Conditions Conditions
Definition
Condition
A condition is a contractually agreed element of a financial transaction or financial instrument. It describes the periodical and amount structure of the transaction / instrument (interest, repayment, etc.).
Condition type
Conditions are defined via condition types. You assign flow types to condition types in Customizing under Define condition types. These flow types display changes to the payment flows and are part of the cash flow. You assign the flow categories and calculation categories which are predefined in the system to the flow types you define in Customizing. The flow category controls how the flow is processed in accounting, and the calculation category controls how the flow is processed in the cash flow.
SAP delivers flow types for the most common business transactions, which you do not need to change.
In Customizing via Assign condition types to transaction type, you define which condition types are required for the different financial transactions.
Use
The conditions include all relevant data for creating flows in the cash flow. The different entries for the individual condition types determine exactly how the flows are calculated.
Conditions in Money Market, Foreign Exchange and Derivatives are so-called individual conditions. This means that a condition cannot exist independently of a class.
Structure
Entering conditions in Money Market
Conditions in Money Market are entered when entering transactions.
The Basic data screen is split up into three entry areas:
Enter the transaction amount.
You enter the dates for the start and the end of the term here.
You enter the basic data for interest payment here.
a) Enter the Percentage rate and the Interest calculation method.
In Customizing via Define product types, you can define the default values for the interest calculation method.
b) The ‘Frequency’ field is pre-assigned the update rule ‘End of interest period corresponds to end of term’.
You can, however, choose another frequency. If you choose Monthly frequency or Daily frequency, you must fill the All...days/months field.
If you do not require periodical update of the interest period end and the due date, you can choose another update rule in Conditions detail: Interest.
c) If you set the Capitalize interest flag, the interest until the end of the interest period for the amount is increased and included in the subsequent period for fixed-term deposits and deposits at notice.
d) In the Transaction day due date and Transaction day calculation fields, you specify whether the due date and the calculation date should be put back if they do not fall on a working day. Provided that you do not make another entry in Conditions detail, the calendar of the country in whose currency the transaction was concluded is used.
e) In the Rollover field, you specify what happens with interest in the case of a rollover. You can choose between the following methods:
i) Payment, i.e.the interest due up to the rollover is paid.
ii) Capitalization, i.e. the interest due up to the rollover on the investment amount is increased and charged.
iii) Deferral, i.e. the payment of the interest due is put back until the end of the rollover period.
This entry is, however, not binding, i.e. you can choose another procedure when rolling over.
f) Establish the start and end of the calculation period. You can choose between the following two variants:
i) Start inclusive ( = start inclusive and end exclusive )
ii) End inclusive ( = start exclusive and end inclusive )
These entries relate to the whole term of the transaction and cannot be overidden by the Inclusive field in
g) Specify which rounding rule is to be used when calculating interest.
Entries made here are transferred to Conditions detail: Interest. If necessary, you can change/complete the entries there.
Conditions entry for derivatives
Conditions entry for derivatives takes place in transaction entry. The entry screen offers the corresponding entry possibilities for the condition types belonging to a transaction depending on the transaction.
Refer to the following units for transaction entry:
Entry of interest rate instruments
Conditions overview:
You branch to the conditions overview via the Conditions button at the top of the screen.
In this list, you will find the conditions entered by yourself from transaction entry as well as the automatically generated condition flows for the financial transaction. When creating a fixed-term deposit, for example, the entries for nominal interest as well as the automatically generated repayment flow from the due date are displayed.
You can take the following data for the condition positions from the list:
Condition details screens
There are condition details screens for the condition types, nominal interest, interest rate adjustment and option premium where you can refine the entries for the condition positions.
From the conditions overview, you can branch to the details screen for the interest position via double-click on an interest position or via Edit ® Condition. Via double-click in the Interest structure area, you can access Conditions detail: Interest from the Basic data of the transaction.
You will find the entries from the Basic Data screen here again and you can refine the interest entries.
See also:
Notes for Processing
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If different conditions are valid during the term of a transaction, you can add further conditions via Edit ® Copy condition. Here, you firstly have to enter the start of the new validity. The original condition is copied to a second conditions detail screen. You then enter the new conditions by overwriting the default values.-
Via the functions, Previous condition or Next condition (arrows on the standard toolbar), you can switch between the individual detail screens.Interest rate adjustment is a condition type used to represent variable interest rates. You define here which frequency is used to determine the variable interest and on what day the value of the reference interest rate is to be established for the determination of the new variable interest rate.
The interest rate adjustment method PANF ( = at start of period ) is set as a default. If you do not wish to use this method, then change to the other interest rate adjustment method via Goto ®
See also: Conditions detail: Interest rate adjustment
From the conditions overview, you can branch to the details screen for the option premium via double-click on the premium or via Edit ® Choose condition.
Via double-click in the option premium area, you access Conditions detail: Premium from the basic data of the transaction.
See also: Conditions detail: Option premium