Fee Accrual for Prepaid Fees
The frequency of the accrual can be either Daily or Month End.
Supported fee accrual methods
Straight line method
The Straight line method calculation is a simple division of the total prepaid fee to be accrued by the total number of terms to be spread over.
Example:
| Fee to be Accrued | Accrual Terms | Fee Accrued per Term |
|---|---|---|
| 100 | 20 | 100/20=5 |
IRR method
In IRR method the fee accrued over the terms is not equal and depends on the interest for the period, and the interest accrued per term.
Example:
| Terms | Total Fee Accrued | Interest for the Period | Interest Accrued | Fee Accrued per Term |
|---|---|---|---|---|
| Term 1 | 100 | 150 | 80 | (80/150)*100 |
| Term 2 | 70 | (70/150)*100 |
Configuring fee accrual
To accrue a fee, you must associate it with a product and specify the method to accrue it.
These settings can be overridden at the contract level.
At the contract level you can specify additional parameters, such as Accrual Terms- the number of terms for which the fee should be accrued. This option works only with Straight Line method of accrual.
User interface reference
Steps to configure a fee accrual
- Log in to your Salesforce account.
- Click Lending Products.
- Go to View/Edit Lending Products.
- In the Product Pre-PaidFees section, click New Product Pre-Paid fee.
- On the New Product Pre-Paid fee page, fill in the details as described in the table below, and then click Save.
| Field | Description |
|---|---|
| Fee | The fee that you want to associate with this lending product. |
| Lending Product | The lending product with which you want to associate this fee. |
| Add Fee to Loan Amount | With this check box selected, this fee is included in the loan amount. |
| Enabled | With this check box selected, this fee is active is copied to the new contracts associated with this lending product. |
| Frequency | The accrual frequency. It can be daily or monthly. |
| Accrual Required | With this check box selected, this fee is accrued. |
| Accrual Method | The accrual method. |
Viewing the fee accrual stream
Use the View Stream button to view the detailed schedule of the fee accrued for a contract.
Example:
An Example of Fee Accrual Stream:
