Hi Bharath, Thank you. I will create a Jira ticket so that community members can update the requirements there.
1. Cash-based For this, we can directly post the entry to income from interest GL Account Nazeer -> The problem is the upfront interest amount can't be posted directory to GL Account as I am not sure marking future installments interest paid is a good idea (at least with periodic accruals). So I am thinking of keeping the upfront interest on Liability GL account and keep on adding interest paid transaction(s) before installment due. I assume this works for 3 accounting scenarios. I haven't thought about interest recalculation config so far. 2. Accrual (Upfront) For this type We need to have a receivable account credited first and then would be moved to the Income GL account when the payment comes in Nazeer -> Same as above 3. Accrual (periodic) Since on the business side, the Income amount is being collected upfront I do not think it is correct to have interest accruals at the installment or at a periodic cut-off. but the system should accrue if any fees or penalties are introduced in the middle of the loan term. Nazeer -> Same as above On Thu, Jun 1, 2023 at 12:22 PM Bharath Gowda <bgo...@mifos.org> wrote: > Hi Nazeer, > > Good to hear from you and happy to see this feature being worked on. > Has a Fineract JIRA been created yet for the same? it will be helpful if > you could share the JIRA ticket with the flushed-out functional and > implementation details. > Curious to know more about what type of product configurations this would > be allowed and not allowed. as it would become more complex with daily > interest calculations and recalculations enabled. > > Here are my 2 cents on the accounting entry for the same > > 1. Cash-based > For this, we can directly post the entry to income from interest GL Account > > 2. Accrual (Upfront) > For this type > We need to have a receivable account credited first and then would be > moved to the Income GL account when the payment comes in > > 3. Accrual (periodic) > Since on the business side, the Income amount is being collected upfront I > do not think it is correct to have interest accruals at the installment or > at a periodic cut-off. > but the system should accrue if any fees or penalties are introduced in > the middle of the loan term. > > Anyone with experience in upfront interest loan products with > accrual-based accounting, feel free to correct me and share your thoughts > on the same. > > > > Regards, > Bharath > Lead Implementation Analyst | Mifos Initiative > Skype: live:cbharath4| Mobile: +91.7019635592 > http://mifos.org <http://facebook.com/mifos> > <http://www.twitter.com/mifos> > > > > On Thu, Jun 1, 2023 at 12:03 AM Nazeer Hussain Shaik < > nazeerhussain.sh...@gmail.com> wrote: > >> Hi all, >> >> Hope this email finds you well. We are planning to implement upfront >> interest collection for the loans for some of our business use cases. With >> respect to the following 3 accounting configurations, how to post the >> journal entries ? >> >> >> >> 1. Cash Based >> 2. Accrual (Up front) >> 3. Accrual (Periodic) >> >> >> Can we directly post the entry to income from interest GL Account? Or do >> we need to have some kind of liability GL account where upfront collected >> interest will be posted on this account initially and then moved to income >> from the interest account? >> >> And how the Periodic accrual entries should be posted (As periodic >> accrual entries will be accrued and posted per instalment)? >> >> >> Thanks, >> >> Nazeer >> >> SSA, CrediLinq >> >> https://www.credilinq.ai >> >> >>
