Defining fractionalization parameters
Fractionalization parameters define how all the branches of the company fund loan contracts and manage investors.
For example, lenders may levy a service fee on the investors for managing their portfolio of investments and repayments. This fee amount is deducted from the funds that are paid out to investors based on the borrower repayment. In addition, a lender may also choose to tax the investors' returns less any fees charged to them.
You can define such settings as part of the fractionalization parameters.
Prerequisites
The following is the prerequisite to defining fractionalization parameters:
- Fractionalization is enabled for the org.
Steps
Perform the following steps to manage the custom settings for fractionalization:
Log in to your Salesforce account.
Click your Username.
Click Setup.
Click Build, Develop.
Select Custom Settings.
Go to Fractionalization Parameters.
Click Manage.
The Fractionalization Parameters page is displayed.
Click New to define the fractionalization parameters.
Define the default service collection parameters:
Select the Collect Service Fees on Fees checkbox if service fee is deducted from the amounts appropriated towards fees and charges applicable on the loan contract, from the share paid to the investor.
Select the Collect Service Fees on Interest checkbox if service fee is deducted from the interest amount, from the share paid to the investor.
Select the Collect Service Fees on Principal checkbox if service fee is deducted from the principal amount, from the share paid to the investor.
Note:Service fee is deducted based on the service rate defined at the investment order, investor, or lending product level.
Specify the Investor Payout Job Batch Size. This indicates the number of loan payment transactions for loans having investors, processed in a single batch for investor payout.
Specify the IO IntAccrual Job Batch Size. This indicates the number of investment orders to be processed in a single batch for accruing interest.
Select Manual Investor Payment Release checkbox to release payments to investors manually.
Select Withhold Tax on Income Less Service Fees checkbox if you plan to deduct applicable taxes on the investor's income (interest and fee income), less the service fees charged to investor.
Specify the Investor Tax Provider. This is the Apex class that provides the method for calculating tax and VAT for the investor.
Specify the Default Service Rate. This is the service rate charged on an investment order.
Click Save to save the fractionalization parameters.
Field reference
| Field | Description |
|---|---|
| Collect Service Fees on Fees | indicates if service fee is deducted from the amounts appropriated towards fees and charges applicable on the loan contract, from the share paid to the investor. |
| Collect Service Fees on Interest | indicates if service fee is deducted from the interest amount, from the share paid to the investor. |
| Collect Service Fees on Principal | indicates if service fee is deducted from the principal amount , from the share paid to the investor. |
| Collect Service Fee on Total Payment | Deprecated in CL Loan 1.2005 and later releases. |
| Default Service Rate | This is the service rate charged on an investment order if no service rate is specified at the investment order or investor level. |
| Investor Payout Job Batch Size | The number of loan payment transactions for loans having investors, which are processed in a single batch for investor payout. The batch job can include transactions from multiple loan contracts. Keep this number low to handle situations where there are multiple investment orders per loan. |
| Investor Tax Provider | The Apex class that provides the method for calculating tax and VAT for the investor. This class must implement the loan.IInvestorTaxProvidable interface for the CL Loan to call it. |
IO IntAccrual Job Batch Size | The number of investment orders to be processed in a single batch for accruing interest. The batch job can include investment orders from multiple loan contracts. You must keep this number low, if there are large number of Investment orders. If a batch fails for any reason, fewer investment orders are impacted if the batch size is small. |
| Manual Investor Payment Release | Indicates if payments are released to investors manually. Manual payment is done using the Release Payment button on the investor account page. Such payments are not added to the investor's available funds for reinvestment unless you select the Reinvest Principal and Reinvest Interest checkboxes in the investor account page. |
| Withhold Tax on Income Less Service Fees | Select this checkbox to deduct applicable taxes on the investor's income (interest and or fee income), less the service fees charged to investor. If you deselect this checkbox, tax is withheld on the investor's entire income (before deducting the service fee). |
Interest Payout Method | The method for calculating the interest component payable to the investor from the payment amount. Whole Interest: The total interest accrued by investor, which is calculated as per the certificate rate, up to the payment receipt date is paid out. Proportional Interest: The total interest accrued by investor, which is calculated as per the certificate rate, up to the bill date is paid out. If no value is specified, Whole Interest option is assumed. |