4.3.5 Liquidate Back Dated Bills
Oracle Banking Trade Finance has the facility to create a loan for sight Import bills before maturity on the manual liquidation by creating a loan automatically with liquidating bill. Change the interest calculation on this bill from the date of creation of loan. In this case, the penalty is calculated after 30 days of creation of loan. Also, system allows liquidation of back dated bill for sight Export bill as well.
Liquidate the back valued sight Export/Import bill in the Bills and Collections Contract Detailed screen. Specify the same date as the Debit Value Date and Credit Value date. System posts the accounting entries on the value dates mentioned in these fields. In Import Bill, if you check the ‘Advance by loan’ option, a loan will be created as of the Application date.
Select the Loan product and the Suspense General Ledger at the ‘Bills and Collections Product – Preferences’ screen. System creates the loan account and liquidates the bill contract. System creates the loan as of the date mentioned under ‘Dr Value date’.
For further details on the ‘Bills and Collections Product – Preferences’ screen, refer the ‘Specifying Preferences for a product’ section in the ‘Defining Attributes of a Bills and Collections Product’ chapter in this User Manual.
- Maintain an UDE, PENAL_START_DAYS for the loan products for which the Penal Interest is calculated after specific number of days. Maintain the default number of days (for e.g. 30 days) at the loan product level.
- At the bill contract level, the penal Interest is defaulted along with the UDE, PENAL_START_DAYS with the default values maintained at the Loan product.
- While calculating the Penal Interest, system calculates the Effective Date as Loan Creation Date + the days mentioned in PENAL_START_DAYS
- System applies the PENAL_START_DAYS for all the Penal UDEs
- For the Penal UDEs, system uses the calendar days to arrive at the effective date
- For example, a loan product CLBC has been created with the below
UDEs
PENAL_START_DAYS PENAL_INT1 30 5 (Percent)
On 10-Jan-2010, a bill is created with Advance by Loan option checked. At the Bill product level, the Loan Product CLBC has been maintained and hence it is defaulted at the contract level. The UDE IDs, PENAL_START_DAYS & PENAL_INT1 is defaulted along with the values, 30 & 5 respectively under Loans sub-screen in the Bill Contract.
| Component | Effective Date | Rate |
|---|---|---|
| PENAL_INT1 | 9-Feb-2010 | 5 (Percent) |
Effective from 9-Feb-10 (after 30 days of Loan creation), the Penal Interest will start calculating at 5%.
The system will calculate the penalty based on the loan creation date. That is, even if the value date is different from the loan creation date, the penalty will be calculated after the expiry of the penal start days counted from the date of creation of the loan. You can manually change the number of penal value days in order to start applying the penalty from a different date. The following example illustrates it.
| Particulars | Value |
|---|---|
| Bill Amount | GBP 10000 |
| Value Date | 01-Aug-2010 |
| Maturity Date | 31-Aug-2010 |
| Loan Creation Date/Liquidation Date | 31-Aug-2010 |
| Dr. Value Date | 25-Aug-2010 |
| Loan Value Date | 25-Aug-2010 |
| Penal Start Days | 30 Days |
In this case, the system will calculate the penal interest from 30-Sep-2010. This date is derived by adding 30 penal start days to the loan creation date of 31-Aug-2010.
You can change the penal interest start date by manually changing the number of penal start days. That is, in the above case, you can set the penal start days as 24 and as a result, the effective date for the penalty will be set to 24-Sep-2010.
Parent topic: Multi Tenor Bills