Declaration of
Purpose 
Definition
Determines the business nature of a collateral agreement with respect of collateralization of receivables. Declaration of purpose can be classified as wide and narrow declaration of purpose.
Wide Declaration of Purpose: Can collateralize the complete (existing and future) business connection of a business partner. A collateral agreement with wide declaration of purpose is called a Global collateral agreement.
Narrow Declaration of Purpose: Can collateralize only existing and specific receivables of a business partner. A collateral agreement with narrow declaration of purpose is called a Deal-Specific collateral agreement.
Use
You can use the declaration of purpose to expand or restrict the scope of collateralization. The following table summarizes the influence of the declaration of purpose in Collateral Management (CM):
Flag Global (in the Customizing) |
Type of the declaration of purpose |
Possible collateral agreement - receivable assignment |
Flag is checked |
Wide declaration of purpose |
Automatic and manual |
Flag is unchecked |
Narrow declaration of purpose |
Manual |
The settings for the flag Global must be defined in the Customizing of collateral agreement types. These settings can however be over-ruled for individual collateral agreements by using the values for field Global. By changing the settings for the field Global, you can change the declaration of purpose for individual collateral agreements.
Wide
If a wide declaration of purpose is set for a collateral agreement, you can specify the rules. The system uses these rules for generating automatic assignments to receivables. The system automatically updates the collateral agreement-receivable assignment details if any changes are made to the rules.
The rules include search criteria for the receivables. These are:
¡ Business partner of the receivables
Scenario for pool agreement
In a pool agreement, you must enter the pool bank as the lender whose collateral agreements are used for collateralization of receivables. For this, you must create the pool banks in the partner function credit grantor and assign them to the receivables to be collateralized.
¡ Currency of the receivables
¡ Product set of the receivables to be collateralized. For example, all housing loans or car loans.
¡ Organizational unit to which the receivables belong
You must specify the rules for the individual collateral agreement portions. You can enter the rules for one or more business partners.
Narrow
If a narrow declaration of purpose is set for a collateral agreement, you must manually assign receivables that need to be collateralized. You must enter the details of the individual receivables in the Collateral Scope tab page and manually assign them to the collateral agreement portions.
Integration
If you want to determine a global declaration of purpose for a collateral agreement, you must check the flag Global in the Customizing for collateral agreement types. You can define this setting in the Implementation guide (IMG) by choosing Collateral Management ® Collateral Agreement ®Define Collateral Agreement Types.
If you do not check the flag Global, then a collateral agreement assumes a narrow declaration of purpose by default.
For detailed information on how to generate manual and automatic assignments to receivables, see