

} Q: 1) Which postings do you make manually (charges, unscheduled repayments)?} Any charge on account of charges, unscheduled part or full repayments will need

to be posted manually.} GL Account in Chart of Accounts: Company Code level

need to be decided.

}

} Pre requisites: Product Types, Transaction Types, General Ledger (for Loanspayable, Interest Expenses, Other Charges etc), House Banks and Account IDsshould have been created in the SAP / FI System for the relevant Company Code.

} Key Process Changes (if any):} Loan management will be done in the system.} Automatic accounting, accrual and valuation of loan will happen in the system.}

} Output: The output of the process loan management.


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} THANK YOU

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SAP Loans Management

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