A contract is an instruction, wherein, a customer (drawer) approaches your bank to purchase, negotiate, discount, or send for collection, a financial instrument called a bill. This written instrument is an instruction instructing the drawee of the bill to pay a certain sum of money in favour of your bank or at the order of your bank.
Such an instruction involves a sequence of events, but is treated as one contract in Oracle FLEXCUBE.
For example, Ms Keturah Smith (exporter or drawer) in India draws a bill on Mr. Silas Reed (importer or drawee) stationed in Paris in which the exporter Keturah Smith instructs Mr. Silas Reed to pay the amount quoted on the bill to her bank Midas Bank, India, (exporters bank) or to the order of Midas Bank.
Midas Bank after endorsing the bill in favour of Mr. Reed’s bank - Berliner Bank (collecting bank) sends the bill for collection.
The collecting bank, on receiving the bill and it’s supporting documents, requests Mr. Reed to make a payment against the bill. Berliner Bank will then remit the bill amount to Midas Bank (issuing bank), and debit Mr. Reed’s account.
The collecting bank releases the documents to Mr. Reed, allowing him to claim the merchandise.
The sequence of events involved, to affect the bill can be considered a bill contract. Thus, the specific bills processed for the customers of your bank can be defined as a contract.
A Bills Contract would, therefore, require information on:
You have defined products to group together or categorize bills, which share broad similarities. Under each product that you have defined, you can enter specific bills, based on the needs of your customers. Each of these will constitute a contract. While products provide a general framework and serve to classify or categorize bills, contracts are customer specific.
By default, a bill inherits all attributes of the product to which it is associated. This means that you will not have to define these general attributes, each time you input a bill involving a product.
This chapter contains the following sections:
This section contains the following topics:
You can invoke the ‘Bills and Collections - Contract Input - Detailed’ screen by typing ‘BCDTRONL’ in the field at the top right corner of the Application tool bar and clicking on the adjoining arrow button.
The ‘Bills and Collections - Contract Input - Detailed’ screen will be displayed. Click the new button on the toolbar.
If you are calling a contract that has already been entered, double click on a contract from the summary screen.
Through the screens that follow in this section you can process all type of bills - Import and Export (both domestic and international).
You can choose to enter the details of a contract either by:
To facilitate quick input, you only need to enter the product code. Based on the product code you choose, many of the fields will be defaulted. You can over write these defaults to suit your requirement. You can also add further, which are specific to the bill like the bill amount.
Acknowledgement Reference Number
Specify the acknowledgement reference number. Alternatively, you can select the reference number from the option list. The list displays all the acknowledgement reference numbers and type of registration maintained at BC registration screen which are authorized and unprocessed.
The system defaults the details captured in registration screen if acknowlegement is captured on clicking populate (P) button beside Product Code..
Note
System will update the status of registration as ‘Processed’ and contract reference no at registration screen, if acknowledgement reference number is captured at contract screen and (new) contract is created.
Product Code
Enter the code of the product to which you want to link the contract. You can select an authorized product code from the adjoining option list. The contract will inherit all the attributes of the product you have selected.
Product Description
This is a description of the product code that you have selected.
Contract Reference
The Contract Reference Number identifies a contract uniquely. It is automatically generated by the system for each contract. The Contract Reference Number is a combination of the branch code, the product code, the date on which the contract is booked (in Julian format) and a running serial number for the booking date.
The Reference Number consists of a three-digit branch code, a four-character product code, a five-digit Julian Date and a four-digit serial number.
The Julian Date has the following format:
YYDDD
Here, YY stands for the last two digits of the year and DDD for the number of day(s) that has/have elapsed, in the year.
User Reference
In addition, a contract is also identified by a unique User Reference Number. By default, the Contract Reference Number generated by the system will be taken as the User Reference Number. But you have the option to change the User Ref Number.
Oracle FLEXCUBE also provides you the facility to generate the user reference number in a specific format. However, the number, thus generated will be non-editable.
Note
You can specify a format for the generation of the User Reference Number in the ‘Sequence Generation’ screen available in the Application Browser. Refer to the Core Services User Manual for details on maintaining a sequence format.
Characteristics
Characteristics of the product are displayed here.
Stage
Select the stage at which your branch is processing the bill from the drop-down list. The options available are:
Use the ‘Initial’ stage of processing if the documents received are pending approval from the applicant. When a bill is processed in the Initial stage, no accounting entries will be passed.
You can indicate ‘Registered’ only if you are processing a collection.
Operation
The operations that you can perform on a bill are determined by the type of bill you are processing and on the operation you perform on the bill. The operation that you perform on a bill, also determines the accounting entries, that are passed and the messages that will be generated.
You can select an operation from the option list available. The type of operation that you can perform on a bill has been listed below:
Incoming (International and domestic) |
Outgoing (International and domestic) |
Advance |
Negotiation |
Payment |
Payment |
Discounting |
Discounting |
Collection |
Collection |
Acceptance |
Acceptance |
|
Purchase |
|
Transfer |
‘Transfer’ (TRF) operation indicates transfer of bills to third party. If you check the ‘Collection to Transfer’ option, then this operation will be listed in the operation option list. You can select this operation during Amendment, where the current operation is ‘Collection’ and the bill is in Initial Stage.
This operation will be listed even if the ‘Collection to Transfer’ flag at the product level is not checked. A validation will be made during save if this operation is selected when the product level flag is unchecked.
On save of the contract, TRFB event will be fired.
The accounting entries posted as part of book event gets reversed. Additionally, the following entries are passed as part of TRFB event for charges:
Accounting Role |
Amount Tag |
Dr/Cr |
Receivable A/c |
<Comp>_LIQD |
Dr |
Income |
<Comp>_LIQD |
Cr |
The Bills Contract Details screen contains a header and a footer that has containing fields specific to the contract you are entering. Besides these, there are six tabs and a vertical array of five icons through which, you can enter details of the bill. Contract details are grouped into the various screens according to the similarities they share.
The Bills Contract Screen is designed to contain seven tabs along the lines of which, you can enter details of the contract. The seven tabs are:
Tabs |
Description |
Main |
Click on this tab to enter the essential details of the bill you are processing. |
Details |
In this screen you can enter the fields that provide detailed information about the contract. |
Additional |
Click this tab capture the processing details |
Parties |
In the screen that corresponds to this tab, you can enter details of all the parties involved in the bill. This screen along with its fields have been detailed under the head Entering Party Details |
Document/ Shipments |
In the screen corresponding to this tab you can enter details of the documents required under a bill and the clauses that should accompany the documents. You can also specify details, of the merchandise that was traded and the shipping instructions based on which, the goods were transported. |
Exceptions |
Click on this tab to enter details of the exception tracers that should be generated for the exceptions that occur while processing the bill. |
Discrepancies |
In the screen that corresponds to this tab, you can enter details of the discrepancies that occur while processing the bill. The screen also captures details of the tracers that should be generated for Reserve exceptions. |
Rollover |
Click on this tab to maintain rollover details for the bill. |
Drafts |
Click this tab to view the components that make up the Bill Amount. |
Insurance |
Click this tab to associate the appropriate Insurance Company with the Bill contract. |
Invoice |
Click this button to define the invoice margin that should be withheld whenever an invoice is raised against a discounted bill. |
Packing Credit |
Click this tab to specify Pre Shipment Loan details and view Linked or Settled loans |
Purchase Details |
In the screen that corresponds to this tab, you can enter details for a Bill purchase. |
Multi Tenor |
Click this tab to maintain multi tenor details. |
In the Contract Detailed screen there is a horizontal toolbar. The buttons on this toolbar enable you to invoke a number of functions that are vital to the processing of a bill. Enter valid inputs into all the mandatory fields; or to save the contract. The contract can be saved by either by selecting ‘Save’ from the Application tool bar or clicking save icon.
On saving the contract, your User ID will be displayed in the Entry By field at the bottom of the screen. The date and time at which you saved the record will be displayed in the Date/Time field.
A contract that you have entered should be authorized by a user, bearing a different login Id, before the EOD is run. Once the contract is authorized, the ID of the user who authorized the contract will be displayed in the Auth By field. You can authorize a payment by clicking the ‘Authorize’ icon on the Application toolbar. Click ‘Exit’ or ‘Cancel’ button to go back to the Application Browser.
While defining a product, you have already defined a broad outline that will be applicable to all bills involving the product. However, while processing a bill involving a product, you need to enter information specific, to the bill you want to process. This information is captured through the ‘Bills and Collections - Contract Input - Detailed’ screen. Click on the tab titled ‘Main’ to capture the essential details of the bill.
You can capture the following details related in this ‘Main’ tab.
Enter the following details.
LC Not Advised
Check this box if LC is not advised for a bill by the negotiating bank.
LC Customer
Specify the customer in whose name the LC was drawn.
LC Customer Name
The system displays the name of the LC customer.
LC Reference
If the export or import bill is under an LC that was advised by your bank, you can enter the Reference number assigned to the LC, by your bank. The adjoining option list will display LC contracts with Credit Mode as ‘Mixed Payment’ for a Multi Tenor Bill Contract.. If the bill is linked to a product for which the ‘Reimbursement Claim’ option is checked, the system will display only the LC contracts under the operation ‘Reimbursement’.
If the linked LC is backed by an open insurance policy, the system will check if the option ‘Update utilization Automatically’ is checked for the policy or not. If the option is checked, the system will re-instate the available amount on the policy to the extent of the bill amount and correspondingly decrease the utilization on the policy. Similarly, if the bill contract is reversed or a reversal is deleted, the policy utilization amount will be increased or decreased respectively to the extent of the bill amount.
If the LC module of Oracle FLEXCUBE has been installed at your bank, you can enter the contract reference number assigned by the system to the LC. In which case the following should be true of the LC:
All the related details of the LC will be automatically picked up and defaulted to the relevant fields of the Bills -Contract details screens.
Note
If the bill amount that you specify is greater than the amount available under the LC to which it is associated, you will not be allowed to proceed with the processing of the bill.
You can book more than one bill under LC, even if the previous bills under the same LC are unauthorized.
When a bill is booked under LC and if any unauthorized bills are available under the same LC with SG linkage, then the system displays an error message. When Bill with SG linkage is not authorized, then no further bill under same LC will be booked until the bill with SG linkage is authorized.Cancellation of SG - CASG, Cancellation of LC – CANC and Availment – AVAL will be triggered during Bill authorization.
When a Bill is booked under LC, contingent entries are posted from bills. However, contingent entries posted in LC will get released only during authorization of the bills since AVAL event in LC will be fired during authorization.
If a BC is booked under LC when the previous BC is in unauthorized status, then while booking a new BC under the same LC, the amount is displayed in BCDTRONL after deducting the amount of the first BC. In LCDTRONL the LC outstanding amount will be displayed as the full amount itself.
During booking the bill under LC, Transfer Collateral from LC is selected, then collateral is transferred from LC to BC but accounting entries for collateral transfer at BC will happen in INIT event during save of the bill and accounting entries for collateral transfer at LC will happen in AVAL event when the bill is authorized.
Customer ID
In the Contract screen, you can capture details of the party who is your customer. The details of the other parties involved in the bill are captured in the parties' screen.
Customer Name
The system displays the name of the specified customer ID based on the details maintained at ‘Customer Maintenance’ level.
Party Type
Specify the Party Type of the customer. In the case of an Import bill, you should specify details of the Drawee of the bill. If the Drawee is a customer of your bank you should specify the customer reference, assigned to the customer, in the Customer Information File (CIF) of the Core Services module of Oracle FLEXCUBE. The other details of the customer will be automatically picked up.
If you are processing an Export bill, you should specify details of the Drawer of the bill. If the drawer is a customer of your bank, you should specify the customer reference assigned to the customer, in the Customer Information File (CIF) of the Core Services module of Oracle FLEXCUBE. The other details of the customer will be automatically picked up.
When an export LC is advised to a non- customer or customer having facilities with multiple banks and if the LC is confirmed by the advising bank, the export bill under the LC is presented to the advising bank through another bank which is the presenting bank. The system allows you to select the party type as presenting bank while booking export bill under LC. The advices and payment to the beneficiary will be routed through the presenting bank.
If the counterparty is maintained as presenting bank, then the system defaults the presenting bank details in the Parties tab. If presenting bank is captured in parties tab then the system displays an error message as ‘Presenting bank is not available as the counterparty’.
If you are processing a reimbursement claim bill, the system will display only ‘ISSUING BANK’ in the adjoining option list.
Collection Reference
If you are entering the details of a bill that was registered earlier, you should indicate the reference number assigned to the collection, when it was registered. All the details that you specified for the collection, during registration will be defaulted to the Contract screen.
For example, a customer of your bank has requested you to collect a sum of money due to him under a bill. You have registered the bill and sent it for collection. The reference number assigned to the bill is - 000COB7993630007.
When you receive the sum due on the bill, you need to liquidate the bill. While doing this, you need to specify the reference number allotted to the collection by Oracle FLEXCUBE when it was registered i.e., 000COB7993630007.
Currency
Specify the currency in which the bill is drawn.
Amount
Specify the amount for which the bill is drawn. While uploading an MT430, the system amends the bill amount as per fields 33A or 33K of the incoming message and displays the new bill amount in this field. If the bill is under an LC that is linked to an open insurance policy, the system will re-instate the policy utilization with the bill amount.
On saving the transaction after entering all the required details in the system, the system validates the value of the transaction amount against the following:
If the transaction currency and the limit currency are different, then the system converts the amount financed to limit currency and checks if the same is in excess of the product transaction limit and user input limit. If this holds true, the system indicates the same with below override/error messages:
Amount in Local Currency
System displays the amount for which the bill is drawn, in terms of the local currency.
Outstanding Amount
The outstanding amount which is the amount that is yet to be liquidated under the bill is automatically displayed. In the case of a collection it is computed as follows:
Outstanding Amount = Bill Amount - Liquidation Amount
Rebate Amount
Specify the rebate amount for the reduction of bill amount. You can enter the rebate amount only when the mode is Unlock and the stage is Final.
Enter the following details:
Base Date Code
Specify a valid base date code which provides additional information for the maturity period, from the adjoining option list.
Base Date Description
Enter a description for the Base Date.
Note
For multi tenor bills, the system generates the base date code from multi tenor tab
Base Date
The base date is the date from which, the tenor specified for the bill becomes effective. The base date is used to calculate, the maturity date of the bill. In effect the tenor of the bill will begin from this date.
Note
For multi tenor bills, the system defaults the base date with the earliest base date specified in the multi tenor tab.
For example, you indicate the base date of a bill to be 01 January 1999 and the tenor of the bill as 45 days. The 45-day tenor of the bill will begin from 01 January 1999.
If you are processing a sight bill, the base date is the lodgment date and for a usance bill it can be, the Invoice or the Shipping Date.
You have the option to change the Base date specified for the bill. The maturity date of the bill is automatically updated using the new base date.
Note
When you accept an Inward Bill of Usance without specifying the Base Date, an Acceptance Advice in an MT 499 format will be generated. When you enter the Base Date for the bill, the Acceptance Advice will be generated in an MT 412 format.
Tenor Days
Usance bills are generally associated with a tenor. The tenor of a bill is always expressed in days. The tenor that you specify for a bill should be within the minimum and maximum tenor specified for the product, to which the bill is linked.
The standard tenor defined for the product associated with the bill is defaulted. You can change the default and specify a tenor, to suit the bill you are processing. If the product to which the bill is associated is defined with the standard tenor as zero, you need to specify the maturity and the expiry date of the bill.
If you attempt to save the bill without entering the expiry or maturity date you will be prompted for an override.
Note
The tenor of a sight bill is always defaulted to zero days. You do not have an option to change it.
For multi tenor bills, the system defaults the Maximum Tenor entered in multi-tenor tab
Transit Days
The transit days refer to the notional period for the realization of the proceeds of a sight or matured usance bill. The transit days will be used in the computation of the maturity date, of the bill.
Maturity Date
The maturity date is the date on which the bill falls due, for payment. The maturity date is calculated in the following manner, based on the entries made to the previous fields.
Note
For multi tenor bills, the system defaults the Maximum maturity date entered in multi-tenor tab in case of multi tenor bills
Maturity Date = Base date + Tenor + Transit days
You can change the maturity date of a bill that is arrived at using the above method. However, the maturity date that you specify should be later than or equal to the Value date specified for the bill. While uploading an MT430, the system amends the bill maturity date as per fields 33A or 33K of the incoming message and displays the new date in this field.
The system displays override messages:
Note
The system will validate when a new limit line is attached during actions other than New.
For a BC product under which you may be creating a contract here, you may have chosen the ‘Consider as Discount’ option (specified through the ‘ICCF Details’ screen) and you may have specified the interest collection method to be advance (specified through the ‘Bills and Collections Product - Preferences’ screen). In such a case, you cannot change the ’Maturity Date’ here.
If we modify the maturity date for a sight bill, the transit days gets adjusted accordingly, displaying an override. Similarly, for a usance bill, the tenor gets adjusted. An override is displayed for the same.
For discounted export bills, you have the option to amend the maturity date of the bill. This could mean a pre closure or extending the maturity date of the bill.
If you extend the maturity date of the LC, additional interest for the extended period will be charged.
Transaction Date
The transaction date is the date on which, the bill was entered into Oracle FLEXCUBE. The system automatically defaults the transaction date to today’s date. You cannot amend or change the date that is defaulted.
Value Date
The Value date of a bill, is the date from which a bill becomes effective. The accounting entries triggered off by events like input, amendment and liquidation hitting the Nostro and the customer accounts will be passed as of the value date.
The Value date should be earlier than or the same as today’s date. The Value date can be one of the following:
If you do not enter a value date for a bill, the system defaults to today’s date.
Note
The Value date of a bill should not be earlier than the Start Date or later than the End Date specified for the product, involved in the bill.
For multi tenor bills, the system generates value date from the multi-tenor tab
Debit Value Date
For accounting entries hitting nostro or customer accounts, you can specify a debit and credit value date that is different from the value date specified for the bill.
The value date of the Bill will be defaulted as the Debit and Credit value date. You have an option to change it to suit the requirement of the bill you are processing. In this case, the value date of the bill will be used only for debiting and crediting GLs involved in the bill.
Credit Value Date
Specify the date on which credit entries should be posted.
LC Issue Date
Specify the date on which the LC was issued.
LC Amount
The Letter of Credit Amount gets defaulted from the LC Contract. This is a display only field.
LC Liability Amount
The Letter of Credit Liability Amount also gets defaulted from the LC Contract. This is a display only field.
For a collection bill, most of its details are captured during registration. The details of the collection will be displayed in the respective fields of this screen, when you specify the collection reference.
Their LC Reference
If you are processing an outgoing bill, under an LC, that was issued by another bank, you can enter the Reference number assigned to the LC by the other bank.
If ‘LC Not Advised’ is enabled, then original LC reference number of the issuing bank should be provided as ‘Their LC Reference’ number. Their LC Ref number will be defaulted to the ‘Parties’ tab against ‘Issuing Bank’ under field ‘Reference’ during save.
The following fields are not applicable if ‘LC not Advised’ is checked and ‘Their LC Reference’ number is specified:
Reimbursement Days
Enter the reimbursement days for the bill you are processing. The Reimbursement Claim for the bill will be automatically generated on reimbursement (working) days prior to the Maturity Date.
Assume that the Maturity Date of a bill is March 23, 2001. You specify the Reimbursement Days as ‘2’. Two working days prior to the Maturity Date (that is, March 21, 2001), as part of the BOD process, the Reimbursement Claim (MT 742) for the bill will be automatically generated.
Confirmed Amount
When you book a bill contract under a letter of credit, the system displays the current confirmed amount of the letter of credit contract.
Available Confirmed Amount
When you book a bill contract under a letter of credit, the system displays the current available confirmed amount of the letter of credit contract.
Unconfirmed Amount
When you book a bill contract under a letter of credit, the system displays the current unconfirmed amount of the letter of credit contract.
Available Unconfirmed Amount
When you book a bill contract under a letter of credit, the system displays the current available unconfirmed amount of the letter of credit contract.
Liquidation Amount
On selection of 'Liquidate' option in tool bar, user can enter the bill amount to be liquidated. This is a display only field which shows the actual bill amount which is liquidated once a bill is liquidated.
Note
For multi tenor bills, the system defaults the sum of total liquidation amount from multi-tenor tab in case of multi tenor bills
Liquidation Date
A liquidation date is meaningful, if you have specified that the bill should be automatically liquidated. By default, the liquidation date of a bill is taken to be the maturity date specified for the bill.
The Auto liquidation function will automatically liquidate the bill on the liquidation date that you specify.
Note
Suppose you are processing an acceptance bill, for which you had specified automatic change of operation from acceptance to advance. Then the automatic processes run as part of EOD or BOD will automatically change the operation of the bill from Acceptance to Advance on it’s liquidation date.
Their Charge Currency
You can capture the charge details of other banks (for instance, the charge levied by the remitting bank on an import bill) in the ‘Their Charge’ fields. In this field you can specify the charge currency.
Their Charge Amount
Specify the charge amount here. In a phased manner, you can settle this charge by debiting your customer and crediting the correspondent bank.
Interest Liquidation Mode
At the time of final liquidation of principal, you have the option of either recovering interest immediately or later. The interest liquidation mode with ‘immediate’ and ‘deferred’ values are enabled only at the time of final liquidation of principal.
If ‘immediate’ option is selected at the time of final liquidation, of principal, the entire outstanding interest will be liquidated along with the principal and the contract status becomes ’liquidated’.
If ‘deferred’ option is chosen at the time of final liquidation of principal, only principal gets liquidated and recovery of interest gets deferred. The contract status would remain ‘active’. The outstanding interest can be liquidated later either partially in stages or fully through BC interest payment screen. Once the entire outstanding interest gets liquidated, contract status will be shown as ‘liquidated’.
In case the rollover of the bill is specified after the maturity date of the bill, the contract will have interest components along with penalty interest on principal as outstanding. You need to specify the mode in which the system liquidates both the interest components i.e. Normal and Penal components by choosing either of the following:
Note
Oracle FLEXCUBE does not support backdated or future dated rollover. The value date for the Rollover event will always be the current system date.
In case of auto liquidation, the system will apply ‘Immediate’ mode to liquidate the bill.
Click the ‘Details’ tab and invoke the following screen.
From Date
Enter the date from which all tenor-based components of the bill should be calculated. The ‘from’ date that you enter should not be later than today’s date. It is mandatory for you to enter a start date for all bills, with at least one tenor based interest component.
To Date
Enter the date upto which the tenor based components of the bill should calculated. These components will be calculated for the period between the Interest ‘From’ date and the ‘to’ date. This date should be later than or equal to today’s date. If the non-penalty interest components of the bill are to be collected in advance, it is mandatory for you indicate a ‘To date’.
The tenor based interest components of the bill will be calculated for the period between the ‘Interest From date’ and the ‘To date’.
Note
For a BC product under which you may be creating a contract here, you may have chosen the ‘Consider as Discount’ option (specified through the ‘ICCF Details’ screen) and you may have specified the interest collection method to be advance (specified through the ‘Bills and Collections Product - Preferences’ screen). In such a case, you cannot change the Interest ‘To Date’ here.
Grace Days
The grace period indicates the period, after the To date specified for a bill within which the penalty interest (if one has been defined for the product to which the bill is linked) will not be applied. This period is defined as a specific number of days and will begin from the date the repayment becomes due. If the repayment is made after the due date, but within the grace period, penalty is not changed.
Penalty interest will be applied on a repayment made after the grace period. The penalty interest will be calculated for the entire period it has been outstanding (that is, from the date the payment was due).
For example, the repayment on Mr. Silas Reed’s bill is due on June 15, 1999 (maturity date). You have specified a grace period of 5 days, after which a penalty interest of 2% will be imposed.
Bill repayment made within the grace period
Now, if Mr. Reed makes the payment on June 18, which falls within the grace period, he will not have to pay penal interest.
Bill repayment made after the grace period
If he makes the payment after the expiry of the grace period, that is, after June 20, then he will be charged penal interest right from June 16 onwards (the repayment date) and not from June 20, the day the grace period expires.
Note
The penalty type Interest Components of a bill will become applicable after the To date + No of Grace days, for penalty defined for the bill.
Allow Prepayment
Check this box to allow prepayment
Refund Interest
Check this box to refund interest for the following:
Recovery Interest Rate
Specify the recovery interest rate to capture interest rate during refund of interest due to rebate.
Recovery Interest Rate Code
Specify the recovery interest rate code.
Note
If the recovery interest rate and recovery interest code is not specified then the rate applicable for the interest component is considered as recovery interest rate.
For Incoming Bills in Acceptance stage you can specify the dates for calculating the commission components. Indicate the From date and To date in the respective fields.
From Date
The system starts the computation of commission from the date specified here. This date must be later than or equal to the base date.
To Date
Indicate the end date for calculating the commission. The minimum/maximum tenor specified in the product underlying the contract has to be adhered to.
Based on the preferences for acceptance commission, the system calculates the commission:
Acceptance commission is always calculated based on the original bill amount and ‘From’ and ‘To’ dates specified for acceptance commission irrespective of BADV/Liquidation date and Mode of liquidation (Partial or Full liquidation).
When your bank accepts discounts or advances a bill on behalf of its customers, the bank in reality undertakes to pay even if the confirming bank does not fulfil its obligation, under the bill. Thus, accepting or advancing a bill is a liability for your bank.
Ideally, you would track your exposure to the credit-seeking customer, under a Credit Line. The credit granted to a customer under a Credit Line can be backed by Collateral that the customer offers. Often you may accept cash, as collateral for the bill.
Collateral Description
Here you can enter collateral details that are specific to the bill you are processing. Enter a description of the collateral in the dialog box that pops up. These details are intended for the internal reference of your bank and will not be printed on any of the advices generated for the bill.
Collateral Currency
This is the currency in which the cash collateral account is opened. Select a valid currency code from the option list of currencies allowed for the product, which the bill involves.
Note
Collateral currency will be defaulted to LC collateral currency if ‘Transfer Collateral from LC’ option is checked in Bills Preference and cannot be modified.
Collateral Amount
Here you can express the value of cash collateral in the currency specified in the previous field.
Transferred Collateral Amount
Specify the transferred collateral amount.
Outstanding Collateral Amount
Outstanding Collateral amount is sum of collateral amount and transferred collateral amount. Outstanding collateral will be updated with Bills Collateral Amount, when you save the contract. This is a display field. Field ‘Outstanding Collateral’ will be updated with remaining collateral amount, after each Bill liquidation.
Transfer Collateral from LC
This is defaulted from the product. However, you can modify it at contract level during bill booking. Later this cannot be changed. This indicates that the collateral amount may be collected from LC as part of Bill availed under LC.
Transferred Collateral gives the LC collateral amount in LC collateral currency to the extent of Bill Booked is transferred to bill.
Liquidate Using Collateral
This is defaulted from the product. However, you can modify this at any point in time prior to bill liquidation. If this is checked, it indicates that the bill should be liquidated using the collateral amount.
If ‘Liquidate Using Collateral’ is checked, then proportionate collateral amount will be used for bill liquidation.
Enter the following details.
Pass Our Charges to Drawee/Drawer
During initiation of a bill, you can indicate that the drawer’s charges can be passed on to the drawee. Check against this option to indicate that the remitting bank can pass on our charges to the drawee.
Pass Interest to Drawee/Drawer
Check this option to indicate that the drawer’s interest can be passed on to the drawee.
Our Charges Refused
During liquidation of an incoming bill, the drawee may refuse to pay the drawers charges. Check against this option to indicate the same.
Your Charges Refused
During liquidation of an incoming bill, the drawee may refuse to pay the charges due. Check against this option to indicate that the drawee has refused to pay the charges due.
Claim Advice in Swift
Check this box to claim advice in swift.
Template ID
The system displays the template ID.
Enter the following details.
Letter Dated
Specify the date printed on the covering letter of the documents based on which the contract was entered. This date can be used to retrieve information on pending documents. Note that this date cannot be greater than the application date.
Document Original Received
This field is applicable only to Documentary bills. Here you can indicate whether the original set of documents that are required under the bill have been received.
Document Duplicate Received
This field is applicable only to Documentary bills. Here you can indicate whether the duplicate set of documents that are required under the bill have been received.
If you had indicated negatively in the ‘Document Original Received’ field you should indicate positively in this field. This is because the bill contract should be entered based on the first set of documents that are received.
Acknowledgement Received
Check this option to indicate that an acknowledgement has been received from the collecting bank to confirm the receipt of collection.
For an existing contract, if you check this option, the system will trigger the ACKB event.
Acknowledgement Date
If you have checked the option ‘Acknowledgement Received’, specify the date on which acknowledgment is received.
These fields get updated during an upload of MT410. During contract amendment too, these fields can be modified. The system will trigger the ACKB event on saving.
Collect LC Advising Charges From
Specify the bank from which the LC advising charges should be collected. The drop-down list displays the following options:
Choose the appropriate one. The amount shown in MT756 is dependent on the bank chosen here. Hence, while generating MT756, the system observes this field and updates the field ‘Amount’ accordingly.
Note
This field is applicable to reimbursement bills only.
Further Identification
Select further identification from the adjoining drop-down list. the options available are:
Cheque Number
In case the payment for the bill has been made by cheque, specify the cheque number here.
Parent Contract Reference
You can view the reference number of the parent contract if the current contract is a child contract.
Loan Contract Reference
This is the reference number of the loan that is created automatically at the time of liquidation of the Bill. You will not be allowed to change this reference number.
Provision Amount
Specify the amount set aside for provisioning.
Remarks
You can enter information describing the contract details here. This will be available when you retrieve information on the contract.
While defining a product, you have also specified the various stages or status that the bill should pass through, if repayment is not made on the due date against a bill. These details are defaulted to all the bills that involve the product. The current status of a bill will be displayed along with the date on which the bill moved into the status.
Status as of Date
The system displays the contract status. If you have specified the status change as a manual event, you can change the status of a bill from one status to another in this screen. The option list available for this field contains all the lists of Status codes, defined for the product, to which this contract is linked.
User Defined Status
Specify the status of the bills contract. The option list displays all valid statuses that are applicable. Choose the appropriate one.
Contract Derived Status
The system displays the derived status of the bills contract. You cannot modify this.
There are some events that triggered automatically, when the batch process is run as part of the EOD or BOD. Batch processing preferences for a product is specified in the Bills - Product Preferences screen. The preferences indicated for the product involved in the bill will be defaulted. Click ‘Additional’ tab to change these defaults to suit the requirements of the bill you are processing.
Specify the following details:
Auto Status Control
A status change is one in which the status of a bill changes or moves, from one defined status to another. In the Bills - Product Preferences screen, you can indicate whether the bills linked to the product, should move from one status to another, automatically or manually. The preference indicated for the product involved in the bill, will be defaulted. You can change the default for the bill.
If you specify that status changes have to be carried out automatically, the status of the bill will be automatically changed, after the specified number of days. If not, you have to change the status of a bill through the Bills -Contract Details screen.
You can indicate other preferences for the status change like should the change be in the forward or reverse direction, through the Bills - User Defined Status Maintenance screen.
Even if the product, to which a bill is associated, is specified with automatic status change, you can manually change the status of the bill, before the automatic change is due.
However, if a product associated with the bill has been specified with manual status change, you cannot specify automatic status change for the bill.
Note
You will be allowed to specify whether automatic status change should be in the forward or reverse direction in the Status Maintenance screen, only if you specify that automatic status change is allowed.
Auto Liquidate
The components of a bill can be liquidated automatically or manually. In the Bills - Product Preferences screen you can indicate the mode of liquidation. The preference indicated for the product involved in the bill, will be defaulted. You can change the default.
If you choose the automatic mode of liquidation, the bill will be automatically liquidated, on the day it falls due, by the Contract Auto Liquidation function run as part of the BOD processing. If a bill for which you have specified auto liquidation matures on a holiday, the bill will be processed based on your holiday handling specifications, in the Branch Parameters table.
If you do not specify auto liquidation, you have to give specific instructions for liquidation through the Manual Liquidation screen, on the day you want to liquidate the bill.
Link to Loan
Check this box if you want to link an export bill contract to a loan. This is defaulted from the product level. You are allowed to modify this.
Advance By Loan
Oracle FLEXCUBE provides the facility to book a loan through the Bills module. Check this option to book a loan while liquidating the import bills. Once you have selected this option, you need to specify the loan product and the bridge GL in the consecutive fields.
Note
You are allowed to create a loan only for import bills that are of Acceptance type and for Usance and Sight import bills for both under LC and not under LC. In BC module, creation of the loan is possible only at the time of Final liquidation and not during Auto or Partial Liquidation.
In case you delete the Bill, the loan that is created through the bills contract will also be automatically deleted. However, deletion o the loan alone is not possible. In case of reversal of a bill, the system displays an override.
You cannot authorize the new loan contract outside the bill contract. When the liquidation of the bill is authorized, the loan also gets authorized.
Allow Rollover
Specify whether the Bill contract can be rolled over into a new bill. This field is enabled only if you have opted for the rollover option at the product level. You can choose to change this option during initiation or amendment of the Bill.
Note
If the box is unchecked, the Bill contract will not be rolled over even though rollover is specified at the product level.
Settle Available Amount
Oracle FLEXCUBE allows you to check if there are sufficient funds available in the customer’s account. The system will settle the acceptance to the debit of whatever funds are available in the account and auto creates a loan for the shortfall amount. If there is no sufficient balance available in the customer’s account even after considering the OD limits, then the loan will be created for the entire Bill Liquidation amount.
Check this box to verify the customer balance and in turn to create the loan for the shortfall amount during liquidation. You can also amend the settlement account.
Note
This field is enabled only if the ‘Advance by Loan’ field is checked. The customer balance check and loan creation is not applicable during Auto liquidation and will be applicable only for Manual Liquidation.
Use LC Reference in Message
Choose this option if you would like to furnish the Related LC Reference Number in the messages generated for the bill. If you do not choose this option, Field 20 of the SWIFT messages and the mail messages generated for the bill will furnish the Bill Reference Number.
Note
On liquidation of the bill, the advising charges transferred from export LC to the bill will be liquidated. If you check this option, then, the User LC Reference Number is populated to field 20 of the SWIFT messages generated for the bill.
LC Detail in Payment Message
If this option is checked then MT756 (Advice of reimbursement or Payment) is generated with tag32B containing the LC Contract Currency and Amount.
Available for Rediscount
A discounted bill, which is in the final stage, can be made available for re-discounting. You can indicate that a bill is eligible for rediscounting, by checking the field. The discounted bill will be reported available for rediscounting, when they are in final stage but not yet matured.
Note
No processing will be done, based on your specifications to this field. It only helps retrieve information, on discounted bills available for rediscounting. The Bills eligible for Rediscounting report, lists the bills that are eligible for rediscounting. Based on the report you can send a discounted bill for rediscounting.
Auto Change of Operation Acceptance to Advance
If you are processing an acceptance type of bill, you can indicate whether the bill should be automatically converted, into an advance type of bill on its liquidation date.
Allow Brokerage
This preference is defaulted from the product screen.
Brokerage To Be Paid By Us
Check this box to indicate that the brokerage will be paid by the importer or exporter depending on the bill product.
Note that this field will be enabled only if the box ‘Allow Brokerage’ is checked.
For any export purchases, you can indicate whether you want to levy the charges and interest in the ICCF pickup currency or the contract currency for the customer.
ICCF Pickup Currency
Indicate the currency in which interest and the charge pick-up will happen for the contract.
Exchange Rate
Specify the exchange rate between ICCF pick-up currency and contract currency. You are not allowed to change the ICCF pickup currency for EIM (Effective Interest Method) contracts. It gets defaulted to the contract currency and will be disabled here.
In case where the charges and interest are based on ICCF pickup currency, you have to maintain the ICCF rule as follows:
Currency Type |
ICCF Rule |
Transaction currency (Rule currency) |
ICCF Pickup Currency |
Basis Amount Currency |
ICCF Pickup Currency |
Charge Currency |
ICCF Pickup Currency |
Booking Currency |
Charge Currency |
For example, let us assume the following:
Bill Currency = USD
ICCF Pickup Currency = GBP
Exchange Rate = 12
So the ICCF rule will be as follows:
Currency Type |
Currency |
Transaction currency (Rule currency) |
GBP |
Basis Amount Currency |
GBP |
Charge Currency |
GBP |
Booking Currency |
GBP or USD |
Floating rate pickup and customer margin pickup for interest components will be based on ICCF pickup currency. So, you need to maintain the floating rate code and customer margin for the respective ICCF pickup currency.
Also, if you want to apply charges in ICCF pickup currency, then you have to define the charge component with amount tags suffixed by _ICCY. If charge components are defined with normal bills amount tags, then charges will be computed in contract currency. Thus, you can apply charges in contract currency or ICCF pickup currency based on basis amount tag of a charge component.
Liquidated Amount
While liquidating a bill, the margin you retain for a bill during the discount is proportionally released and displayed here.
Outstanding Amount
You can specify the following details:
Request Date
Specify the date on which your customer requests for bill forfeiting.
Document Submission Date
The requestor of forfeiting will invariably submit a document. This may or may not happen on the date of request. So you can capture the date of submission of the forfeiting document here.
Note
These two fields are only meant for information purpose. The system performs no processing or validation on them.
In the Bills Contract Input screen, you have already specified details for the Counterparty of the bill. The Parties screen can be used to record details pertaining to, all the parties involved in a bill. The documents, tracers, advices and messages that are generated for the bill, will be sent to the concerned parties based on the details you specify in this screen.
You can capture the following details of the parties involved in the bill you are processing:
Note
When a Bill is booked by linking an LC which is partially confirmed, you can specify the amount confirmed against the Issuer and track the limits for the same.
During Transfer operation, you can maintain the Transferee Bank (TRB) using the party type. You can amend the Parties Tab. You can add a new party towards the third Bank (Transferee Bank). Party details related to same shall also be added.
The following table contains a list of party types that can be involved in all types of bills:
Party Type |
Party Description |
DRAWER |
Drawer |
DRAWEE |
Drawee |
ISSUING BANK |
Issuing Bank |
NEG BANK 1 |
Negotiating Bank 1 |
NEG BANK 2 |
Negotiating Bank 2 |
BENEFICIARY |
Beneficiary |
ACCOUNTEE |
Accountee |
CASE NEED |
Case Need |
GURANTOR |
Guarantor |
ACCEPTING BANK |
Accepting Bank |
DISCNTING BANK |
Discounting Bank |
REMITTING BANK |
Remitting Bank |
COLLECTING BANK |
Collecting Bank |
REIMBURSING BANK |
Reimbursing Bank |
CONFIRMING BANK |
Confirming Bank |
FORFAITING HOUSE |
Forfaiting Bank/Institution |
CLB |
Claiming Bank |
PRESENTING BANK |
Presenting Bank |
The parties that can be involved in a bill depend on the type of bill you are processing and on the operation that you perform on the bill. The following table indicates the parties that can be involved based on the operation that you perform on the bill:
Bill Type |
Operation |
Parties Applicable |
Incoming |
Pay and Advance |
Accountee (if different from Drawee) Issuing Bank (your bank) Negotiating Bank Reimbursing Bank Drawer Drawee |
Incoming |
Acceptance |
Accountee (if different from Drawee) Issuing Bank (your bank) Negotiating Bank Accepting Bank (your bank) Drawer Drawee |
Incoming |
Discount |
Beneficiary Accountee (if different from Drawee) Discounting Bank Negotiating Bank Reimbursing Bank Remitting Bank Drawer Drawee |
Outgoing |
Negotiation |
Negotiating Bank 1 Negotiating Bank 2 Reimbursing Bank Confirming Bank Issuing Bank Drawer Drawee |
Outgoing |
Pay |
Negotiating Bank 1 Negotiating Bank 2 Reimbursing Bank Confirming Bank Drawer Drawee |
Outgoing |
Acceptance |
Accepting Bank Issuing Bank Reimbursing Bank Negotiating Bank 1 Negotiating Bank 2 Confirming Bank Drawer Drawee |
Outgoing |
Discounting |
Discounting Bank Issuing Bank Reimbursing Bank Negotiating Bank Confirming Bank Drawer Drawee |
Incoming and Outgoing |
Collection |
Through Bank Guarantor Collecting Bank Remitting Bank Drawer Drawee |
Incoming and Outgoing |
Reimbursement |
Claiming Bank of the LC |
In case of a reimbursement claim, the following parties are mandatory:
While processing an outgoing collection bill, you have the option to change the party that you specified earlier as the:
To change the collecting bank you need to first change the Party Type of the previous collecting bank to ‘Prev Collecting Bank’. Thereafter, select the new collecting Bank from the option list. An amendment advice is sent to the previous collecting bank requesting them to transfer the documents to the new collecting bank and a remittance letter is generated to the new collecting bank.
To change the Drawee of a collection bill, you need to change the party type of the previous Drawee to ‘Prev Drawee’ and select a new drawee from the option list. Similarly, to change the Drawee of a Incoming Bill, you need to change the party type of the previous Drawee to ‘Prev Drawee’ and select a new drawee from the option list.
Note
You can use a particular CIF ID only once in a bill that you process.
The details on central liability tracking that feature on this screen have been covered in the chapter titled Specifying Central Liability tracking details
Specify the following details:
Serial Number
Specify the serial number of the limit.
Operation
When you click ‘Default’ button, the system defaults the operation specified in the main screen.
Party Type
This indicates the type of the party whose credit limits need to be tracked.
If you click ‘Default’ button, in the first row, the system defaults the party type based on the details maintained under ‘Parties’ tab of ‘BC Contract Details’ screen. However, you need to make sure that the mandatory party details have been maintained under ‘Parties’ tab of the screen.
When you add another row to the list, you can manually select the party type as required. If you leave it blank, the system will automatically update the party type when you save the contract.
Customer No
Specify the customer number of the party whose credit limits need to be tracked. The option list displays the customer numbers of all the parties selected under ‘Parties’ tab. Choose the appropriate one.
You need to make sure that the customer number corresponds to the party type selected above. If the customer number and party type do not match, the system displays an error.
JV Parent
When you click ‘Default’ button, the system defaults the joint venture customer number of the party. This customer number is defaulted based on the details maintained in ‘Joint Venture’ sub-screen of ‘Customer Maintenance’ screen.
Liability Number
When you click ‘Default’ button, the system defaults the liability number from ‘Joint Venture’ sub-screen of ’Customer Maintenance’ screen.
Type
Specify the linkage type. The drop-down list displays the following options:
Choose the appropriate one.
Linkage Reference No
Specify the reference number that identifies the facility or collateral pool. The option list displays all valid facilities and collateral pools specific to the liability. Choose the appropriate one.
In case you choose the same linkage reference for more than one record in the list, the system displays an override message. You may choose to cancel or proceed with the selection.
% Contribution
Specify the proportion of limits to be tracked for the credit line or collateral pool for the joint venture customer. When you click ‘Default’ button, the system defaults the percentage of contribution maintained under ‘Joint Venture’ sub-screen of ‘Customer Maintenance’ screen.
It is mandatory to indicate the percentage of contribution if the party is a customer under joint venture. This is not applicable to customers who are not a part of joint venture.
Note
For one joint venture, the total percentage of contribution in all applicable credit lines together cannot be more than 100%.
Amount Tag
Specify the amount tag. The system tracks the limits for non joint venture customers based on the amount tag. The amount tags applicable to BC contracts are listed below:
Choose the appropriate one. If you do not specify the amount tag, the system will track the limits based on the bill amount or the amount purchased for a combination of customer, liability and facility.
For joint venture customers, you need to choose ‘Bill Amount’ as the amount tag. Other amount tags are not applicable to joint ventures.
Limit Amount
When you click ‘Default’ button, the system defaults the amount tracked for each credit line. In case of joint venture customers, the system derives the amount as follows:
In case of non joint venture customers, the amount is calculated based on the percentage of contribution.
For joint venture customers, the total bill amount is shared by different facilities/pools based on the percentage specified.
The total percentage of contribution for the joint venture customers need to be 100%. Otherwise, the system displays the error message as “(EL-CUST01) Sum total of limits percentage contribution should be 100”
For non joint venture customers, the system tracks the limits based on the amount tag.
Oracle FLEXCUBE allows you to reverse or delete a Bills contract. On reversal or deletion of a bill, the limits tracked for all joint venture customers are reduced proportionately. The limits tracked for non joint venture customers are reduced to the extent to which it was tracked.
When a BC contract is reversed, limit update happened during BC contract booking will also be reversed. The available amount of the limit line will be reinstated to the extent of LC availment amount and the matured amount of the limit will be reduced to the extent of LC availment amount.
When a BC contract booked under an LC is reversed, the following events will be triggered in the same sequence.
On liquidation of a Bills contract, the limits tracked for all joint venture customers are reduced proportionately. The limits tracked for non joint venture customers are reduced to the extent to which it was tracked.
A bill, as an instrument of trade finance, involves trade transactions. Such transactions involve merchandise, a mode of transportation and documents that accompany the goods in the case of a documentary bill.
You can specify document, goods and shipping details only for documentary bills under an LC or not under an LC. You can specify these details in the ‘Bills and Collections - Contract Input - Detailed’ screen by clicking on the tab titled ‘Document/Shipment’.
If the LC module of Oracle FLEXCUBE has been installed at your bank, and the documentary bill is under an LC, then the document, goods and shipping details will be automatically picked up on specifying the reference number of the related LC. You will not be able to amend the details, defaulted from the related LC.
If the bill is under a reimbursement claim, you will not be able to save details in this screen. The system will display an error message while saving the contract if you have entered details in this screen.
For the documentary bills that are processed at your branch, you can keep track of the documents that are required under the bill. You can indicate:
There are some standard documents that may be required under a documentary bill. For documentary bills not under an LC, the documents specified for the product to which the bill is linked, will be defaulted to this screen. The details specified for these documents like the document type, description, the clauses specified for the document are also defaulted from the product. You can edit the list of documents, as well as the contents of the documents to suit the bill you are processing.
As two sets of documents are sent or received for a bill, there is a provision to capture details regarding the documents sent in both mails. The first set is recorded as I Mail and the second as II Mail. In this field you can also capture the number of documents issued along with the number of documents required. The data is captured in NN/MM format where NN denotes number of documents required and MM signifies number of documents issued.
If the LC module of Oracle FLEXCUBE has been installed at your bank, and the documentary bill is under an LC, the documents picked up, when you specify the reference number of the related LC. You will however, not be able to amend the list of documents defaulted from the related LC.
The BC Contract online function will validate whether the supplied document reference has a shipping guarantee against it. This will be done only for import bills and if the ‘Validate shipping guarantee’ field is checked for the document code in the document codes maintenance.
The following processing will be carried out after capturing the document reference in documents screen of import bills.
Note
BC Upload processing will validate the document reference against shipping guarantee documents if the bill is import LC and validate shipping guarantee for the document code is ‘Y’.
You can add to or delete from the list of documents that are defaulted from the product. To add to the list of documents defaulted for a bill, click add icon and select the code that identifies the document, from the list of document codes maintained in the Documents Maintenance screen. The other details of the document will be defaulted to this screen. To delete a document, that is not required for the bill you are processing, highlight the document code and click delete icon.
There are some standard clauses, which should appear on the documents that are required under a documentary bill. In this screen you can indicate the clauses that should accompany a document
For documentary bills not under an LC, the clauses that you specified for a document, while defining the product are defaulted to this screen. In addition, the details specified for these clauses, like it’s description, are defaulted from the product.
When you highlight a document code, all the clauses defined for the document are displayed. You can add to or delete from the list of clauses that are defaulted. To add to the list of clauses defaulted for a bill, click add icon and select the code that identifies the clause, from the list of clauses maintained, in the Clause Maintenance screen. The description of the clause will be displayed, based on the clause code that you select. To delete a clause that is not required for the bill you are processing, highlight the clause code and click delete icon.
If the LC module of Oracle FLEXCUBE has been installed at your bank, and the documentary bill is under an LC, then the clauses specified for documents will be automatically picked up, when you specify the reference number of the related LC. You will not be able to amend the list of clauses, defaulted from the related LC.
There are certain standard requirements and conditions associated with the shipment of the merchandise, based on which the bill was drawn. You can specify the following shipping details for a bill.
Note
The system will display an override message if the shipment date is later then the latest shipment date of the LC Contract.
When you specify the import or export bill details, the system will verify if the Bill Amount is lesser than linked LC amount. If you have not checked ‘Partial Shipment Allowed’ field, then the system will display the following override message:
A bill is an instrument of payment, for trade transactions. Trade transactions involve goods that are transported from one destination to another. You have maintained the list of standard goods that are traded, in the Goods Maintenance screen.
In this screen, you can specify a description of the goods that were traded for the payment of which the bill was raised. After you select the code that identifies the goods, its description (which contains details of the merchandise traded) will be picked up and displayed automatically.
You can edit the description that is defaulted to suit the requirements of the bill you are processing. Your can also enter specifications such as the quality and quantity of the merchandise.
If the LC module of Oracle FLEXCUBE has been installed at your bank, and the bill is under an LC, the goods will be defaulted, when you specify the reference number of the related LC. You will however, not be able to amend the list of clauses defaulted from the related LC.
These details are used only for information purposes. The system will not validate the date you capture here
When you receive a document for Usance LCs, an Authorization to Reimburse Advice in an MT 740 format will be generated.
While indicating the messages that should be generated at the event (INIT), you should also associate the pre-shipped advice tag LC_AUTH_REIMB to the event. When the Bills Contract is authorized, the MT 740 is generated from the Outgoing Message Browser with the bills contract reference number and it displays all the details of the LC contract excluding the credit amount.
The expiry date of LC contract and maturity date from Bills contract are also displayed in the generated MT740 message. For swift MT740 message, the 31D field will display the expiry date specified in the LC contract and 42P field will display the maturity date specified in the BC contract. But for mail MT740, the system will display both LC and BC dates.
The bill amount that is defaulted includes the contract and its currency. However, the BC amount will be converted to LC contract currency equivalent using STANDARD mid rate in case the LC contract currency is different from the bill contract currency.
Tracers are reminders, sent to various parties involved in a bill indicating that an exception that has occurred, while processing the bill.
To specify the tracers that should be generated for each exception, click on the tab titled ‘Exceptions’ in the ‘Bills and Collections - Contract Input - Detailed’ screen. If the bill is under a reimbursement claim, you will not be able to save details in this screen. The system will display an error message while saving the contract if you have entered details in this screen.
In this screen you can capture tracer details for the following exception events:
The details specified for the product involved in the bill will be defaulted. You can change the defaults to suit the requirements of the bill you are processing.
There are two types of messages that can be sent, each time an exception tracer is generated. One to the party who needs to be reminded, to take action to resolve the exception (exception tracer) and the another to the party, who needs to be informed about the current status of the exception (advice of fate tracer).
In this screen, you can specify details for the generation of both types of messages.
Tracer Required
You can indicate whether the exception tracer is applicable to the bill you are processing. You can select one of the following options:
Tracers to be Sent
If you have indicated that the tracer is applicable, to the bill you are processing, you should also specify the maximum number of tracers that should be generated, for each of the exception events.
The number of copies specified for the product to which the bill is linked will be displayed. You can change the default and specify a number, to suit the bill you are processing.
If you have indicated that the tracer should be generated until the bill is resolved, the value 9999 is displayed, indicating that the tracer will be generated until the exception is resolved.
Tracer Medium
For each of the exception tracers that you specify for a bill, you can also indicate the medium through which the tracer should be generated.
The preferred medium specified for the product to which the bill is linked is defaulted. The media supported include:
If the tracer is generated through SWIFT an MT420 will be generated.
Tracer Frequency
You can specify the frequency (in days) with which, the tracer should be generated to the concerned parties (after the Start days) involved in the bill.
Tracers Sent
The system displays the number of tracers that have been sent.
Tracer Receiver
You can specify details of the party, who needs to be reminded to take action to resolve the exception. Select the party type from the option list that is available. The tracer will be generated to the customer linked to the party type, in the Parties screen.
Tracer Start Date
Exception tracers can be generated, only after the maturity date of the bill. While creating a product, you have also indicated the number of days that should elapse after the Bill matures on which the first tracer should be generated.
By default, the system calculates the date on which the first tracer should be generated, based on the maturity date specified in the contract screen and on the number of days specified for the product, involved in the contract.
You can change the default and specify a start date, to suit the requirement of the bill you are processing. The system also displays the number of tracers, already sent to the concerned party.
Previous Tracer Date
This is the date on which the last tracer was sent to the party indicated in the tracer Receiver field.
Next Tracer Date
This is the date on which the next tracer will be generated to the party indicated earlier.
Pay Message Date
Enter the date on which you send the acceptance message to the remitting bank (in the case of an Import bill). In the case of an export bill this is the date specified on the acceptance message received from the collecting bank.
This field is for information purposes only.
Non Pay Message Date
Enter the date on which you send the non-payment message to the remitting bank in the case of an export bill. In the case of an export bill this is the date specified on the non-payment message received form the collecting bank.
On entering the non-payment message date the event -- REFP (refusal to pay) is triggered. The accounting entries defined for the event will be passed and the advices will be generated.
Under Protest
Check this option to indicate that you want to protest the bill.
Protest Date
When the exception has not been resolved by the concerned party, even after a number of tracers have been sent, you may want to protest the bill. You can specify the date on which the protest advice needs to be generated, to the concerned party.
You can visit this screen to view the current status of the tracers generated for the bill. The system displays the following information:
The advice of fate is sent, to keep a party involved in the bill, informed about the current status of an exception. An advice of fate is generated, along with the exception tracer and at the frequency specified for, the exception tracer. You can specify the following preferences for the generation of an:
Advice Required
You can indicate whether the advice of fate should be generated, to a party involved in the bill. You can indicate one of the following options:
Note
While processing an export bill the Advice of Fate Required field is automatically defaulted to ‘Not Required’.
Advice Medium
For each of the advice of fate that should be generated for a bill, you can indicate the medium through which the advice should be generated.
You can select a media type from the option list available. The valid media include -
If the advice is generated through SWIFT an MT422 will be generated.
Receiver of Advice
You can specify details of the party, who needs to be informed, about the current status of the exception. Select the party type from the option list of valid parties that you specified, in the parties screen.
The advice will be generated to the customer, linked to the party type, in the Parties screen.
Manually Generate
An advice of fate tracer is generated at the frequency with which, the related exception tracer is generated. If you want to generate the advice of fate immediately, check against manually generate. If you do not check against it, the message will be generated automatically, as part of the end of day processes on the day it falls due.
You can visit this screen, to view the current status of the advices of fate generated for the bill. The system displays the following information:
You also have the option to bring the maturity date of a discounted bill forward. The excess interest collected for the bill can be returned to the customer, if you defined the relevant accounting entries for the product associated with the bill.
Note
You can register the discrepancies that you encounter while processing a bill, in the Discrepancies screen. To invoke this screen click on the tab titled ‘Discrepancies’ from the ‘Bills and Collections - Contract Input - Detailed’ screen. If the bill is under a reimbursement claim, you will not be able to save details in this screen. The system will display an error message while saving the contract if you have entered details in this screen.
Discrepancies are likely to be found, while processing Incoming or Outgoing bills that are under LCs.
You have specified the discrepancies and assigned codes to them, in the Discrepancy Code Maintenance screen. In this screen, you can select the discrepancies that are applicable to the bill you are processing. The description associated with the discrepancy code will be automatically picked up from the discrepancy code maintenance screen. This value is captured in field 77J of an outgoing MT734 in the following format: 70*50.
In this screen, you can also indicate whether the discrepancy, has been resolved. The date on which it was resolved will be automatically displayed.
Tracer Required
You can indicate whether the reserve exception tracer is applicable, to the bill you are processing. You can indicate one of the following:
Tracer Frequency
You can specify the frequency (in days) with which the tracer should be generated to the concerned parties (after the Start days) involved in the bill.
Trace Receiver Party Type
You can specify details of the party, who needs to be reminded to take action to resolve the exception. Select the party type of the party, from the option list that is available. The tracer will be generated to the customer linked to the party type, in the Parties screen.
Tracer Medium
For each of the exception tracers that you specify for a bill, you can also indicate the medium through which, the tracer should be generated.
The preferred medium specified for the product, to which the bill is linked, is defaulted.
The media supported include:
If the tracer is generated through SWIFT an MT420 will be generated.
An override message is displayed if you enter an export bill in final stage with unresolved discrepancies. Similarly if you attempt to move a bill that has unresolved discrepancies to the final stage, an override is sought.
Tracers to be sent
Specify the number of tracers that can be sent.
Tracers Sent
The system displays number of tracers that have been sent.
Previous Tracer Date
This is the date on which the last tracer was sent to the party indicated in the tracer Receiver field.
Reserve Release Date
Enter the date on which the reserve was released that is the date on which you received the reserve advice from the Issuing bank or the Drawee.
Under Reserve
Check this option to indicate that the discrepancy is under reserve.
Tracer Start Date
Exception tracers can be generated for a bill, only after the maturity date of the bill. While creating a product, you have indicated the number of days that should elapse after the Bill matures, on which the first tracer should be generated.
By default, the system calculates the date, on which, the first tracer should be generated, based on the maturity date specified in the contract screen and on the number of days specified, for the product involved in the contract.
You can change the default and specify a start date, to suit the requirement of the bill you are processing. The system also displays the number of tracers already sent to the concerned party.
You can visit this screen, to view the current status of the reserve exception. The system displays the following information:
Note
The system will display an override if the discrepancies are added to the bills after the discrepancy notice period. You can capture this period in the ‘Letters of Credit-Branch Parameters’ screen. This period is calculated from the booking date of the bills contract.
For details on ‘Letters of Credit-Branch Parameters’ screen, refer the ‘Automatic processes’ chapter of the Letters of Credit (LC) User Manual.
A contract that is marked for rollover will be rolled over with all the terms of the original contract. However, you can change certain terms by specifying them in the Rollover Details tab.
In the ‘Bills and Collections - Contract Input - Detailed’ Screen, click the ‘Rollover’ tab.
You need to specify the following additional details for the rollover of the bill:
Base Date
The base date is used to calculate the maturity date of the bill. In effect the tenor of the bill will begin from this date. The current system date will be displayed in this field and you cannot change the default value.
Base Date Description
The description of the instruction will be automatically picked up and displayed. You can edit the description of base date that is defaulted, to suit the requirements of the bill you are processing.
Bill Tenor
Specify the number of days for the tenor. The system will use the number of days to arrive at the maturity date for each tenor. The minimum/maximum tenor specified in the product underlying the contract has to be adhered to.
Transit Days
The transit days will be used in the computation of the maturity date, of the bill. Enter the transit days for the bill.
Maturity Date
The maturity date is the date on which the bill falls due, for payment. The maturity date is calculated in the following manner, based on the entries made to the previous fields:
You can change the maturity date of a bill that is arrived at using the above method. However, the maturity date that you specify should be later than or equal to the value date specified for the bill.
Interest Liquidation Mode
Interest components of a bill can be liquidated immediately or deferred to a later date. In the Roll Over Preferences screen, you can indicate whether the mode of liquidation is to be immediate or deferred.
Choose ‘Immediate’ to liquidate the interest components at the time of Rollover. If you choose ‘Deferred’ from the option list, the system defers the liquidation of interest components to a later date. You can choose to pay the interest components fully or partially subsequently.
From Date
The system starts the computation of interest from the date specified here.
To Date
Once you have specified the start date for interest computation, you have to indicate the end date for calculating the interest. The minimum/maximum interest rate specified in the product underlying the contract has to be adhered to.
The roll over of a bills contract is possible only if:
If you have marked a bill for roll over, the system liquidates the original bill and creates a new rolled over bill based on the details you have maintained through the Rollover screen.
A new event Roll will be triggered when a bill is rolled-over and the system:
If a bill has to be rolled-over:
You can capture amounts for the different components of a bill. Click ‘Drafts’ tab in the Contract Online screen to capture the different component amounts.
The components for which you can capture this information are:
You can associate the name of an insurance company to the bill contract being processed. Click ‘Insurance’ tab in the contract screen and invoke the ‘Insurance Details’ screen.
Select the appropriate insurance company code from the option-list. The list will display all authorized and active company codes. Upon selection of the company code, the following details will be automatically displayed by the system:
On receiving the policy, you can also specify the Insurance Policy Number in this screen. The Reference Number of the bill contract will also be defaulted to the screen.
Note
You can also choose to associate an Insurance Company that is not maintained in the system. When you are specifying a company code that does not exist, the system will display an override (The override can be configured to be an ignore or an error message depending on your requirement). On confirmation of the override, the company code will be automatically changed to ‘XXXXXXXXX’. The system will not perform any validations. Subsequently, you can specify any company name to be associated with the contract. However, no details will be populated in this case.
When an invoice is raised against a discounted bill, you can specify a margin of the invoice amount that should be withheld. Click ‘Invoice’ tab in the Bills contract screen and invoke the ‘Invoice Details’ screen.
You need to specify the following details of the invoice you are raising for the bill:
The invoice amount is taken to be in the currency of the bill against which it was raised. You can enter several invoices against a bill. However the total invoice amount should be greater than or equal to the Bill amount of the bill against which the invoice is raised.
Percentage
The system will always calculate the margin amount on the bill amount. You can indicate the manner in which the margin to be discounted should be derived. You can express the margin as:
If you specified percentage, indicate the percentage of the bill amount that should be retained as a margin.
If you specified amount, indicate the margin amount. If a margin is applicable, the system will arrive at the ‘Eligible Amount’ by subtracting the ‘Margin Amount’ from the bill amount. The bill amount will not be considered as the eligible amount. The outflow on the value date (the date on which the accounting entry is passed pertaining to the day you actually fund your customer) is the eligible amount. The following example will illustrate the calculation:
For example, a bill contract has the following details:
Calculation will be as follows:
Margin Amount – 10% of Bill Amount = 100
Hence, Eligible Amount = Bill Amount - Margin Amount = (1000 – 100) = 900
The Bill Amount will not be altered and remain at 1000.
On the maturity date of the contract, the inflow is the bill liquidation amount and the outflow is the margin amount.
The sum of the invoice amounts that you specify can be greater than or equal to the total bill amount.
Packing Credit is a Loan or Cash Credit facility sanctioned to an exporter at the Pre Shipment stage to facilitate purchase of raw materials at competitive rates, produce goods per requirement of the customer and finally organize packing for onward export.
You can capture credit details in the ‘Packing Credit’ tab of the BC contract screen. To invoke this screen, in the ‘Bills and Collections - Contract Input - Detailed’ Screen, click the ‘Packing Credit’ tab.
The Packing Credit Subsystem includes the following as detailed under.
Sequence Number
Specify the order in which the system liquidates attached multiple loans. You need not maintain bridge GLs within CL Products which allow creation of these CL accounts as the system replaces the credit settlement bridge with the bridge GL that the BC product maintains, automatically.
CL Account Number
Select the CL Account Number from the option list provided.
Event Code
The system defaults the appropriate event code while attaching CL for liquidation and attempting to save. These include INIT (in case of initial Discount, Purchase or Negotiation operation) and LIQD, BPUR, BDIS, LPUR and LDIS events.
Outstanding Amount
The system displays the outstanding amount of the CL contract while attaching the same. Click ‘P’ to populate information to the field.
Currency
The system displays the outstanding currency of the CL contract while attaching the same. Click ‘P’ to populate information to the field.
Settled Amount
The system displays the loan amount settled against each event in the CL currency, while liquidating the loan from the bill.
You can attach Packing Credits during purchasing, discounting or liquidation of an Export Bill. The Oracle FLEXCUBE system throws an error if you attempt to attach CL accounts during any other event than the latter ones or INIT events on account of direct purchases, discounts and negotiations.
The system allows linking only active and authorized CL accounts created with the ’Packing Credit’ flag enabled at the contract level. You cannot enable auto liquidation for these accounts. Further these accounts need to have an outstanding CL amounts as greater than zero. The counterparty involved remains as the one on the bill .The system also allows linking of multiple bills to the same account.
Note
You must enter Pre-Payment Details for Products with the Packing Credit flag enabled to avoid a CL error on attempting to save.
If the total value of a CL contract attached to a bill exceeds the Purchase or Liquidation amount, the system displays an override on attempting to save. In case of change of operation from Discount to Collection or Purchase to Collection, another override is displayed on saving that event to manually reverse CL Payments in the contract.
If you create a Bill under the product with the flag ‘link to loans’ enabled, you can attach the Packing Credit during the BPUR or LIQD events only if no BLNK event has been fired in the CL contract failing which an error is thrown on attempting to save. You can link the Bill to the CL after attaching the Packing Credit to the latter. You cannot create a CL where its value is greater than difference of the Outstanding Bill Amount and the Purchase Amount. During the LPUR event an override alerts you of the soft linked outstanding loans. You need to handle this operationally by manually liquidating the loan outstanding and then input such liquidation amount in BC. Alternatively the system credits the customer’s CASA account with such difference liquidation amount.
When the system authorizes the event in which the CL is linked, the LIQD event in CL is also authorized. Some limitations in this regard though are noteworthy:
On linking and saving a BC contract liquidation of the linked CL Account is triggered. You do not require maintaining a separate Bridge GL in the CL Product, as the system automatically replaces the Credit Settlement Bridge with the Bridge GL in the BC Product. In case of a Purchase or Discount operation the system converts the purchase amount to CL currency and credits the same into the Bridge GL maintained in the BC Product.
In BC Products when FX is linked but the CL Account attached is in the LCY of the branch the effective LCY exchange rate is used for Loan liquidation, In case multiple FX contracts are used, the system arrives at an effective Purchase or Liquidation rate by using the method of weighted averages. If the Loan currency is different from the Bill currency, then the Interest Rate from the Rate Type at the Product level is used. The Loan liquidation happens to the extent of the Purchase Amount and the excess amount if any is credited to the customer’s account.
Again during Bill Purchase or Discount Liquidation, when funds are received from a Nostro Account if a CL is attached, the system liquidates any Loan attached per the effective LCY Collection Rate or the Rate Type at the product level in that order, if in LCY. The effective Purchase or Liquidation Rate used during Bills Purchased Asset creation is again used during Asset Liquidation. The excess proceeds then if any are credited to the customer in that order. Again when no Purchase, Discount or Negotiation occurs the system directly liquidates any existing Loans and credits excess proceeds to the customer.
Note
The Tag ‘LOAN_LIQD_AMT’ includes both the Outstanding Principal and Interest components put together while the system uses the Tag ‘AMT_PURCHASED’ if the customer’s CASA account needs to be credited.
Let us illustrate accounting entries for appropriate events using conditions bulleted below:
Purchase details of a bill can be captured in the ‘Purchase Details’ tab. To invoke this screen, in the ‘Bills and Collections - Contract Input - Detailed’ Screen, click the ‘Purchase Details’ tab.
Note
The packing credit subsystem is available through the BC Contract Online screen.
You can link pre-shipment loans availed by exporters such that they be adjusted against outgoing Bills, Discounting of Bills or Purchase of Bills .The system then liquidates the loan and credits only the remaining proceeds to the exporter's settlement account.
You can also allow CL accounts linkages and purchase details only for export bills i.e. for product of type ‘E’. Further you can link CL accounts using the ‘Packing Credit’ subsystem during the following events:
You can also select the ‘Packing Credit Product’ check box under ‘Account Preferences’ in the CL Product Preferences Screen to allow linking with bills. CL account creation also involves the packing credit field, the value of defaults from the one maintained at CL Products.
Note
The system throws an error if you enter purchase details for events other than Purchase (BPUR), Discount (BDIS), Liquidation of Purchase and Discount (LPUR and LDIS), Liquidation (LIQD) and ‘INIT’ in BC when the initial operation are ‘PURCHASE’, ‘DISCOUNT’ or ‘NEGOTIATION’ only.
You can attach a CL to multiple bills such loan to the bill linking is possible only during the final stages. You can modify a linked CL account only in attached corresponding events before saving, Post authorization de-linking or modifications are not possible at any stage of the contract.
Liquidation of an attached CL during a corresponding event is possible either to the extent of the purchase amount (in case of purchase and discount) or the liquidation amount (in case of liquidation of bill) while the amount in excess is credited to the customer.
You can attach the same CL that is linked to BPUR and BDIS events for liquidation to LPUR and LDIS events if the outstanding CL amount is not zero. You can also attach another active and authorized CL account having a non-zero outstanding amount to another bill belonging to the same customer, Such CL accounts are not enabled for auto liquidation or attached to any other bill. You cannot validate a CL Contracts and Bills against their creation dates.
The following amount tags are available in this module.
Module |
Amount Tag |
Description |
BC |
LOAN_LIQD_AMT |
Loan liquidated amount |
BC |
AMT_PURCHASED |
Amount tag used during customer CASA credit |
BC |
COLL_LIQ_AMT |
Amount tag used for Nostro debit to be credited to the customer |
BC |
COLL_LIQ_AMTEQ |
Amount tag used for credit to the customer. |
Purchase Amount
Specify the value of the Bill purchased. Partial purchases are allowed where the amount tag ‘AMT_PURCHASED‘ indicates the amount used for the purchase.
Note
For multi tenor bills, the system defaults the sum of total discounted amount from multi-tenor tab.
Unlinked FX Rate
Specify the unlinked FX rate. This is the rate at which the system liquidates an LCY Loan utilizing a part purchase amount to which no FX is attached.
Effective Purchase or Liquidation Rate
This rate is defaulted by the Oracle FLEXCUBE system if FX is linked to BC. You can use this rate to liquidate a CL in the LCY of that branch. The Oracle FLEXCUBE system finally arrives at the Effective Purchase /Liquidation rate by using the method of weighted averages. The FX sequence used for arriving at the Effective FX rate remains in the sequence used while initially attaching the same.
Let us assume the existence of three FX deals Fx1, Fx2 and Fx3.
Fx contract 1 USD/INR @ 50 for USD 200
Fx contract 2 USD/INR@49 for USD 200
Fx contract 3 USD/INR@48 for USD 200
In case of a purchase of say USD 600, the effective exchange rate would be calculated as:
Effective exchange rate = ((200*50+200*49+200*48))/600 = 49
Therefore in case of a LCY loan where INR is the local currency of the branch, the CL loan will get liquidated during purchase at the rate of 49 per USD/INR. The liquidation of this purchase, negotiation or discount (LPUR or LDIS or LIQD event of INIT), is also completed at the same exchange rate, where the’ INIT’ event is triggered by the liquidation operation,
Effective Collection Liquidation Rate
This rate is also defaulted if FX is linked to BC and is applied in case of liquidation of CL when it is in the LCY of the branch. The liquidation event of the bills (LPUR, LDIS and LIQD events) are triggered during subsequent to the initial operations of bill purchase, discount, negotiation or normal liquidation events during the life cycle of the BC if a loan is attached. The effective collection liquidation rate is arrived at by the weighted average method discussed in the example of effective purchase or liquidation rate mentioned above.
Multi Tenor details of a bill can be captured in the ‘Multi Tenor’ tab. To invoke this screen, in the ‘Bills and Collections - Contract Input - Detailed’ Screen, click the ‘Multi Tenor’ tab.
You can maintain the following multi tenor parameters here:
Serial Number
Serial number for each split is incrementally defaulted here.
Base Date
Specify base date of the split from the adjoining calendar. You can modify the base date even after first authorization.
Base Date Code
Specify a valid base date code which provides additional information for the maturity period, from the adjoining option list.
Value Date
Specify value date of the split from the adjoining calendar. You can modify the value date even after first authorization.
Note
Value date for all the splits should be the same.
Tenor
Specify tenor of the split in days. You can modify tenor days even after first authorization.
Transit Days
Specify transit days of the split. You can modify transit days even after first authorization.
Maturity Date
Specify maturity date of the split from the adjoining calendar. You can modify the maturity date even after first authorization.
Maturity date is calculated as the sum of Base Date + Tenor + Transit Days for each split.
Note
Tenor entered across multiple splits must be unique. The system will not allow saving of multi tenor bill with more than one split having the same maturity date
While liquidating multi tenor contracts, the system liquidates the splits of different tenors in the ascending order of their maturity dates.
Split Percentage
Specify percentage of the split you need to use to calculate the Bill Amount.
Note
If the bill amount is directly entered and the split % is not maintained, then the system will not compute split % by default.
If both the split % and bill amount are maintained, then the system recalculates the bill amount based on the split % maintained.
Bill Amount
System calculates and displays the bill amount of the bill based on the split % maintained; however, you can directly specify bill amount, if needed.
Note
If you specify bill amount and split % is already maintained, then the system recalculates the bill amount based on the split % maintained.
Discount Amount
Specify discount amount of the bill discounted by the bank, if a multi tenor contract operation is maintained as ‘Discount’ directly or when the multi tenor contract operation is changed from ‘Collection’ or ‘Acceptance’ to ‘Discount’ due to amendment. You can specify the discount amount for each split; however, it is mandatory to specify at least for a single split.
Rebate Amount
Specify amount which you need to reduce as a rebate from the split amount, during amendment of the bill.
Note
You can either decrease or increase bill amount at the initial stage; however, at the final stage you can only decrease the bill amount and is treated as ‘Rebate’ given to the customer.
Exchange Rate
Specify exchange rate for each split, if the operation ‘Discount’ or ‘Negotiation’ and the bill currency is different from the local currency.
Note
The weighted average of the exchange rate maintained for all the splits is considered while financing.
Discounted Amount
Total amount discounted for each split is defaulted here.
Liquidation Amount
Specify liquidation amount for each split you need to liquidate.
Note
During liquidation, if the liquidation amount is not maintained for any of the splits, then the system displays an error message.
Liquidated Amount
Total amount liquidated till date for the split is displayed here, for each split.
From Calculation Date
Specify date from when you need to compute interest for the split.
System validates the date to be later than the value date of the split. If it is earlier, then the system displays an error message. If the date is not entered, then the system defaults the value date of the split here.
You can specify the date even when the operation is changed to ‘Discount’. System validates the date to be later than the application date of the split. If it is earlier then the system displays an override message. If the date is not entered, then the system defaults the application date of the split here.
To Calculation Date
Specify date till when you need to compute interest for the split.
System validates the date to be earlier than the maturity date of the split. If it is later, then the system displays an error message. If the date is not entered, then the system defaults the maturity date of the split here.
User Defined Status
Specify contract status of the split for each split. The option list displays all valid statuses of the split. Select the appropriate one. However; if it is a new action, then the system defaults the status as ‘NORM’.
Status can be different for each split as the due date is different. The worst status is updated in ‘Details’ section of the contact.
Status as of Date
Status of the split as of date is displayed here and is updated when the status changes. If the action is new, then it is defaulted with value date of the split.
Note
When an auto status change batch is run and the status of a split in multi tenor bill is prior to the status manually updated in the ‘Details’ tab, then the system considers the status of the bill for GL movement.
Under Protest
Check this box if you need to generate ‘PROTEST_NONPAY’ advice for a split.
If this check box is checked, then while generating the advice the system will provide the split bill amount and not the total bill amount.
Protest Date
Specify date when the protest was generated.
As the values maintained in Multi Tenor tab are not applicable for other tabs, the system defaults and validates the following values maintained for multi tenor bills in Multi Tenor tab when a Bill is saved:
Note
You will not be able to amend these fields later.
You can view the BC contract using ‘Bills and Collections - Contract Input - Summary’ screen. To invoke this screen, type ‘BCSTRONL’ in the field at the top right corner of the Application tool bar and click the adjoining arrow button.
You can click ‘Search’ button to view all the pending functions. However, you can to filter your search based on any of the following criteria:
Authorization Status
Select the authorization status of the contract from the drop-down list.
Contract Ref No
Select the contract reference number from the option list.
Product
Select the product code from the option list.
Branch
Specify the branch code on which you want to query for contract details, from the adjoining option list. This list displays all valid branch codes maintained in the system. You can select the appropriate one.
Contract Status
Select the status of the contract for which you want to check the pending function from the drop-down list.
User Reference
Select the contract amount from the option list.
Counterparty
Select the contract amount from the option list.
When you click ‘Search’ button the records matching the specified search criteria are displayed. For each record fetched by the system based on your query criteria, the following details are displayed:
Click ‘Advanced Search’ to display the screen below:
You can query a contract based on any of the following details:
This section contains the following topics:
Operations on multi tenor bills are similar to those on the normal bills; however with minimal changes as listed below:
Discount
When an operation on a multi tenor is maintained as ‘Discount’, the system discounts the amount for those splits with a tenor greater than zero. Splits can be discounted either partially or fully. The system updates the ‘Purchase Amount’ in the ‘Purchase Details’ tab with the sum total of discount amount maintained for all the splits.
Negotiation
The system will not allow negotiation of a bill for partial amount. Also, for a cross currency bill exchange rate has to be maintained for each split and the system considers weighted average rate as the exchange rate average rate.
Liquidation
The system provides an option to maintain liquidation amount for single split or multiple splits. The system also allows partial liquidation of each split and updates the ‘Liquidation Amount with the sum total of the amount liquidated till date.
If ‘Liquidate using Collateral’ check box is checked, then the system utilizes the collateral while processing the first liquidation. However; if the collateral amount is more than the first splits liquidation amount, then the system adjusts the balance towards subsequent splits.
If ‘Advance by Loan’ check box is checked, then the system liquidates one or more splits and creates a loan to the extent of liquidated amount.
Partial auto-liquidation of a multi tenor is enabled, that is, liquidation of only a portion of Bill Amount that falls due for the day.
Note
When an operation is changed from acceptance to advance automatically, the system processes the contracts for which the latest maturity date of the splits in a multi tenor contract is less than or equal to the application date.
The system processes interest components assigned to the respective event as below:
Interest Liquidation, Interest Accrual & OD Accrual
Floating Type of Interest
Effective Interest Rate & Discount Accrual
If an Interest component is marked as discount, then the system calculates the effective interest rate and the daily discount accrual based on the intermediate cash flows for different tenors and amount dues.
After a multi tenor contract is authorized for the first time, addition and deletion of splits is disabled. However; Bill amount of the Multi Tenor Bills can be amended at the initial stage using Bills Online Screen. Also, you can amend rebate amount at the split level at the final stage.
To amend bill amount, the changed amount needs to be entered at each split level. Then the system defaults this amount as the bill amount in the main tab. When a contract is saved, the system reduces Bill Amount of the contract and the respective split by the Rebate Amount. Rebate on a split bill amount is collected from the customer’s account, if it is processed on a discounted or negotiated portion.
After an amendment is saved, the system validates for the changed split amount of each split to be lesser than the liquidated amount of the split. If so, then the system will display an error message.
If ‘Recovery Interest Rate’ or ‘Recovery Rate Code’ is specified at the contract level and there is a Rebate on Split Bill Amount, then the interest is refunded or recollected for each split.
When an MT202 is received with an amount lesser than the due amount of the split with earlier maturity date and if the amount is more than the tolerance level, then the system moves the message to ‘Pending Liquidation’ status.
When an MT202 is received with an amount greater than the due amount of the split, then the system adjusts the remaining amount towards the subsequent splits.
When an MT430 is received for a Multi Tenor contract, the message will be logged as repair contract with the following repair reason:
Multi Tenor contract. This message has to be processed manually.
Oracle FLEXCUBE has the facility to create a loan for sight Import bills before maturity on the manual liquidation by creating a loan automatically with liquidating bill. You can change the interest calculation on this bill from the date of creation of loan. In this case, the penalty is calculated after 30 days of creation of loan. Also, system allows liquidation of back dated bill for sight Export bill as well.
You can liquidate the back valued sight Export/Import bill in the ‘Bills and Collection Contract Detailed’ screen. You can specify the same date as the Debit Value Date and Credit Value date. System posts the accounting entries on the value dates mentioned in these fields. In Import Bill, if you check the ‘Advance by loan’ option, a loan will be created as of the Application date.
Select the Loan product and the Suspense General Ledger at the ‘Bills and Collections Product – Preferences’ screen. System creates the loan account and liquidates the bill contract. System creates the loan as of the date mentioned under ‘Dr Value date’.
For further details on the ‘Bills and Collections Product – Preferences’ screen, refer the ‘Specifying Preferences for a product’ section in the ‘Defining Attributes of a Bills and Collection Product’ chapter in this User Manual.
The interest start for the loan will be the loan creation date. Interest start date will not be few days prior or later than the loan creation date. For calculating the penalty on the loan after specific number of days of the loan creation irrespective of the interest start date, the following actions takes place:
For example, a loan product CLBC has been created with the below UDEs:
PENAL_START_DAYS |
PENAL_INT1 |
30 |
5 (Percent) |
On 10-Jan-2010, a bill is created with Advance by Loan option checked. At the Bill product level, the Loan Product CLBC has been maintained and hence it is defaulted at the contract level. The UDE IDs, PENAL_START_DAYS & PENAL_INT1 is defaulted along with the values, 30 & 5 respectively under Loans sub-screen in the Bill Contract.
While creating the Loan contract for the Penal Interest, PENAL_INT1, system inserts a row as below:
Component |
Effective Date |
Rate |
PENAL_INT1 |
9-Feb-2010 |
5 (Percent) |
Effective from 9-Feb-10 (after 30 days of Loan creation), the Penal Interest will start calculating at 5 %.
The system will calculate the penalty based on the loan creation date. That is, even if the value date is different from the loan creation date, the penalty will be calculated after the expiry of the penal start days counted from the date of creation of the loan. You can manually change the number of penal value days in order to start applying the penalty from a different date. The following example illustrates it.
For example, consider a bill with the following particulars:
Particulars |
Value |
Bill Amount |
GBP 10000 |
Value Date |
01-Aug-2010 |
Maturity Date |
31-Aug-2010 |
Loan Creation Date/Liquidation Date |
31-Aug-2010 |
Dr. Value Date |
25-Aug-2010 |
Loan Value Date |
25-Aug-2010 |
Penal Start Days |
30 Days |
In this case, the system will calculate the penal interest from 30-Sep-2010. This date is derived by adding 30 penal start days to the loan creation date of 31-Aug-2010.
You can change the penal interest start date by manually changing the number of penal start days. That is, in the above case, you can set the penal start days as 24 and as a result, the effective date for the penalty will be set to 24-Sep-2010.
When the Import/Export Bill is liquidated with back value date, the Interest is adjusted accordingly as below:
A new Amount tag, REFUND_INTEREST will be introduced
When the Interest Component is defined, the amount tag REFUND_INTEREST is automatically created as <Component>_DECR. This is used to park the refund amount during the intermediate partial liquidations.