Booking The Principal Amount Using An Adjustment
When a loan service agreement is activated (i.e., when its status changes from pending start to active ), an adjustment is created to book the principal amount. If the customer takes out a loan of 10,000, the adjustment's financial transaction looks as follows:
Event
GL Accounting
Effect On Current Balance
Effect On Payoff Balance
Current Balance
Payoff Balance
Loan service agreement is activated (and an adjustment is created to book the principal)
Long Term Loan Receivable 10,000
Cash <10,000>
0
10,000
0
10,000
This adjustment is issued if:
• The service agreement's SA type indicates a special role of Loan.
• The loan service agreement's Total Amount to Bill contains an amount (i.e., the loan amount).
• The loan service agreement was created using a start option on Start/Stop Maintenance AND the start option references an adjustment type and this adjustment type has been set up as follows:
◦ The adjustment type's distribution code should reference the GL account to credit (e.g., Cash).
◦ The adjustment type's FT algorithm reference Payoff Amt = Adj Amt / Current Amt = 0 (booking principal only impacts a customer's payoff balance).
Note that because this financial transaction doesn't have a current amount (the customer doesn't actually owe a current amount yet), there is no need to book anything to the short-term receivables distribution code.