12. Liquidation of Receivable Components

Whenever you have to collect a component (typically for a commission or charge, or under certain circumstances the availment amount or the collateral amount), you debit it from the customer’s account. On some occasions, you may have to debit it from an internal receivable GL, to be debited from the customer account at a later date.

The debiting of the receivable account happens at the event for which the commission or charge has to be collected (issue of an Islamic LC, amendment of an Islamic LC, availment against an Islamic LC, etc.). When the customer account has to be debited at a later date, you have to perform, what is termed as receivable liquidation.

There are two related functions associated with liquidation:

This chapter contains the following sections:

12.1 Online Receivable/Payable Details

This section contains the following topics:

12.2 Maintaining Online Receivable/Payable Details

You can pass manual entries into LQ Module to maintain additional entries into AR/AP LQ Module in the ‘Receivable/Payable Online’ screen. You can invoke ‘Receivable/Payable Online’ screen by typing ‘LQDTRONL’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

For further details on generic attributes that you can define for liquidation of an LC contract, please refer the ‘Liquidation’ User Manual under Modularity.

12.2.1 Liquidating the Receivable Components of an Islamic LC

Once you enter the reference number of the Islamic LC in the Receivable Liquidation screen, the system automatically assigns a unique liquidation reference number to the component you are liquidating. Besides this, the following details of the Islamic LC are picked up and displayed:

You can specify the following details for the Liquidation:

The outstanding components of an Islamic LC are displayed for each event. To liquidate an outstanding component, choose Liquidate by clicking ‘Processing’ on the application tool bar.

After the liquidation of an outstanding component, if there are other outstanding components for the event, the system will inform you of them and prompt you to liquidate them as well.

12.2.2 Manual Liquidation of Receivable Components for the Islamic LC

In order to perform manual liquidation of transferable charge and/or commission components to an Islamic LC, invoke the ‘Islamic LC Deferred Liquidation’ screen.

You can invoke this screen by typing ‘LIDEPMNT’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

The outstanding commission and charge components can be liquidated using this manual liquidation screen.

During manual liquidation, you can opt to waive the receivable charge / commission amounts. No backdated value dates are allowed during manual liquidation of these components.

Reference Number

This displays the reference number of the Islamic LC being liquidated.

Contract Amount

This displays the total contract amount.

Contract Currency

This displays the currency of the contract.

Customer

This displays the customer information.

Value Date

The value date is defaulted to the application date and the same cannot be modified.

Total Paid

This displays the total amount to be paid against liquidation of the Islamic LC.

12.2.2.1 Specifying Payment Breakup Details

The total amount due for the commission and charge components till date is displayed by the system during payment as the payment breakup, inclusive of the details of each component.

Upon complete liquidation of the component, the system updates the status of the component from Receivable to Liquidated. The amount liquidated is also updated in the receivable component details.

The accounting entries maintained in ‘MLIQ’ event are passed for the amount paid.

12.2.2.2 Waiver of Components during Manual Liquidation of Islamic LC Charges

During manual liquidation of charges the system allows waiver of certain components. When the waiver option is selected, the system defaults the amount paid as the amount due and does not allow modification of the same for the component.

Upon waiver, the system marks the component in the Islamic LC as liquidated, internally. Waivers are processed in the system as a new event initiated along with the MLIQ event.

12.2.3 Specifying Details of the Advices for the Liquidation

The advices that can be generated for the events that occur during the life cycle of an Islamic LC are defined for the product involved in the Islamic LC. In this screen, you can specify the advices that should be generated to the parties concerned, indicating that you have liquidated a receivable component of the Islamic LC.

The details of two advices are shown in this screen:

The Charge Claim Advice will, be generated at EOD; on the day the receivable account is debited. This is the event for which a charge is attached or a commission liquidation event (Event Code CLIQ). Its details whether it was suppressed during the event, the medium through which it was transmitted and the date on which it was generated will be displayed. This is for information purposes only.

The Debit Advice is generated when the receivable components of the Islamic LC are liquidated. You can suppress the generation of the advice or change the media and priority when you are processing the liquidation.

Suppress

By default, all the advices defined for the product involved in the Islamic LC will be generated. If you do not want to generate a specific advice, you can suppress its generation by indicating so.

Priority

Priority applies to the advices that need to be sent, through media like S.W.I.F.T. or TELEX. By default, the priority of all advices is marked as normal. Advices can be prioritized to one of the following options:

Medium

It is mandatory to also specify the medium through which an advice is to be transmitted. An advice can be transmitted through Telex, Mail, S.W.I.F.T or any other media that you have defined in your branch. You can select the appropriate medium code from the option list.

In addition, the details for the Charge Commission Tracer are also displayed. This tracer is generated after the event has taken place till the component is liquidated. These details are for information only. They are defaulted from the product under which an Islamic LC is processed.

12.2.3.1 Accounting Entries Passed During Account Receivable Liquidation

The system passes the following accounting entries during account receivable liquidation when: