Loans Management (FS CML)

Purpose

The Loans Management component enables you to manage both simply structured loans such as consumer loans, and complex loans, such as mortgage loans.

For mortgage loans, Loans Management offers functions for mapping the complete loan process for loans given and loans taken, from entering data on a potential contract right through to contract disbursement and the data transfer to Financial Accounting. It incorporates complex collateral management functions, support for decision-making and a range of options for tailoring your contracts.

For consumer loans, you can use the functions to manage the complete loan process for loans given, from entering data for new contracts, making offers, and concluding contracts right through to contract disbursement and the transfer of data to Financial Accounting.

For installment loans, functions are available with which you can create and manage the complete life cycle of loans given, up to the transfer to financial accounting.

All the main forms of loan can be represented. Loans Management supports all common loan forms thanks to the high degree of flexibility offered for setting up conditions, flows, collateral and loan partners. Besides traditional loan forms, the system also supports borrower's note loans, a special form of loan common on the German market.

Integration

Loans Management is fully integrated in SAP Treasury, allowing you to measure the effects of loan activities on your liquidity or interest rate risk directly. Cross-application functions, such as SAP Business Partner Management or the Information System provide you with a comprehensive overview of the business relationships maintained with your loan partner.

Features

Product Types

The following product categories are available in the system for representing the various loan forms:

  • Mortgage loans

  • Borrower’s note loans

  • Policy loans

  • General loan (for managing any other loans)

  • Consumer loans

  • Installment loans

Depending on your company’s requirements, you can subdivide your loan transactions into product types, which you can use to define specific forms of loan or business areas. You define the product types in the IMG for Loans Management according to your individual requirements, and assign each product type to a product category and condition group. These settings apply across all company codes. You can make additional formulations for consumer loans and installment loans at product level.

Transaction Management

You can enter rudimentary data from prospective customers or concrete inquiries for specific contract conditions for mortgage loans. The flexible condition structure allows you represent complex interest and repayment terms. The task of drawing up standard contracts is supported with predefined new business tables and reference loans. Once you have calculated the credit standing, assigned collateral and objects, and, where appropriate, calculated the collateral value, you can add any missing information before you conclude the contract. You can then disburse the contract fully, or make a number of partial disbursements. Additional process security can be incorporated by linking release requirements to the process steps. A filed documents facility is available for managing all the documents relating to a loan. You can use a special order processing function for processing purchases and sales of traded borrower's notes.

You can enter rudimentary data from prospective customers or concrete inquiries for specific contract conditions for consumer loans by using the model calculation. The management of consumer loans is automated and simplified in the following ways:

  • You can define products containing specifications for the contract and the conditions. The loan processor can enter the loan simply and quickly.

  • You can also determine that a release process is only necessary when the specifications of the underlying product definition have been breached.

  • Many of the business operations and functions that you need to execute for a loan are contained in a single function, such as creating and disbursing a loan, changing the installment plan or rescinding the loan.

You can also enter a credit life insurance policy as additional collateral for loans from this product category.

A condensed solution is available in Loans Management for the management of installment loans.

  • As for consumer loans, you can define products with attributes specific to installment loans, containing specifications for the loan contract and conditions. The loans officer can enter the loan simply and quickly.

  • You can enter all master data for an installment loan using one function, which also offers you current information about the status of the loan, such as accrued interest, payment plan, and account statement.

Position Management

Position Management offers functions for processing existing contracts, such as contract changes, business operations (such as charges, payoffs, borrower changes for all product categories, deferral and capitalization of overdue items for consumer loans, or extension and skip for installment loans) or the automatic generation of rollover offers for mortgage loans.

Integrated Financial Accounting

The accounting processes for loans are supported within Loans Management. There are manual and automatic functions for generating debit items, and functions for transfer postings and position valuation. In addition to keeping the subledger, the component offers open item management. The relevant posting information is transferred to Financial Accounting via an interface. Payments the system is unable to assign to an appropriate customer account are posted to rejection accounts, while advance payments and overpayments are posted to a customer account. You can then process these payments manually using the payment postprocessing function.

Reporting

The information system allows you to monitor deadlines and evaluate positions and revenues. The business partner information gives you detailed overview of your partner's loan commitment. You can use the drilldown reporting tool to make use of predefined standard reports and to generate and edit your own reports.

Basic Principles of Loans Management

Contract conditions form the basis for the contractual relationship. The conditions are used to generate planned records, which are required for processing loan receivables and payables later on.

Loans Management uses the status concept to reflect the various stages of the contract process (prospective customer through to conclusion of a contract).

In the loans area SAP Business Partner Management offers functions for assigning business partners to loans in specific roles (for example, main borrower or lender, guarantor, issuer), in this way one business partner can have more than one role.

Furthermore, you can enter details for important real estate objects and other collateral in the system, including guarantees, pledged securities and encumbrances.

The following diagram summarizes the relationships in Loans Management, taking mortgage loan business as an example: