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    TRM Loan Interest

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    Ghosh2
    This document discusses the steps to set up accounting for term loans in SAP, including interest calculation and repayment. It outlines creating the loan product, assigning transaction types, defining update types, linking the product to accounting components, determining accounts, and configuring valuation areas. This will generate the proper accounting entries for disbursing the loan, paying interest, fees, and the final repayment to correctly track the loan transactions.

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    TRM Loan Interest

    Uploaded by

    Ghosh2
    85 views6 pages
    This document discusses the steps to set up accounting for term loans in SAP, including interest calculation and repayment. It outlines creating the loan product, assigning transaction types, defining update types, linking the product to accounting components, determining accounts, and configuring valuation areas. This will generate the proper accounting entries for disbursing the loan, paying interest, fees, and the final repayment to correctly track the loan transactions.

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    This document discusses the steps to set up accounting for term loans in SAP, including interest calculation and repayment. It outlines creating the loan product, assigning transaction types, defining update types, linking the product to accounting components, determining accounts, and configuring valuation areas. This will generate the proper accounting entries for disbursing the loan, paying interest, fees, and the final repayment to correctly track the loan transactions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    85 views6 pages

    TRM Loan Interest

    Uploaded by

    Ghosh2
    This document discusses the steps to set up accounting for term loans in SAP, including interest calculation and repayment. It outlines creating the loan product, assigning transaction types, defining update types, linking the product to accounting components, determining accounts, and configuring valuation areas. This will generate the proper accounting entries for disbursing the loan, paying interest, fees, and the final repayment to correctly track the loan transactions.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 6

    Scenario : Term Loan , Interest Calculation and Final Repayment

    1.While receiving the loan (Facility)


    Bank A/C. Dr xxxxx
    Long term Loan A/C. Cr xxxxx
    2.Disbursement (Int Rt Instrmt)
    Bank A/C. Dr xxxxx
    Long term Loan A/C. Cr xxxxx
    3.Commission/Charges/other exp
    Charges/Commission A/C. Dr xxxx
    Bank A/C. Cr xxxx
    4.paying monthly interest to bank
    Interest A/C . Dr xxxx
    Bank A/C. Cr xxxx
    5.Final Repayment
    Long term Loan A/C. Dr xxxx
    Bank A/C.Cr xxxx

    There are 2 option .

     Create Facility as Loan , Bilateral in Product type


     Directly Create Loan as product type – e.g. 55 A

    In product type under money market area Fascility is created as Bilateral where Loan amount is
    recorded along with processing charges.

    Say for example business needs Rs 200,000 . he enter fascility as Bilateral – Rs 200,000.
    But initially he consume Rs100,000. So there user can have clear visibility of Credit line. By creating 2
    fascility in product type user can have different level of evaluation. By assigning different structure
    characteristics, various forms of transactions can be predefined.
    Or else create loan / borrowings as single fascility and directly enter the full loan amount, interest
    rate and other charges.

    I used both the option. 561 – Bilateral Fascility , 563 – Borrowings

    Step 2 - Assign Condition type to transaction type.

    In this section transaction type for Final Repayment, Interest Repayment, and if required Installment
    payment is assigned for applicable product type. In this case I used against 563 – Borowings

    Step 3 : Define New Update type and Assignment of business flow type to update type.

    Here additionally update type for Processing Fee , Commission and Other Charges ( as applicable)
    are created to update the Processing charges to Loan transactions

    Assign flow type to update type : Loan , Money Market assigned to update type Loan Repayment,
    Interest Charges, Commission & Other Charges , Accrual Interest

    Step 4 : General Settings > Accounting > Link to Accounting component

    Create Accounting Assignment unique for your facility : 5610 – Fascility , 5630 – Term Loan

    Step 5 : General Settings > Accounting > Link to Accounting component > Define Accounting
    Assignment Reference Determination

    Create Derivation Rule where all applicable product type ( 561, 563, 55A,56A ) is added along with
    respective valuation class.

    Step 6 : General Settings > Accounting > Link to Accounting component > Allocate Additional
    Accounting Assignment Reference to Account Assignment Reference

    Here cost centre is assigned based on the corresponding company code NU00 and account
    assignment reference.

    Step 7 : General Settings > Accounting > Link to Accounting component > Account Determination

    Step 8: For setting up Valuation area, Accounting Code and Valuation Class for Operating and
    Parallel Valuation area . we need to do the following settings :
    Previously the setting was the following which was producing the following loan accounting
    transactions : Account Determination
    After :

    Since multiple valuation areas ( 001, N02, N03) Account determination will also be updated
    accordingly. Here for Valuation area 001 foll0wing settings are done.
    Following Loan Accounting entries generated for Loan taken with Quarterly Interest Payment basis

    If we use separate facility ( 56A) then accounting transactions will also be updated against fascility
    5610 , 56A

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