Facilities 

Use

Facilities are agreements between a lender and a borrower, which control the general conditions for a series of drawings against a credit line. The lender can give drawing authorization to several people (= borrowers), who are entitled to draw varying amounts at any time up to the total approved credit line.

The utilization of this credit option for a facility is called a Drawing.

The lender calculates charges for the borrower (commitment interest). The charges that incur are calculated according to different methods (see Charges).

Confirmed facilities

The lender guarantees the availability of a limited credit amount at any time. The borrower has to pay a charge for this.

Unconfirmed facilities

The lender does not guarantee a credit limit. No charges are made for this.

Features

The functions for managing facilities include the standard functions for entering and processing them.

You can assign fixed-term deposits, deposits at notice, cash flow transactions and interest rate instruments to a facility. You specify which money market transactions can be assigned as drawings on the Rules tab page.

For an overview of the transactions that have already been assigned to the facility, see the Profiles tab page.

For further details, see Processing Facilities and Creating Facilities.

Prerequisites

Before you can use the Money Market component, you have to maintain master data.

·        You have to create your Business Partners, assign the corresponding roles to these partners and maintain the transaction authorizations.

·        You have to set up the Standing Instructions (correspondence, payment details) and release the business partner.

You also have to make the following settings in Customizing:

·        Define the Product Type (if you do not want to use one of the standard product types delivered with the system, you can define your own product types). You create financial transactions and manage positions on the basis of product types. An example of a product type in the Money Market area is a Facility.

·        Define the Transaction Type. Transaction types determine the type of transactions that can be concluded with a particular product type. They also control the transaction and position management process. Example: Grant facility (lending) or Grant facility (borrowing).

·        Define the Flow Type. These describe the various changes to the cash flows. Example: Facility charges: Not utilized.

·        You must assign flow types to transaction types.

·        Define the condition type. This setting controls which charges you can enter when you create a transaction.

·        The charges for a facility are represented with certain condition types. You therefore have to define Amounts equivalent to similar interest. Examples:

-         Facility charges: Not utilized

-         Facility charges: Utilized

-         Facility charges: Overdrawn

-         Facility charges: Credit line

·        You have to assign the condition type to the transaction type.

For more information, see the relevant section in the Implementation Guide.