Generate Lease Pricing Manually

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Generate Lease Pricing Manually

Pricing is the process of defining the value that a lessor will receive from a business entity in the exchange for the products and services that they offer. In Q2 Origination, you can generate the lease pricing using the rate cards or can calculate it manually based on the configured fees and the pricing parameters such as standard yield, additional yields, financed amount, taxation amount, and more.

Here is how to go about generating lease pricing manually in Q2 Origination.

Configure Fees

If you want to consider fees to calculate lease pricing, first, you need to configure fees to be added to a lease application. 

On the Lease Pricing page, the Fees option displays the fees (with Event Type : 'Lease Origination' only) that are associated with the product type for which the lease application is created. The details of the displayed fees can be modified, and also new fees can be added. After the pricing is generated, its details in terms of the payment amount and the payment frequency are displayed on the Payment Schedule page.

You can associate a fee to an asset class so that it is easy to record income or expense-related additional cash flows, which are linked to the equipment to be leased.

You can capture payment details against income and expense fees. This helps the system to disburse the income and expense payments of fees to third parties such as vendors, dealers, suppliers, or brokers, which is based on different kinds of fees defined in the system.

Prerequisites

Before adding or editing a fee, ensure that the following prerequisites are met:

  • The fee type is defined.

Note:

To know how to create new fees, see  Create a Fee Definition in Q2 Origination Administration Guide.

  • A fee set is created.

Note:

To know how to create a new fee set, see Create a Fee Set in Q2 Origination Administration Guide.

  • The fee type is associated with the fee set.

Note:

To know how to assign fees type to fees set, see Fee Set Assignment in Q2 Origination Administration Guide.

  • The fee set is associated with the product.

Note:

To know how to associate fees set with a product, see Assign Fee Set to a Lease Product in Q2 Origination Administration Guide.

  • The fee type is associated with the yield definition.

Note:

To know how toassociate a fee with yield definition, seeAssociate Fee with Yield Definition steps in Lease Pricing using Non-Standard Yields.

Steps

To add or edit a fee:

  1. Log in to your Salesforce account.

  2. Go to (App Launcher) > Applications.

  3. On the  Applications tab, select the required application ID.

  4.  Go to More> Lease Pricing > Fees.


  5. To create a new fee, select Create Fee.

    The list of preconfigured Fee Definitions is displayed.


  6. Select the required Fee Definition Nameand then select Apply Charge.


  7. In the Confirm section, perform the following and then select Save:


    Field Name Action and Information
    Frequency

    Select one of the following frequencies of payments:

    • One-Time
    • Daily
    • Weekly
    • Monthly
    • Yearly
    No of Payment

    Specify the number of fee payments expected at the selected frequency.
    For example, 12*Monthly payments, 4*Quarterly Payments, or 2*Half Yearly Payments.

    Note:

    This field cannot be edited if the Frequency = One-Time.

    Original Amount
    DateThe start date from which this fee is charged.
    Type

    The type of the fee. This is a display-only field.
    For example, Amortized Fees, Maintenance Fees, and so on.

    Taxable

    Select this checkbox if the fee is taxable.

    Include in DuesSelect this checkbox to include the fees in dues and to display them along with the rent.
    Note:

    This checkbox can be enabled for fees with a frequency other than ONE-TIME.  If this checkbox is selected, the fee is displayed under Payment Schedule (Fee).

    Capitalize

    All the fees that have this checkbox enabled are added to the financed amount.

    Note:

    This checkbox can be enabled only for One-Time fees. If this checkbox is selected, the fee amount is displayed under Pricing (Fees Amount).

    Include in APRSelect this checkbox to include the fees in calculating the Annual Percentage Rate (APR).
    Equipment

    Select the equipment to be associated with a fee.

    This helps to record the income or expense-related fees.

  8. To delete a fee, on the Lease Pricing > Fees page, select (Delete Fee) for the required fee row.

  9. To edit a fee, on the Lease Pricing > Fees page, select  (Edit record details) for the required fee row.


    1. Add Payment Details - This section captures the payable details against the expense fee such that the amount and the disbursement date against all the vendors are recorded in the lease contract.

      1. Select Add Payment Details.


      2. Provide the details as described in the following table, and then select Save:

        Field Name Action and Information
        Pay ToSelect the vendor account to which the payment is made.
        Payment %Specify the percentage at which a payment amount is to be made.
        Disbursement DateSpecify the disbursement date of the payment amount.
        Due DaySpecify the date on which you want the next bill to be generated.
        Disbursement FrequencySelect one of the following disbursement frequencies of the payment:
        • One-Time
        • Daily
        • Weekly
        • Monthly
        • Yearly
        Number of DisbursementsSpecify the number of payments that must be made, this is the payment amount out of the fee amount.
        For example, 12*Monthly payments, 4*Quarterly payments, or 2*Half Yearly payments.
        Note:

        Once the payment details are added, you can edit the required details.

    2. In the Fee Details section, make the required changes, and then select Save. 

Calculate Pricing

The Pricing option allows you to calculate the lease pricing manually based on various parameters such as the fees, financed amount, standard yield, additional yields, tax amount, and more. With the Mercury release, you can also calculate the individual values of the following:

  • Yield

  • Payment Amount

  • Financed Amount 

Advance Payment Details

Advance payment is a common business scenario in which the lessee would like to do some part of the lease payment at the beginning of each payment period. 

When a lease contract is signed, the number of payments to be paid in advance can be zero, one, two, three, or more but should not exceed the contract term. For example, the rental payment for a lease contract is $500 and there are two advance rentals to be paid at the beginning of the contract. So at the time of initiation of the lease contract, the lessee needs to pay $1,000 (2*$500) to the lessor.

With the Platinum release, there is a provision to define payment structure with advance payment details. So that the system calculates the advance payment amount and number of remaining payments based on the defined number of advance payments.

Steps

To calculate the lease pricing for an application:

  1. Log in to your Salesforce account.

  2. Go to (App Launcher) > Applications.

  3. On the  Applications tab, select the required application ID.

  4.  Go to More> Lease Pricing > Pricing.

    The values are prepopulated from the Equipmentand Lease tabs.

    Note:

    By default, the system displays Number of Advance Payments = 1, Number of Remaining Payments = 11 (If the Term = 12), and Advance Payment Amount = 0.

    If you want to update the Advance Payment details, perform the following:

    1. In the Payment Term section, select Edit.

    2. Specify the Number of Advance Payments, optionally, you can specify the Number of Remaining Payments.
      When you Solve For Payment Amount, the system calculates the Advance Payment Amount based on the specified Number of Advance Payments.

    3. Select Save.

    These fields are available only when the  Payment in Arrears = FALSE.

  5. In the Payment Term section, select Pricing Calculator.


  6. In the Solve For window, select one of the following options from the Solve For list:

    • Yield

    • Payment Amount

    • Financed Amount

  7. Select Calculate.

    The Payment Schedule page is updated with the payment schedule based on the values of the pricing parameters that you have specified:

    • If you have selected the Yield option, the standard yield and additional yields are calculated.

      Note:

      To know how to calculate yield using non-standard yields, see Lease Pricing using Non-Standard Yields.

    • If you have selected the Payment Amount option, the payment amount and the specified yields are calculated.

      Note:

      To know how to calculate payment amount using seasonal payments, see Lease Pricing using Seasonal Payment.

    • If you have selected the Financed Amount option, the financed amount and specified yields are calculated.

      Note:

      • The Financed Amount must be calculated before adding an asset. If it is calculated after adding an asset, the system displays the following error message:
        "The Financed Amount has already been calculated."

      • The APR can be calculated after the Yield, or the Payment Amount is calculated.

  8. To generate the amortization schedule of an application:

    1. Create the lease application of the type FinanceLease.

    2. Select the Generate Amortization Schedule checkbox for the selected CL Product.

    3. Calculate lease pricing.

      The Payment Schedule page displays the generated amortization schedule.

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