How to Configure and Utilize User Defined and Off-Loan Balances

Originally Aired: September 27, 2017

Description:
Robert Buskirk discusses the User Defined Balances and Off Loan Balances. These are configurable fields which allow lenders to hold loan balances and off loan balances. Robert will be going over how to configure and utilize these fields and go over what each feature allows lenders to track.

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Transcript

Hello everybody, this is Robert Buskirk with Nortridge Software. Today, we’re going to be covering the topics of user defined balances and off loan balances. Let’s begin.

First, I’m in the loan screen and I want to show you the different fields that we’re going to be configuring today. You can see on the left-hand side in the balance section on the loan record that was have this user defined total. You can also see that we have a red triangle in that little field, so we can click on that field and then we can see a more detailed version of what this field holds. What it holds is 10 user defined balances. They are currently unconfigured right now, so we can name some and then it will allow us to track certain balance separate from principle interest, deferred interest fees, or late charges. Typically, what I see in here is there would be some sort of custom fee that a lender will want to charge and have that fee be separate and distinct from the other fees that they charge on the loan which will likely fall into the fees categories. The other field that we’re going to be talking about is the off-loan balance fields and again we have a red triangle in the top left corner of the field which means we can click on that field and see the expanded view. Just like the user defined totals or balances we have some off-loan balances; just three of them and this is where we can track some balances that would not actually be part of the loan. So, let’s get to configuring these things.

I’m going to go into the setup area of the database. Expand loan setup and first I’m going to go into labels. This is where you can configure some of the user defined areas of the software. We’re not going to do anything with the statistic or loan groups, but we do want to configure one of our loan balances. We can see this dropdown; we have ten of our user defined balances and here’s those three off loan balances. We’ll select user defined 1 and we’ll put a label in for this type of balance that we want to track. I’m just going to call it custom fees and you can call it whatever you would like.

While we’re in here, I’m going to also give a label to our off-loan balance #1 and I’ll label that for the time being, I’ll call this, principle charge off amount. That’s how we’re going to configure the off-loan balance today. I’m going to click ok and restart.

Now that NLS is restarted, I’m going to go back into the loan screen and we’ll look at those areas that we were just talking about and we’ll see if our changes have taken effect. We can see custom fee has showed up and has replace user defined #1. If we go to off loan balance, we can see it says principle charge off amount. Just like any of these balance fields, the way that they get established in those fields is through a transaction code. Again, we’ll have to go into the setup, expand loan setup, and go down to the transaction code area. Here we’re going to build a custom transaction code. I’m going to pick the first available so 500 would be the first available transcode number that you can use for a customize transcode. I will call this, “sample custom fee.” I want to make this a billing so the user defined balances; since these are going to be balances on the loan, they would be more appropriate for a receivable type transaction; something that the borrower would be responsible for paying. Whenever you make a transaction that’s a receivable, you’ll be prompted to a payment once it’s done. What type of receivable is this transaction? We’ll say it’s a custom fee. What transaction code we’re going to use as the payment transaction? It’ll be the next available even number, 502. We’re not going to be talking about general ledger in this session, but you would link up the appreciate GL placeholders so when that transaction is executed, the correct GL account would be debited or credited for the respective loan group. So, what is the classification of this transaction? I’m going to specify this as a fee. This controls how that transaction code is going to appear on your reports. When we do the billing of this custom fee, we’re going to want to increase a loan balance and we’re going to increase user defined #1, the custom fee. No need to change any other loan balances so we’ll hit, next. Do we need to increase statistics? You might say we’re going to increase fees earned at this point of time. No vouchers need to be created for this transaction and no additional checkboxes will need to be checked. I’ll clicked finish and we’ll be prompted to enter that payment. We’ve already defaulted to a payment as the transaction type. We don’t need to do any GL for this session, but you would most likely want to enter the GL placeholders here. The classification would be a payment and this time we’re going to decrease UDF1. If we want to update statistics, we’ll then have a fee paid increased and we’re done with that transaction code.

Let’s look at what we’ve done in terms of the user defined balances. I’m going to go to the loan screen and query a loan that I have already added into the database. Here’s a loan that I have and what I’m going to do is go into transaction entry and execute our newly created transactions code. So, I’ll select the transaction type dropdown, select manual transaction, go to the transcode list; go to the bottom where we can find our sample customer fee billing, we’re going to create a billing; you can set when this billing will be due, I’ll say this fee is going to be for $50, click ok, and we can see that the user defined total has increased by $50 and it’s a custom fee that increased. I’ll go into transaction entry and this time I’m going to post a payment and let’s see what’s due on this loan. We have several billings that are due, and we have this custom fee billing right down here. I can post a $50 payment and if I want to make sure that only that user defined field gets paid, I would have to move my balances up, make sure none of the principle and interests gets paid. We can see that the $50 is going towards the current custom fee balance, not principle or unbilled principle or any interest. We’ll click ok and post this payment. The user defined total has gone back down to 0 and in the payment history, we can see that our custom fee payment has been received and credited to the loan.

Now, let’s talk about the off-loan balances. We’re going to have to do the same thing for the off-loan balances in terms of creating a transaction code that will either increase or decrease that balance. A big difference between the off-loan balances and the user defined balances are that the off-loan balances aren’t part of the loan, so what makes sense to create a transcode that’s going to alter the balance of an off-loan balance and make that a receivable because that would make it show up in the payment due screen. My next available number would be transcode 504 and in this example how I’m going to configure the off-loan balances is we’re going to configure this off loan balance to track value and this value is going to be the amount that was charged off on a loan. So, a borrower might file for bankruptcy and you might have to wait for a report to render their verdict on whether those funds are collectable or not. You might have to charge off the loan before you have that judgement or answer from the court. You can then take whatever balances that you are charging off and store them in an off-loan balance and then if you ever need to go back and put those balances back on a loan, you have an off-loan balance there storing that value. So, I will put in the transcode so “increase off loan balance charge off.” This said, we won’t have a receivable; set it too generic instead. We done deal with any of the GL today. For the transaction classification, I don’t think we need to classify this type of transaction so I’m going to leave it as none, but we do want to increase this off loan balance. Again, I don’t think we would need to increase any statistics unless you have a user defined statistic that you’d like to track for that. So now we have our transaction code and if we’re going to increase a balance, you might want to also create a transcode to decrease that balance. I’m going to do that right now. Again, we won’t do anything with the general ledger or with anything with the transaction classification but this time we want to decrease that off-loan balance.

Now, let’s talk about the off-loan balances. We’re going to have to do the same thing for the off-loan balances in terms of creating a transaction code that will either increase or decrease that balance. A big difference between the off-loan balances and the user defined balances are that the off-loan balances aren’t part of the loan, so what makes sense to create a transcode that’s going to alter the balance of an off-loan balance and make that a receivable because that would make it show up in the payment due screen. My next available number would be transcode 504 and in this example how I’m going to configure the off-loan balances is we’re going to configure this off loan balance to track value and this value is going to be the amount that was charged off on a loan. So, a borrower might file for bankruptcy and you might have to wait for a report to render their verdict on whether those funds are collectable or not. You might have to charge off the loan before you have that judgement or answer from the court. You can then take whatever balances that you are charging off and store them in an off-loan balance and then if you ever need to go back and put those balances back on a loan, you have an off-loan balance there storing that value. So, I will put in the transcode so “increase off loan balance charge off.” This said, we won’t have a receivable; set it too generic instead. We done deal with any of the GL today. For the transaction classification, I don’t think we need to classify this type of transaction so I’m going to leave it as none, but we do want to increase this off loan balance. Again, I don’t think we would need to increase any statistics unless you have a user defined statistic that you’d like to track for that. So now we have our transaction code and if we’re going to increase a balance, you might want to also create a transcode to decrease that balance. I’m going to do that right now. Again, we won’t do anything with the general ledger or with anything with the transaction classification but this time we want to decrease that off-loan balance.