Asset Financing Information
Inventory Control Menu -> Rental
Inventory -> Financing Options ->
Asset Financing Information
The Asset Finance option is a more substantial process
than the Lease Information but Asset
Financing can only be applied to non-bulk rental products.
The data in this finance schedule tracks payment dates with the
principal and interest amounts, and generates postings to the
General Ledger by the date due.
There is no corresponding posting to vendor accounts in the A/P
sub-ledger.
Asset Finance payments can be considered in the product costs,
when running Gross Margin Analysis
Report.
Operator Role Permission in the
'Document Field Access' section controls user access to
Asset Finance Information.
G/L Posting Account & Cost Code Setup:
To post the finance transactions setup in this schedule, the four
G/L accounts need to be defined in the following two tables:
- These 3 GL posting accounts need to be defined for the Company
currency in the "Additional Accounts" window of the Default Accounts:
"Finance Bank" (defaults to
schedule)
"Finance Loan Liability"
"Finance Interest Liability" - for Term
-
The product type specific "Finance Interest Expense Account"
must be set in the "Additional Options" window of the Rental Product Class for each relevant class.
This "Finance Interest Expense" defaults from the Class Defaults when a new Rental Product Class is created or cloned.
-
When the 'Activate Asset Finance Interest Dissection'
option is activated in the Company Posting
Parameters, a 'Repair Code' must be flagged for
"Interest" in the Job Cost
Codes.
Schedule Setup & Startup Posting:
- Finance schedule data can be imported from a spreadsheet using
the Asset Financing Export/Import tools or
data can be entered manually into the Asset Financing Header
and Payment Details table.
-
The 'one time' start-up posting generated to setup the Interest
"holding account" for the Finance Contract, occurs when the first
Monthly Payment from the Payment Details table is
posted by the Asset Finance Report and
Posting.
This 'one time' 'Total Interest for the Contract Term' (interest
for all payments) for each product, includes:
Debit - 'Total Interest for the Term
by product' - to the "Finance Interest Liability" defined in
Default Accounts for the Company currency,
to the "Owning Division" defined on the product's
Asset Tag
Credit - 'Total Interest for the Term by product' - to the "Finance
Loan Liability" defined in
Default
Accounts for the Company currency, to the "Owning Division"
defined on the product's
Asset Tag
When this initial setup posting is done, the Initial GL
Posting checkbox displayed in the Asset Financing Header
for the product shows as checked.
Monthly Process Flow:
- The Monthly payment can be posted manually from Asset Finance Report and Posting or through Automatic Reporting (AFHDR09) to generate the
following postings:
- The monthly Payment amounts including principal and
interest, create the GL transactions as follows:
Credit - 'Total Monthly Amount' (sum
of all products on Finance Contract) - to the "Bank Account G/L"
defined in the
Finance Schedule header for the Head Office
Division
Debit - 'Total Monthly Amount' but by one trx for each product on
Finance Contract - to the "Finance Loan Liability" defined in the
Default Accounts for the Company currency,
to the "Owning Division" defined on the product's
Asset Tag
-
The Interest by product also posts the following
transactions in the G/L:
Credit - one trx per product - to the
"Finance Interest Liability" (Interest Term account) defined in the
Default Accounts by the Company currency,
to the "Owning Division" defined on the product's
Asset Tag
Debit - one trx per product - to the "Finance Interest Expense
Account" defined in the specific
Rental
Product Class, to the "Owning Division" defined on the
product's
Asset Tag
When this monthly posting is done, the Fin Post checkbox
displayed in the Finance Payment Details for that date shows
as checked.
-
When the 'Activate Asset Finance Interest Dissection'
option is activated in the Company Posting
Parameters, a separate Monthly Interest Cost breakdown
can be posted by the Asset Finance Interest
Report and Posting to further dissect the interest
payments.
This report re-posts the interest already posted to the "Finance
Interest Expense Account" for the Rental
Product Classes, to show interest paid out over the month as it
applies to the actual equipment rentals.
This postings generated include:
Credit - (one trx per product on the
Finance Contract) - Total Interest for Month - out of the "Finance
Interest Expense Account" and "Owning Division"
Debit - (multiple trx per product) - breakdown of interest paid per
time on each rental contract & interest paid for time not on
rent - back to the same "Finance Interest Expense Account" but to
the Division assigned on the contract.
The 'Transfer Interest From Owning To Inventory Location'
flag in the Company Posting Parameters
controls whether the interest portion when the product is not on a
contract, posts to the "Owning Location" or to the Inventory
Location (RSIL).
When this monthly interest dissection posting is done, the
Int Post checkbox displayed in the Finance Payment
Details for that date shows as checked.
-
When all the Fin Post checkboxes and also the Int
Post checkboxes when the Interest Dissection feature is used,
in the Finance Payment Details are checked in a schedule
then the Finance Schedule is completed and the Closed
checkbox displays as checked in the Asset Financing
Header.
Early Lease Termination:
- When a Lease is terminated early with a buy out the following
additional postings are required to clear the finance schedule for
the Loan balance minus the Net Payout amount:
Credit - 'Term Interest'
Debit - 'Finance Interest Expense' account defined in the
Rental Product Class,
Note: If your firm uses the 'Activate Asset Finance Interest
Dissection' option activated in the Company
Posting Parameters, the Early Termination option is only
available when both the Fin Post and the Int Post are
completed on the final month to be paid, and more than one
scheduled payment is then allowed in the same month for the
termination transaction.
The prompts are:
-
- PRODUCT
- The non-bulk product number and description are displayed for
easy reference.
FINANCE ID
- In Add mode accept the auto-assign number for this Finance
Contract for this product.
Multiple schedules can be applied to a non-bulk product but only
one open schedule is allowed at a time.
In Change mode a drop-down box is provided to view and select
from a list of existing Finance Contracts for this product. The
list shows the Finance ID, Finance Contract number, Vendor number,
Contract Start Date and End Date.
Select a Finance schedule to display the header
information.
FINANCE CONTRACT
- Enter the Finance Contract number up to 30 characters.
FINANCE VENDOR
- Enter the Vendor number or select it from the Vendor Search window.
FINANCED AMOUNT
- Enter the total dollar amount financed for this product on this
contract, excluding interest payments.
When the payment details are entered in the schedule, the
Finance Payment screen cannot be closed until monthly
payments are entered to pay off this amount.
RESIDUAL AMOUNT
- Enter any residual dollar amount that remains when the payments
are completed.
This is displayed as the Principal on the last payment in
the Finance Payment detail screen, so the End Bal is
zero.
# MONTHLY PAYMENTS
- Enter the total number of monthly payments for this
schedule.
When the payment details are entered in the schedule, the
Finance Payment screen cannot be closed until the number of
payments are entered.
BANK ACCOUNT G/L
- Accept the default Bank account number setup in Default Accounts for the Company currency or
select one from the G/L Account Search
window.
The Bank Account G/L assigned to a Finance schedule must be
consistent across products that have been assigned the same
Finance Contract and Vendor.
COMMENCEMENT DATE
- Enter the date of the first finance payment.
This date cannot overlap any previous schedules for this product
and the payment details must match this starting payment date.
END DATE
- Enter the date of the last finance payment.
The payment details must match this date.
INITIAL GL POSTING
- This box is information only, and is automatically displayed as
checked when the 'one time' start-up posting to setup the Interest
"holding account" for the Finance Contract, has been generated and
posted on the first Asset Finance Report and
Posting.
Refer to the Schedule Setup & Startup Posting:
information above for the more details about the initial Interest
GL transactions.
CLOSED
- This box is information only and shows as checked if this
Finance Schedule payment plan is complete.
The Finance Schedule payment plan is considered complete when the
all the monthly payments in the Finance Payment details
screen are posted to the G/L as indicated by the Fin Post on
each payment record, and when 'Activate Asset Finance Interest
Dissection' processing is enabled in the Company Posting Parameters then the Int Post
checkboxes must also be checked on each payment record.
PAYMENT DETAILS
- Window to access the Finance Payment schedule details as
follows:
- SEQ
- The Sequence number tracks the payment records in the
table.# Monthly Payments defined on the header of the
Finance schedule.
- DATE
- Enter the date of the payment.
The payment dates must be entered in sequence and only 1 payment is
allowed in each month but the dates can vary within the month.
i.e. A March payment cannot precede a February payment in the
schedule and there cannot be 2 payments in April but the payments
could be Feb 28, Mar 31, Apr 30
- PAY #
- This column is information only and can be used to number the
payments.
- START BAL
- Enter the starting balance owed on the Finance schedule after
the last payment and before this payment.
This value must match the Financed Amount from the schedule
header if this is the first payment in the table, or it must match
the End Balance of the previous payment.
- PAYMENT
- Enter the total amount to be paid on this payment, including
any interest or residual amounts.
This can vary between payments.
- INTEREST
- Enter the amount of interest included in this payment.
This field cannot be left blank but a zero can be entered if there
is no interest on the payment.
- PRINCIPAL
- The amount applied to the principle is automatically calculated
and displayed for information.
i.e. Payment less Interest = Principal
- END BAL
- The ending balance owed after this payment is automatically
calculated and displayed for information.
This becomes the starting balance of the next payment in the
schedule.
i.e. Start Bal less
Principle = End Bal
On the final payment the ending balance should be zero.
i.e. Start Bal less
Principle (or Residual) = End Bal of zero
- FIN POST
- This box is information only and automatically shows as checked
when this monthly payment has been posted in Asset Finance Report and Posting.
When a new schedule is imported using Asset
Financing Export/Import, any payments on it that have already
been paid can be imported as completed so the record is included in
the schedule but the Fin Post check box is checked.
The Finance Schedule is closed when the all the monthly payments in
the Finance Payment details screen are posted to the G/L as
indicated by the Fin Post and the Int Post checkboxes
on each payment record.
- INT POST
- This check box only applies when the 'Activate Asset Finance
Interest Dissection' processing is enabled in the Company Posting Parameters.
This box is information only and automatically shows as checked
when this interest dissection of the payment has been posted in
Asset Finance Interest Report and
Posting.
When a new schedule is imported using Asset
Financing Export/Import, any payments on it that do not to be
posted for interest analysis can be imported as completed so the
record is included in the schedule but the Int Post check
box is checked.
- GL
- Once there are any Finance or Interest postings, the G/L Postings for Finance Schedule window is provided
to view the General Ledger transactions associated with this
payment.
- Finished?
- Click Accept when the payment schedule is complete.
EARLY TERMINATION
- Early termination can be used to buyout and close a lease.
Note: If your firm uses the 'Activate Asset Finance Interest
Dissection' option activated in the Company
Posting Parameters, the Early Termination check box is
only enabled when both the Fin Post and the Int Post
are completed on the final month to be paid.
Leave this box unchecked if the Lease is still active.
Check this box to terminate the Lease before it is fully paid
and complete the final payout amount as follows.
- NET PAYOUT AMOUNT
- Enter the net payout amount that is to be paid as the last
payment on the lease.
Finance Payment Schedule
- In the Finance Payment schedule details Delete all
remaining unpaid lease transactions and add one final payment to
complete the early termination, as follows:
- Add the final lease transaction as of the early settlement
Date.
More than one scheduled payment is allowed in the same month to
complete an early termination..
-
Enter the Net Payment Amount provided by the Finance
Vendor as the "Payment".
This would not include any termination admin fee that needs to be
entered as a G/L Journal.
-
Enter the Interest balance to be paid.
This is calculated by subtracting the Interest already paid and
subtracting an interest adjustment (based on the difference between
the 'Loan Balance' and the 'Net Payout') from the total Interest to
be paid on the original loan.
-
The End Balance will be cleared in the additional
Termination postings.
Example:
- Manually calculate the difference between the 'Loan Balance'
and 'Net Payout' to determine the 'Interest Adjustment'.
This will be the adjustment required in the Term Interest Account.
$54,023.667 (Loan Balance)
Less $52,500.00 (Net Payout to date)
$ 1,523.667 (Term Interest Adjustment required)
- Manually calculate the Term interest balance:
$11,533.45 (Total Interest for the original term included in the original Loan)
Less 3021.03 (Total of Interest processed in the monthly payment transaction up to and including last payment)
Less 1,523.667 (Adjustment in Term Interest from step 1.)
$ 6,988.75 (Interest Amount to pay in early settlement transaction)
- The final schedule line of the early termination postings
include:
Credit Term Interest $ 1,523.667
Debit Loan Account $ 1,523.667
Credit Bank $52,500.00
Debit Loan Account $52,500.00
Credit Term Interest $ 6,988.75
Debit Interest Expense $ 6,988.75
Errors:
- Any errors will be displayed in an Information Log window.
Errors must be correct to save the Finance schedule.
Note: The End Balance does not show negative signs so if
an error is thrown on the Residual, check the values to ensure the
End Balance is not calculating a negative dollar
amount.
Finance Posting to the G/L:
- Asset Finance Report and Posting
Asset Finance Interest Report and Posting
Finance Reporting:
- Asset Finance Summary Report
Rolling 12 Month Asset Finance Payments
Gross Margin Analysis Report
Topic Keyword: AFHDR01 (6647)