Investor Agreements

This chapter covers the following topics:

Investor Agreements Overview

As a lessor, you are likely to want to sell some of your contracts and revenue streams to investors. Investor agreements allow you to manage syndication and securitization from a lessor's perspective. When you activate an investor agreement, Oracle Lease and Finance Management completes transactions and account processing on the contracts. Leasing companies fund leased equipment in different ways.

The following list summarizes the basic functions in investor agreements.

Syndication

You can fund the equipment with your own capital, borrow funds from a lender, or share the cost of the equipment with investors. Syndication is the business where finance organizations face the situation of a finance amount (loan or lease) that is greater than what they can afford, such as big tickets like leasing airplanes or petroleum equipment. They may either lack the funds or may not want to accept risk for the entire deal. To acquire necessary funding or to spread the risk, lessors gather more than one investor or bank to finance the deal. In every syndicated loan there is always one managing company, typically a bank, that controls communications and logistics and collects additional service fees. In a syndication, each individual investor can be priced differently, meaning each would have its own rate of return and is individually at risk and could have different levels of servicing fees.

Investor agreements contain terms and conditions under which investors participate in lease contracts. Large contracts may involve syndications, where investors fund parts of the contract to spread risk. Investor agreements may group contracts in pools to sell their future cash flows.

To define a syndication under Investor Agreements:

Securitization

Securitization is used by financiers to pool a set of contracts of the same nature, term, and risk rating. They breakdown the pool into shares and sell the shares in a security to investors. Financiers generally turn unrealized profit spread over time into current realized earnings, shorten the ROI period, and raise more funds to continue running their business. Securitization is a common practice in the mortgages and other long-term portfolio businesses.

In leasing scenarios with investors, the lessor sells the anticipated revenue streams and, in return, investors share the burden of the equipment purchase. This arrangement benefits lessors because investors share the risk of the deal, and the initial cost of the asset is recovered. Investors may benefit by sharing the earnings of the lease transactions and earning a higher rate of return.

To define a securitization under Investor Agreements:

Both Syndication and Securitization

To define both a syndication and securitization:

Type of Contracts

The type of contracts that can be attached to an Investor Agreement are Fixed Rate Lease and Fixed Rate Loan. Oracle Lease and Finance Management allows Fixed rate Lease and Fixed Rate Loan contracts to be added to a pool. Currently, Variable Rate Contracts are not supported in Investor Agreement.

Implementation Prerequisites for Investor Agreements

Investor Agreements Prerequisites

The following table lists prerequisites for investor agreements.

Lease and Finance Management Implementation Prerequisites 
Task Reference Sections (primarily in Oracle Lease Management Implementation Guide)
Set up rate for general loss provision. Set up Loss Provision Rates, Oracle Lease Management Implementation Guide
Set up streams for loss provisions. Define Stream Types, Oracle Lease Management Implementation Guide
Set up financial products to be associated with accounting templates to define the accounting for investment agreements. Define Financial Products, Oracle Lease Management Implementation Guide
Set up an investor agreement accounting template set.
Use the seeded transaction type, Investor.		 Define Lease Accounting Templates, Oracle Lease Management Implementation Guide
Define investor accounting code. Define Account Generator, Oracle Lease Management Implementation Guide
Define formula for buy back. Define Formulas, Oracle Lease Management Implementation Guide
Define the investor-okl transaction type in Oracle Receivables. Define Transaction Types, Oracle Lease Management Implementation Guide
Set up the investor invoice grouping rules OKL_INVESTOR_GRP_RL in Oracle Receivables. Set Up Grouping Rules for Invoices, Oracle Lease Management Implementation Guide
Define OKL_INVESTOR transaction source in Oracle Receivables. Define Transaction Sources, Oracle Lease Management Implementation Guide
Define line transaction flexfield structure for investor agreements. Define Line Transaction Flexfield Structure, Oracle Lease Management Implementation Guide
Define Aging Buckets Define Aging Buckets, Oracle Lease Management Implementation Guide

Set Up Accounting Templates for Investor Agreements

Set up accounting templates for association with the investor product for the following events and processes:

The accounting template for investor accrual adjustment is set up on the accounting template set related to the contract.

See Define Lease Accounting Templates in the Oracle Lease and Finance Management Implementation Guide.

Investor Agreement Activation

When you create the accounting template for the investor agreement activation process, use the seeded transaction type, Investor. In addition, you may want to create your own accounting lines for the following purposes:

Billing

Billing transactions apply to payments from the investor. When you create the accounting template for billing processes, use the seeded transaction type, Billing.

Disbursement

Disbursement transactions apply to payments to the investor. When you create the accounting template for disbursement processes, use the seeded transaction type, Disbursement.

Accrual

Set up an accounting template for investor accrual adjustments in the accounting template set associated with the product of the contracts whose streams are securitized. Create accounting templates for accrual adjustment using the stream type of the purpose Investor Rental Accrual/Investor Pre-tax Income/Investor Interest Income.

Pools

Pooling contracts with their asset streams allows you to group receivables into financial instruments that are sold to investors.

You may create a pool that contains only lease contract.

The basic concepts for using pools in investor agreements are the following:

After activating the investor agreement, you can perform transactions on the contract, such as rebooking or termination. When you initiate transactions, such as a buy back, on the pool, Lease and Finance Management will automatically account for the transactions based on terms and conditions.

To terminate an investor agreement pool elements must be disbursed to investors.

The main topics in this section are:

Group Lease Receivables Into Pools

Stream Subclasses

Lease and Finance Management includes three seeded stream subclasses, which you cannot modify:

Streams with subclasses of Rent, Residual, and Loan Payment can be included in the pool.

The first step is to create a pool of the expected revenue streams on one or more booked contracts.

Note: You can run concurrent programs to calculate and recalculate the pool principal amount and asset net investment, and to reconcile the pool contents when eligibility of streams have changed due to operations on the contract.. See Concurrent Programs.

Create a Pool

In this process, you create a pool and select the currency for the pool.

Prerequisites

None.

Steps

Perform the following steps using the Pools page:

  1. Click Create. The Create Pool page opens.

  2. Select the operating unit.

    Note: The list of values includes operating units assigned to the MO: Security profile.

    Note: The application displays the selected operating unit as the default in the subsequent pages irrespective of the value that you set for the MO: Default Operating Unit profile option.

    The selected operating unit restricts the valid list of values in applicable fields.

  3. Select a legal entity to identify the first party on the agreement.

    Note: Contracts with the selected legal entity become part of the pool.

  4. Enter a number for the pool. It can be any format, but must be unique.

  5. Select the currency for the pool.

    Optionally, enter a short description, which appears in results of pool searches, and a more detailed description.

  6. Select the Display in Lease Center check box if you want to view pool and investor agreement details in the Contract region of the Lease Center.

    Note: The Display in Lease Center check box can be selected or deselected, even when the pool has a status of Active.

  7. Click Apply to create the pool and add details later.

Now you can add lease contract streams to the pool.

Change Pool Descriptions

After creating a pool, you can modify the descriptions.

Prerequisites

You must have created a pool, and have a current pool in context.

Steps

Perform the following steps in the Pools page:

  1. In the Pool Number field, enter your pool number or name search string, and click Go.

  2. In the Results region, click the hyperlink of the pool that you want to edit.

    The Pool details page appears, with several read-only fields in the header.

  3. Click Update to modify applicable details.

  4. Click Apply.

Add Contents to a Pool

After creating a pool, add cash flows of one or more booked contracts, which can be for a variety of fixed rate lease contracts and fixed rate loan contracts.

Prerequisites

You must have created a pool, and have a current pool in context.

Steps

Perform the following steps:

  1. On the Add Pool Contents page, enter criteria for selecting contracts that you want to add to this pool. For example, leave the Customer and Contract regions fields empty. In the Streams region, enter January 31, 2004 to January 31, 2004; Stream Subclass Rent; from May 1, 2004 to May 31, 2004. Then click Submit.

    This generates a request to run the concurrent program, Add Pool Contents.

  2. Navigate to Processes > View Requests, select the request number, and click Submit.

  3. On the View Request page that appears, click View Log.

    This report displays the contracts that Lease and Finance Management added to this pool, in the upper section of the page. The lower section of the page lists contracts that have met the eligibility criteria that you entered, but Lease and Finance Management could not add to the pool because they did not meet the prerequisites.

    Lease and Finance Management also lists the reasons that otherwise eligible contracts were not added to the pool, for each contract.

    Streams with subclasses of Rent, Residual, and Loan Payment can be added to a pool.

    At the bottom of the page are the criteria that you entered.

    See Add Pool Contents Field References for selected field references.

    After you view the report, go to Pool Clean Up to further refine your pool contents by deleting any undesired contracts.

Search for Pool Contents

You can view all the contracts that have asset streams that have been added to a pool.

Prerequisites

You must have created a pool, have some contents in the pool, and have a current pool in context.

Steps

Use the Contents tab on the Pool details page to perform either a simple search or an advanced search. To perform an advanced search, go to Step 2.

  1. To perform a simple search, enter or select one or more of the following criteria:

    • Customer Name

    • Contract Number

    • Stream Type Subclass

    • Stream Start Date range

      Click Go, then skip to Step 3.

  2. Click the Advanced Search button.

  3. The Results region displays the following fields for each asset stream in the pool:

    • Contract Number

    • Asset Number

    • Lessee

    • Stream Type Subclass

    • Stream Type

    • Total Amount

      Note: The fields are display-only.

  4. You may click the Details icon to display the details, such as Due Date, Date Billed, and Amount, for each stream element.

Clean Up a Pool

Perform the following steps:

  1. Query the pool using the Pools page.

  2. Click the Clean Up Pool Contents icon in the results area.

    The Clean Up Pool Contents page for the applicable pool appears. On this page you can remove pool contents by clicking Generate Report to run the concurrent program, Clean Up Pool Contents.

    Review the report to confirm the proposed changes that you want to make. Then return to the Clean Up Pool Contents page to again select eligibility criteria and remove pool elements according to the criteria you selected.

  3. You may proceed directly to the Clean Up stage, which will remove the pool contracts that satisfy your search criteria. You are strongly advised, however, to perform the procedures in the specified order. This enables you to see the contracts that you will be removing from the pool, before you actually remove them.

    Generate Report

    1. Enter criteria for selecting contracts that you want to remove from the pool.

    2. Click the Generate Report button.

      This submits a request to run the concurrent program Clean Up Pool Contents. A message appears on the Pool Clean Up page, showing the Concurrent Request Number.

      The report will appear as the output of the Clean Up Pool Contents program.

    3. To see the output of the Clean Up Pool Contents program, see Run Concurrent Programs and View Reports In Lease and Finance Management.

    4. The report shows which correct contract, asset, and stream elements will be changed or removed, using the simple or advanced search criteria that you specified in the Pool Clean Up page.

    5. Continue to clean up. Or you can go back and enter a different set of eligibility criteria.

      Clean Up

      If you have confirmed that the correct pool elements will be removed according to the criteria selected earlier, and you have not changed the search criteria, click Submit.

      This submits a request to run the concurrent program Clean Up Pool Contents, and to remove or change the pool elements that satisfy your search criteria. A message appears on the Pool Clean Up page, displaying the Concurrent Request Number. See Concurrent Programs.

Pool Transactions

Use After Investor Agreement Activation

You can view changes made to a pool of contract streams, after an investor agreement has been activated. See Activate The Agreement. The pool transaction options are: Add, Remove, and Replace.

Prerequisites

You must have an activated investor agreement in context.

Steps

Perform the following:

  1. Query the pool number using the Pools page.

  2. Click the pool number hyperlink in the results area.

  3. Use the Transactions tab on the Pool details page of the applicable pool to view to the pool transactions.

The following table displays the transactions that can occur on a contract in a pool, and the subsequent transaction that occurs in the pool.

Contract to Pool Transactions 
Transaction on Contract Subsequent Pool Transaction
Rebook Replace
Termination Remove
Asset Split Replace
Contract Re-Lease Replace
Asset Re-Lease Replace
Asset Disposal:

  • Purchase

  • Re-purchase

  • Scrap

  • Remarket

 Remove
Principal Paydown Replace

The following table displays the transactions that can occur on an investor agreement, and the subsequent transaction that occurs in the pool.

Investor Agreement -to- Pool Transactions 
Transaction on Investor Agreement Subsequent Pool Transaction
Activation Add
Buy Back Remove
Terminate Remove

Investor Agreements

An investor agreement in Lease and Finance Management includes the following:

When an agreement is activated, Lease and Finance Management:

The main topics in this section are:

Create an Investor Agreement

Prerequisites

Set up a Pool. Pool Number is a required field on an investor agreement.

Set up the parties, including the Trustee (often a vendor who acts as trustee for the investor agreement).

Steps

To create an investor agreement, perform the following steps:

  1. In the Investor Agreements page, click Create.

    The Create Investor Agreement page appears.

    Note: Oracle Lease and Finance Management derives the legal entity from the pool.

  2. Select the operating unit.

    Note: The list of values includes operating units assigned to the MO: Security profile.

    Note: The application displays the selected operating unit as the default in the subsequent pages irrespective of the value that you set for the MO: Default Operating Unit profile option.

    The selected operating unit restricts the valid list of values in applicable fields.

  3. In the Agreement Number field, enter an agreement number.

  4. In the Trustee field, select a trustee for the investor agreement from the list of values.

  5. In the Product field, select a financial product from the list of values.

  6. The read-only Type field is populated with Securitization or Syndication. The value is derived from the quality value of the quality Investor for the financial product selected above.

    Note: The investor agreement type, whether Securitization or Syndication, appears on the Investor Details page when you assign the pool associated with the contract to an investor agreement.

  7. In the Pool number field, select a pool number from the list of values.

  8. Specify the currency conversion details for the investor agreement.

  9. Enter the period during which the investor agreement is effective.

  10. Specify the date by when the investor agreement must be approved.

  11. Select an applicable recourse option.

  12. In the note field, enter a note.

  13. Click Apply to create an investor agreement and add details later.

Investors

Many of the terms and conditions for investor agreements are defined as you provide them on these pages for each investor. For each investor, you enter the amount of the investor's stake, as well as important details of the revenue distribution, such as disbursement and revenue share.

The invoice is generated against each investor for the investor stake amount upon activation of the investor agreement. Investors then receive money as disbursements.

Prerequisites

Select an investor agreement that has not yet been activated.

Steps

Perform the following steps:

  1. Query for the investor agreement that you want to add investors to.

  2. Click the investor agreement hyperlink in the results area. The Investor Agreement details page opens.

  3. Click the Investors subtab and click Add Investor. The Add Investor page opens.

  4. Enter the required information, which includes the investor, amount of investor stake, and payout details.

  5. Click Apply.

Click the Investors subtab again. The investor you added appears on the Investor Agreement details page, along with this investor agreement status, investment date, and amount of investor's stake.

Adding Investors

If there is more than one investor on this agreement, again click Add Investor.

Repeat these steps for each investor on the agreement.

Investor Details

On the Investor Agreement details page in the Investors subtab, click on an investor. Use the Investor details page to provide investor disbursement and revenue share details. Be sure to complete both steps.

You may navigate back and forth between the Investor Disbursement and the Revenue Share subtabs for each investor to make modifications, as long as the investor agreement is not yet activated.

Click Update to save your changes.

Disbursements

Click Investor Disbursement in the Investor details page. See Investor Disbursement Details Field References. Enter or select the required information. Then click Update.

The value that you select for Payment Terms is the terms of the disbursement that will be invoiced in Oracle Payables. For more information see the Oracle Payables User Guide.

Assuming your entries pass the validation checker, you will receive a Successfully Processed confirmation message. If not, go back and fix your entries according to the indications of any error messages.

Return to the Investor Details page (for example, click on the hypertext link that is the name or number of this investor) and complete the Revenue Share details.

Revenue Share

Return to the Investors page (for example, click on the hypertext link that is the name or number of this investor) and click the Revenue Share subtab. The Investor Revenue Share Page is displayed.

Fees

You can attach a fee for an investor agreement applicable to each investor. The fee could be either an Expense fee or an Income fee.

Expense Fee: You can define the Expense fee as a one-time fee. Specify the amount and the period for which the accrual of the expense fee is to be done. The expense fee can be disbursed to the investors once the agreement is activated.

Income Fee: You can define the Income fee as a one-time fee or a periodic fee. For a periodic income fee, define the payment schedule and bill the investors accordingly.

Steps:

  1. Navigate to the Investor Agreement page.

  2. Click the agreement number.

  3. Select the Investors tab.

  4. Select an investor.

  5. Click the Fees tab.

  6. Select Expense or Income from the Create list and click Go.

  7. If your selection was Expense then enter the details as described in the Create Fee Expense Field Descriptions table.

  8. If your selection was Income then enter Fee, Total Income Amount, Effective From, and To date. Click Apply. The Fee is created with the Fees tab highlighted on the Investor page.

    1. Click Update.

    2. Click Create on the Update Fee page.

    3. Enter the details as described in the Fee Payments Field Descriptions table.

  9. On activation of the Investor Agreement, the streams for Expense and Income Fee are created for Billing and Accrual.

Query Streams

To query the streams after activation, follow these steps:

  1. Click Stream Details.

  2. The expense and income fees are displayed.

  3. Click Stream Details to view the Billed and Accrued streams.

The following table describes the fields on the Create Fee Expense page.

Create Fee Expense Field Descriptions
Field or Button Description
Fee  
Effective From The date from which the expense fee is effective.
Effective To The date until which the expense fee is effective.
Total Expense Amount Total Expense Amount.
Number of Periods Number of periods.
Amount per Period Amount per period.
Frequency Frequency of the payment; Annual, Monthly, Quarterly, and Semi-Annual.

The following table describes the fields on the Fee Payments page.

Fee Payments Field Descriptions
Field or Button Description
Stub Days  
Stub Amount  
Periods Fee payment period
Payment Amount Total fee payment amount

Terms and Conditions

The Terms and Conditions subtab in the Investor Agreement details page lists three seeded terms and conditions that contain values that are relevant to processing investor agreement transactions:

These three terms and conditions contain seeded values or values previously entered during the implementation process. For example, the formula for Buy Back is INVESTOR_BUYBACK. You can modify this formula, however, for each investor agreement.

Prerequisites

Select an investor agreement that has not been activated.

Steps

Use the Terms and Conditions subtab on the Investor Agreement details page to complete this procedure. For field descriptions, see Terms and Conditions Field References.

  1. Query the applicable investor agreement using the Investor Agreement page.

  2. Click the investor agreement hyperlink in the results area. The Investor Agreement details page opens.

  3. Click the Terms and Conditions subtab.

  4. Click Update. The Buy Back Formula field is displayed. Click the flashlight icon next to the empty field. The Formula Name list for Lease and Finance Management is displayed. Select the appropriate formula for Buy Back. The Buy Back Formula field is displayed again, this time with the selected formula name entered in the field. If necessary, modify the formula to meet your requirements, and then click Apply.

  5. Click Terms and Conditions again. Click Update. The required fields Payment Basis and Payment Event are displayed. Click Apply when you have made your selections.

  6. Click Terms and Conditions again. Click Update. In the Special Accounting field, the accounting agreement code is displayed.

Activate The Agreement

After you have created an investor agreement and set up the investors and their disbursements and revenue shares and fees, you are ready to activate the investor agreement.

When you activate an investor agreement, Lease and Finance Management:

  1. Generates billing transactions for each investor with the stake recorded.

  2. Generates streams:

    • Disbursement basis streams.

    • Income adjustment streams, on the contracts.

    • Present value of streams in the pool for accounting.

    • Investor Fees streams for expense and income fees for billing and accrual on the Investor agreement.

  3. Generates Investor Agreement accounting:

    • For all templates having transaction type Investor.

    • For the amount to be calculated by solving the formula on each accounting template.

Prerequisites

You must have an investor agreement set up and ready to be activated.

Steps

Perform the following steps using the Investor Agreement page:

  1. Search the investor agreement that you want to activate and click Activate.

    The top of the Activate Investor Agreement page contains read-only investor agreement information, including agreement number, description, and status.

    The Validation Checklist will appear to inform you of any required steps that you may have missed in your investor agreement creation process. Go back and correct these, then return to the Investor Agreement page and click Activate again for the applicable investor agreement.

    When the validation is successful, the Validation Checklist page displays the status for the investor agreement as Active.

After you have activated an investor agreement, subsequent pool transactions are displayed on the Pool Transaction page.

Transactions

In addition to the investor agreement transactions described in this section, you can view pool transactions using the Pools menu. See Pool Transactions.

Add Contracts

Prerequisites

You must have an activated investor agreement.

Steps

  1. Navigate to the Add Contracts page.

  2. Select an active investor agreement number from the list and click the "+" icon in the Add Pool Contents column.

  3. On the Add Pool Contents page, specify the Eligibility Criteria as required.

  4. Click Submit. A concurrent process is initiated for adding the streams in the pool according to the criteria specified and the system assigns a concurrent request number.

  5. Click Go to see the new contract.

Contract Workflow Information

Status: When you add a new contract, the status is New. The other statuses are Pending Approval, Approved, and Completed.

Value of Streams: Shows the total value of the stream already in the investor agreement.

Details: Shows the complete contract detail and the streams added and also displays the total value of new streams that are proposed to be added.

Cleanup: Allows you to clean up the contents of the pool that is being added by specifying the criteria. You can only clean up the contracts that are proposed to be added to the investor agreement.

Investor Stake: Allows you to update the investor stake that is to be billed to the investor.

Approve: Initiates an approval workflow for the Add contracts process.

Cancel: Lets you cancel the Add contracts request. You can only cancel the Add contracts request when the status is New or Approved.

Submit: Submits the Add contract process through a concurrent process and the status changes to Complete when the request is successful.

Viewing Receivable or Payable Invoices

Use the Receivable Invoices and Payable Invoices pages to view receivable or payable invoices. Select an invoice by entering or searching by invoice number, investor agreement name or number, investor name, or the invoice date range. Then click Go.

Buy Back Streams

Use the Buy Back Streams page to view buy back transactions. Perform the following:

  1. Select the contract to be bought back and click Go.

  2. The contract will get listed if its part of an active investor agreement.

  3. Click on the Buy Back streams option on the contract for which you intend to do the buyback.

  4. Select the streams that need to be bought back and click on Buyback. This initiates a process and the streams are bought back.

  5. Select the contract to be bought back and click Go.

You can view the Buyback transaction in the Pools tab. Query for the pool to which the contract was associated. Click on the pool number and go to the transactions tab and query for the contract number.

Note: A bought back contract can be added to a new pool or to a existing active pool by using the Add contracts option also.

Specific Loss Provision of Investor Agreements

Prerequisites

You must have an activated investor agreement.

Steps

  1. Use the Loss Provisions page to create a specific loss provision for an active investor agreement.

  2. Click Create to open the Create Specific Loss Provision page.

  3. Enter the required fields and click Apply. See: Create Specific Loss Provision Field References.

Viewing Accounting Transaction

To view accounting transaction for activation of an investor agreement, navigate to the Accounting Transactions page and search transactions by investor agreement number, transaction type, accounting status, or sources criteria.

Disbursement Processing

There are two concurrent programs that you must run to process disbursements to investors. The first program is specific to investor agreements and is part of Lease and Finance Management. The second is an Oracle Payables concurrent program.

Steps

To process disbursement, perform the following steps:

  1. In Oracle Lease and Finance Management, run the Create Investor Invoice Disbursements concurrent program.

  2. In Oracle Payables, run the Payables Open Interface Import Program.

For more information on disbursement processes, see Disbursements; see documentation for Oracle Payables; and see Concurrent Programs.

Investor Management Field References

The topics in this section describe selected fields for:

Fields left empty or blank generate all possible values.

See Glossary for definitions of selected terms.

Add Pool Contents Page Field References

The following table lists and describes selected fields on this page.

Eligibility Criteria Fields
Field or Button Description
Credit Classification Select the credit classification from the list. This list is displayed from Oracle Receivables.
Pre Tax Yield Desired pre-tax yield percent of contracts
Book Classification Lease contract book classification. From the list of values, select Direct Finance Lease, Operating Lease, or Sales Type Lease, only. (Any additional values in the list are for future functionality.)
Tax Owner Lessee or Lessor or [blank]
Product (Financial product.)
Effective From Date Range
Effective To Date Range
Stream Type Subclass Rent, Residual, or [blank]
Streams Start Date Date Range

Create Investor Agreement Page Field References

The following table lists and describes selected fields on this page.

Agreement Details Fields
Field or Button Description
Trustee Select a vendor to act as trustee for the investor agreement.
Product Select the financial product you have defined for investor agreements.
Service Organization Typically, Lessor
Recourse With recourse for investors, or without recourse for investors.

Add Investor Page Field References

The following table lists and describes selected fields on this page.

Investor Details Fields 
Field or Button Description
Customer Account Select the specific customer account set up in Oracle Receivables or TCA (Trading Community Architecture) for the selected investor.
Bill To Address Select from the list of values for the investor. Sourced from Oracle Receivable's customer information
Investment Date Date of investment by the investor. It is defaulted from the effective start date of the investor agreement and cannot be changed.
Amount Stake Amount paid by the investor. For example, if the investor is committing $10,000, enter 10000.
Payout Start Date Enter the date of the first payout to the investor.
Payout Event Schedule, or Processing Day
Payout Frequency If the Payout Event is Schedule, select Monthly, Annual, Semi-Annual, or Quarterly.
Remittance Days Enter number of days; for example, 5

Investor Disbursement Page Field References

The following table lists and describes selected fields on this page.

Investor Disbursement Details Fields 
Field or Button Description
Payment Method Choose the payment method that the investor uses to make payments.
Cash Application Rule Choose the cash application rule that may be applied to receipts.
Invoice Format Summary Invoice, Detailed Invoice, or user-defined invoice format
Review Invoice Select the Review check box to sort the investor's invoices during printing preparation for a manual review, and not to mail the invoices directly.
Reason for Review Enter the reasons for the review, if applicable.
Review until Date Enter the date the manual invoice review ends, if applicable.
Pay To The application displays the vendor associated with the investor.
Pay Site Select from the list of values for the Pay To party. Sourced from Oracle Payables for the applicable vendor.
Payment Terms Select from the payment terms associated with the Pay To party.
Payment Method Check payment, Payment Clearing, Electronic Payment Method, Wire Payment
Pay Group Select from the list of values for the investor. Sourced from Oracle Payables for the applicable vendor.
Tax Sale Benefit Flag for your information purposes.
Accounting Sale Benefit Flag for your information purposes.
Residual Guarantee Flag for your information purposes.
Tax Reporting Flag for your information purposes.
Tax Billing Flag for your information purposes.
Sales Tax Reporting Flag for your information purposes.
Sales Tax Billing Flag for your information purposes.
Document Number Information that you define.

Investor Revenue Share Field References

The following table lists and describes selected fields on this page.

Investor Revenue Share Fields
Field or Button Description
Stream Type Subclass Stream type subclasses are listed.
Share Percent field for each stream type Enter the percentage (do not include the percent sign) share for each stream type subclass. The combined shares of all the investors for each stream type subclass must not be more than 100 percent. You will receive an error message when you update if you do not observe this limit.

The following table lists stream types purposes assigned to each stream type subclass.

Investor Revenue Share Stream Types 
Stream Type Subclass Description
RENT Rent Payment due from customer
ADVANCED RENTALS Rent Future rent payments due in advance of rental term
INTERIM RENT Rent Per diem rent payment charged prior to contract start date
RESIDUAL VALUE Residual Amount of residual value
PRINCIPAL PAYMENT Loan Payment Principal due from customer for Fixed rate loan contracts
UNSCHEDULED PRINCIPAL PAYMNET Loan Payment Unscheduled Principal payment from customer for Fixed rate loan contracts
INTEREST PAYMENT Loan Payment Interest due from customer for Fixed rate loan contracts
INVESTOR CONTRACT OBLIGATION PAYABLE Investor Disbursement Share of rent payable to an investor
INVESTOR RESIDUAL PAYABLE Investor Disbursement Share of residual payable to an investor
INVESTOR DISBURSEMENT ADJUSTMENT Investor Disbursement Adjusted disbursements to an investor; for example, on a rebooked contract
INVESTOR EVERGREEN RENT PAYABLE Investor Disbursement Evergreen Share of evergreen rent payable to an investor
INVESTOR LATE FEE PAYABLE Investor Disbursement Late fees on share of payments payable to an investor
INVESTOR LATE INTEREST PAYABLE Investor Disbursement Late interest on share of payments payable to an investor
INVESTOR RENT BUYBACK Investor Disbursement Amount required to repurchase rent payments from an investor
INVESTOR RESIDUAL BUYBACK Investor Disbursement Amount required to repurchase residual payments from an investor

Terms and Conditions Field References

The following table lists and describes selected fields on this page.

Terms and Conditions Fields
Field or Button Description
Formula Name Select the formula defined to calculate the buy back amount. INVESTOR_BUYBACK is the seeded formula.
Payment Basis Cash Flow.
Payment Event Billing (1), or Receipt (2).
(1) Select Billing if investors will be credited when the lessees are billed. If Billing is selected, disbursement is due to the investors when the lessee is billed.
(2) Select Receipt if investors will be credited when you actually receive payment from the lessees. If Receipt is selected, disbursement is due to the investors when payment is received from the lessee.
Special Accounting Agreement Accounting Code. This lookup value, located on the accounting template for lease contracts, is user-defined. You can modify it on a lease contract.

Buy Back Streams Field Reference

The following table describes a field on this page.

Buy Back Streams Fields 
Field or Button Description
Book Classification Lease contract book classification. From the list of values, select Direct Finance Lease, Operating Lease, or Sales Type Lease, only. (Any additional values in the list are for future functionality.)

Create Specific Loss Provision Field References

Located on the Operations tab, Loss Provision menu, at Transactions. The following table lists and describes selected fields on this page.

Create Specific Loss Fields 
Field or Button Description
Operating Unit Operating Unit assigned to the record.

Note: The list of values includes operating units assigned to the MO: Security profile.

Note: The application displays the selected operating unit as the default in the subsequent pages irrespective of the value that you set for the MO: Default Operating Unit profile option.

The selected operating unit restricts the valid list of values in applicable fields.
Provision Type Select Specific loss provision type.
Provision Date Date the loss provision is created
Reserve Amount Loss provision reserve amount
Reverse Total Reserve Select check box to reverse the existing loss provisions.
Tax Deductible Local For information purposes only. (Select check box if the loss is deductible from local area taxes.)
Tax Deductible Corporate For information purposes only. (Select check box if the loss is deductible from corporate-level taxes.)

Stream Types in Investor Agreements

The following table lists streams that are generated on lease contracts when an investor agreement is activated, for disbursement to investors:

Streams Generated For Disbursement To Investors
Stream Type Description
Investor Rent Disbursement Basis Amount of rent available for disbursement to investor.
Investor Residual Disbursement Basis Stream is generated based on the following formula: Residual * ((1 + Agreement yield)/(1 + Contract IRR))

The following table lists streams that are applied for billing investor stakes:

Streams Applied For Billing Investor Stakes
Stream Type Description
Investor Receivables Payment due from investor

The following table lists streams that are applied for billing and disbursement of fees:

Streams Applied For Billing and Disbursement of Fees
Stream Type Description
Expense Fee Fees of Expenses to investor
Income Fee Fees of Income from investor

The following table lists a stream that is applied for disbursing rent to investors during the base term:

Streams Applied For Disbursing Base Term Rent To Investors
Stream Type Description
Investor Rent Payable Rent payable to investor

The following table lists streams that are generated on lease contracts when an investor agreement is activated, for adjustment of income:

Streams Generated For Adjustment of Income
Stream Type Book Class Description
Investor Rental Accrual Operating Lease Investor rental accrual for the rental accrual streams
Investor Pre-Tax Income Direct Finance Lease Investor pre-tax income for pre-tax income streams
Investor Pre-Tax Income Sales Type Lease Investor pre-tax income for pre-tax income streams

The following table lists streams that are generated on lease contracts when an investor agreement is activated, for accounting:

Streams Generated For Accounting 
Stream Type Description
Present Value Securitized Rent The present value of securitized rent payments for a contract
Present Value Securitized Residual The present value of securitized residual payments for a contract
Accrued Fee Expense Fees of expenses to investor
Accrued Fee Income Fees of income from investor

  1. SEEDED FORMULAS: Investor_Investment and Investor_Accrual are seeded formulas for Investor Investment or Investor Accrual.

  2. SEEDED STREAM TYPE PURPOSES for accrual adjustment:

    1. There are two seeded stream type purposes. For Direct Finance and Sales type lease contracts, the seeded stream type purpose is Investor Pre-tax Income. For Operating lease contracts, the stream type purpose Investor Rental Accrual. Streams with these stream type purposes are generated on the contract at the time of activation of the investor agreement.

    2. When a contract is securitized, income for the contract should not be accrued to the full extent of the investor revenue share. The purpose of setting up these accounting templates is to adjust income accrual (i.e., negative accrual) for the contract.

  3. Ensure that accounting templates are defined for Accrual transaction type for the expense and income fees in the investor product.

  4. To generate accruals, run the Generate Accruals Master - Streams concurrent program.

Note: When the lessor and the investor have a 50/50 percent stake in the streams, and the lessor does not provide a stake up-front, do not set up the lessor as an investor. If, for example, you set up streams intending that 50% of the rent will be disbursed to the investor while the lessor will get the rest of the rental amount, or 50%, the lessor should NOT be set up as an investor. The lessor's share is assumed to be 100% minus the total revenue share of all other investors.

Frequently Asked Questions About Investor Agreements

Q: In order to set up an investor agreement, I have to define an investor financial product. Do I tie an accounting template set to this investor financial product?

A: The purpose of an investor product is to define accounting based on the Investor quality. It is necessary to associate an accounting template set with the investor product. The accounting template set associated with the investor product must have the following accounting templates to perform necessary accounting.

1. Investor transaction type - for accounting on activation of investor agreement

2. Billing transaction type - for billing investor stake

3. Disbursement transaction type - for periodic disbursement to investors

Q: There are two transaction types: one for syndication and one for investor. Are these transaction types strictly used for the investor portion of the agreement? Or do I add syndication transaction type to all accounting template sets with the stream types that will be changed based on the formula of the investor share?

A: The accounting templates must be defined using only the "investor" transaction type for investor agreements. Investor agreements will not recognize accounting templates with the syndication transaction type.

Q: What is the functionality of the parameters, if we have transaction types? How do these options interact with each other?

A: The accounting template is uniquely identified by a combination of transaction type, stream type, factoring and syndication flag, and memo flag. You can define different accounting templates for the same transaction type having different factoring and syndication flags and codes. This can be used to perform accounting for contracts differently based on the factoring and syndication flags and codes.

Q: There is a parameter with a list of values for factoring, syndication, and investor. If my accounting templates are set with those parameters, do all the accounting templates within that accounting template set require the same parameters?

A: It is not necessary for all accounting templates in an accounting template set to have the same parameters. But if the investor agreement is defined with an investor agreement code, accounting for that investor agreement will be done using only those accounting templates that have the specific investor agreement code.

Q: U.S. Federal Accounting Standards require that we determine whether a deal is a participation (when the lessor funds) or a true syndication (when an investor funds). How can we set up accounting templates to derive different accounting based on participation or syndication?

A: Set up and use different financial products with separate accounting template sets.