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.