Capitalization of Overdue Items

Use

You use this function in the context of position processing for loans to spread overdue items, and in some cases future payments for a loan from a key date over the rest of the loan term, so that the contract capital and the remaining capital is increased by the overdue items and the future payments that the borrower cannot pay. In doing so, the system clears the items that are included in the capitalization of overdue items. The capitalization of overdue items is regarded as a risk-increasing measure and is displayed in its entirety in the loan contract.

For consumer loans you have two ways of spreading the overdue items and future payments over the remaining term from the key date. In the standard procedure, the installment amount remains the same and the remaining term is extended in according to the size of the capitalization amount. However you can also change the installment amount and adjust the remaining term to the new installment amount.

For installment loans , you can only adjust the amount of the installment payment. The end of term for a loan is not changed, and the system adjusts the due settlement installment according to the new payment installment.

For mortgage loans and general loans , you can only adjust the amount of the installment payment. The end of term for a loan cannot be manually modified. The system adjusts the end of term date according to the new payment installment.

This function does not support batch input.

Note Note

End of the note.

You can only use this function for loans that are based on the product category Installment Loans (360), or Consumer Loans (340), or General Loans (330) or Mortgage Loans (300).

Integration

You can use this function in the Workplace for Business Operations . It contains the processing of the business operation with integrated status concept (possible statuses are entered or activated for example). It is included as part of the release procedure for consumer loans, mortgage loans, and general loans.

Prerequisites

To be able to use this function you need to have executed the following IMG activities in the Customizing for Loans Management :

Capitalization of Overdue Items

To use the Capitalization of Overdue Items function for a certain product type, you need to have activated this for the product type in the IMG activity Define Product Types .
To enable the system to process the flows for the Capitalization of Overdue Items correctly, you need to define the flow types and the offsetting flow types for the flows for capitalization of overdue items under Define Flow Types .
- Charge for capitalization of overdue items
- Flow for capitalization of overdue items (flow category AC)
- For consumer loans only:
  
  Flows for CLI extra charge and CLI reimbursement
  
  You need to have created the flow types for additional charges, so that you can add them to the additional flows, if required.
You need to have assigned offsetting flow types to the flow types in the IMG activity Assign Offsetting Flows so that the system can clear the open items and future payments with the capitalization amount. You need have used the relationship category Clear by Capitalization of Overdue Items (111).
In the IMG activity Define Account Determination (under Functions ), you need to have defined the account determination for the flow types, for further processing of the amounts.
In the IMG activity Define Condition Groups you need to have made the following assignments in the Assign Flow Types to Condition Groups per Application screen.
- The flow types for the capitalization of overdue items (capitalization charge, for consumer loans CLI extra charge and CLI reimbursement) to the application subfunction Capitalization of Overdue Items Additional Flows (511).
- The flow types that you use for manual additional flows to the application subfunction Capitalization of Overdue Items Manual Additional Flows (512)
- The flow type for the capitalization charge to the application subfunction Charge for Capitalization of Overdue Items (513)
- A disbursement flow for the capitalization of overdue items to the application subfunction Capitalization of Overdue Items Disbursement Flow (514)
- For consumer loans only:
  
  The flow type for the CLI reimbursement to the application subfunction Capitalization of Overdue Items CLI Reimbursement (515)
- For consumer loans only:
  
  The flow type for the CLI reimbursement to the application subfunction Capitalization of Overdue Items CLI Reimbursement (516)
In the IMG activity Define Condition Groups , you need to have assigned the condition type for capital increases to the application subfunction Capitalization of Overdue Items (510) in the Assign Condition Types to Condition Groups per Application screen.
In the IMG activity Define General Control Data (under Capitalization of Overdue Items ) you must define which tab pages are to be available in the application.
In Define Basic Settings (under Capitalization of Overdue Items ) you need to have defined which predefined values and settings are to take effect depending on the product type used.
In the IMG activity Define Reasons for Capitalization (under Capitalization of Overdue Items ) you need to have defined the reasons for the capitalization of overdue items to be entered by the user.
In the IMG activity Define Reasons for Postprocessing (under Capitalization of Overdue Items ) you need to have defined the reasons for the postprocessing to be entered by the user.
Only relevant for general loans and mortgage loans : In the IMG activity Define Capitalization Charges (under Capitalization ), you need to have defined the default charges to be levied for the capitalization operation, which can be changed by the user. You also need to have defined the minimum and maximum amounts that can be capitalized on a loan.

Products and Conditions

For consumer loans, you can make the settings for this business operation in the product on which the loan is based.

For more information, see Product .
For consumer loans, you need to have set up the conditions required for this business operation in the condition table assigned to the product.

For more information, see Condition Table .

Interest on Arrears

Note Note

You can only calculate interest on arrears for loans that are based on the product category Consumer Loans (340), General Loans (330) or Mortgage Loans (300).

End of the note.

If you want the system to calculate the interest on arrears due for this loan on the business operation key date when you execute this function, you need to have completed the following settings in Customizing for Loans Management .

You need to have set up the business operation category Interest on Arrears . For more information on the business operation Interest on Arrears , see Interest on Arrears .
In the IMG Activity Define Condition Groups in the Flow Types screen, you need to have assigned the flow types for interest on arrears to the application subfunction Capitalization of Overdue Items Flow Types (511).
In the IMG activity Activate Interest on Arrears Calculation for each Business Operation Category you need to have activated the calculation of interest on arrears for the business operation category Capitalization of Overdue Items .

The system posts the interest on arrears when you post this business operation.

Release

Note Note

You can only use this release for loans that are based on the product category Consumer Loans (340), Mortgage Loans (300), and General Loans (330).

End of the note.

If you want to use the release function within the capitalization of overdue items function, you must make the appropriate settings for the capitalization in the activities Maintain Active Indicators , Define Release Status Parameters , and Maintain Workflow Settings in the Release section.

For more information, see the Prerequisites section in Release

Correspondence

If you want to use the correspondence function within the capitalization of overdue items function, you need to complete the IMG activities under Correspondence with Correspondence Tool (SAP Smart Forms) in the Customizing for Loans Management.

In the IMG activity Define External Flow Types you need to have replaced the flow types relevant for the capitalization of overdue items, such as processing charges, with external flow types and leave the Report Category field empty.

Scope of Functions

Along with the loan data such as company code, loan number or name and address of the business partner in the loans header, the system also displays the business operation status ( New, Entered, Activated, for example) in the Business Operation Header. In the Business Operation Description field you can either enter a posting text manually or select a text from the possible entries. When you post the payoff, this text is transferred to the Text field in the Additional Posting Data screen. You can change the default text here. Once the posting has been executed, the text appears on the FI document header.

Note Note

In the IMG activity Define Company Code-Specific Texts define the texts that you want to be able to select in the Capitalization function.

End of the note.

Once you have entered the relevant data (see below), you can save, activate or post the business operation, as long as it does not need to be released first. The system displays the status of the business operation automatically. You cannot change this here.

If the release function is activated for consumer loans, general loans, or mortgage loans, you forward the business operation Capitalization of Overdue Items to the inbox of the Business Workplace using the To be released function. From there, it is released. You can release, activate, or post the business operation directly from the Release Function . The system also displays the release status in the Business Operation Header . You cannot change this here.

By choosing Cash Flow you can have the system recalculate and display the current cash flow, with or without consideration of the capitalization of overdue items.

If you are processing a consumer loan, general loan, or mortgage loan, and have activated interest on arrears calculation for this business operation category, the system also displays the incurred interest on arrears for the loan on the key date in the cash flow.
You can have the system output the Payment Plan with or without consideration of the capitalization of overdue items or display the current payment plan for the product category Mortgage Loans (300) and General Loans (330). This function is not available for loans based on the product category Consumer Loans (340).
By choosing Display Contract you can branch directly into the loan contract screen.
You can display the Loans: Summary or Account Statement for the selected loan.
You can use the Generate Correspondence function to process correspondence for the capitalization of overdue items.

On the lower part of the screen you can make entries in the tab page that you activated in the IMG activity Define General Control Data . You can also select the initial tab page in Customizing. The following tab pages can be used in the Capitalization of Overdue Items function:

Activities

ChoosePosition Management Business Operations Workplace for Business Operations Capitalization of Overdue Items Create.
Enter or change the relevant data and save, then activate or post the business operation.

For more information about using the Workplace for Business Operations see Business Operations .