2.25.10 Automatic Status Changes

A placement that is yet to reach a repayment date, or on which repayments are being made regularly, is considered as having a ‘Active’ status. When a repayment is not done on the schedule date, the user may want to do aging analysis for the placement.

If the user has specified status and indicate that they be changed automatically, then the status change is done during BOD processing on the day the aging is due.

The user can do aging analysis by changing the status of a placement on which payment(s) are defaulted. At any time, the user can generate reports of deals, with details of aging, to facilitate the follow up process for repayment.

• Active - This is when repayments on a placement are done as per schedule.
• Past Due Obligation (PDO) - This is when repayments on a placement have been stopped but the accruals on the accruable components are still being done (There is still a chance of repayment of the deal).
• Non-accrual basis (NAB) - When the placement acquires this status all accruals for the placement are stopped (The chances of repayment diminish further).
• Write-off (WRO) - This is when the placement is written off and all accrual entries are reversed.

The user want a placement under this product to move from status to status in the order in which they are mentioned here. For such a condition, the user can indicate the number of days after which each component must move to the status being defined (these can differ for a maturity schedule and an interim schedule).

According to the number of days of default defined for each component, a placement will first be moved to PDO from Active status, then to NAB and lastly to WRO status.

The user can also indicate the change of GL if any when a component comes to a particular status, and the messages to be generated at each status change.

A ‘forward’ status change is one in which the status changes from one to the next. In our example, the movement from Active to PDO, PDO to NAB and NAB to Write Off are all forward changes. A ‘reverse’ status change is one in which the status changes from one to the previous. Such a situation arises when a payment is made on a placement with a status other than Active.

If the user specify that reverse changes have to be carried out automatically, the status will be changed when a payment is made on a placement with a status other than Active. If the user specify that reverse changes should not be automatic; the status remains unchanged even if a repayment is made on the placement. The status has to be changed by the user through the Contract Processing function. A reverse change may also become necessary when the number of days of default is increased for a product.

If the user specify that forward changes or reverse changes have to be carried out automatically, the status changes will be carried out by the Automatic Contract Update function when it is run either during Beginning of Day processes on the day the change falls due.

If the day on which the forward or reverse status change is due happens to be a holiday, then, the processing depends upon your specifications in the Branch Parameters screen.

• If the user has specified that processing has to be done today (the last working day before the holiday) for automatic events right up to the day before the next working day, the events falling on the holiday will be processed during end of day on the last working day before the holiday.