Example: Deferring Payments
A main master contract, MC #1, contains two participant loan accounts the operate under the Planned Payment Principle:
LO #1 with a committed limit of EUR 130,000
LO #2 with a committed limit of EUR 70,000
Customizing
The master contract is based on a product in which the Facilities feature is active and which is customized as follows:
Facility Control
Attributes |
Value |
Credit Clearing Mode |
1 — Debit Balance The utilization balance of a master contract is the sum of all negative balances of the participants in this master contract. Positive balances are not taken into account. |
Clearing Mode for Currency Translation |
1 — Clearing After Currency Translation |
Utilization Calculation
The Master Contract
The nominal utilization is to be checked against the global external limit. The effective utilization is to be checked against the global internal limit.
Participant Loan Accounts
The utilization calculation base relevant for nominal utilization is Nominal Capital. The utilization calculation base for effective utilization is Remaining Capital plus Prenotes.
Master Contract and Account Processing
MC #1 has a committed limit of EUR 200,000 and a tolerated overdraft limit of EUR 10,000.
Payment is deferred on LO #'2.
As part of the deferral transaction, a check is made on the facility. Under nominal utilization, the transaction can only proceed if the sum of both loan capitals minus both repayments is less than the global internal limit. Under effective utilization, the transaction can only proceed if the sum of both loan capitals minus both repayments is less than the global external limit.
This table illustrates the effects of the deferred payment:
Global Internal Limit |
Nominal Utilization |
Open Nominal Utilization |
Global External Limit |
Effective Utilization |
Open Effective Utilization |
|
LO #1 |
130,000 — repayment 1 |
130,000 — repayment 1 |
||||
LO #2 |
70,000 — repayment 2 |
70,000 — repayment 2 |
||||
MC #1 |
200,000 |
200,000 — repayment 1– repayment 2 |
0+ repayment 1 + repayment 2 |
200,000 |
200,000 — repayment 1– repayment 2 |
0+ repayment 1 + repayment 2 |
Calculation of the Nominal Utilization after deferred payment:
Participants |
Global External Limit |
Nominally Utilized Amount |
Non-Utilized Amount |
MC #1 |
200,000 |
–200,000 + repayment 1+ repayment 2 |
0+ repayment 1 + repayment 2 |
LO #1 |
–130,000 + repayment 1 |
||
LO #2 |
–70,000 + repayment 2 |
Calculation of the Effective Utilization after deferred payment:
Participants |
Global Internal Limit |
Effectively Utilized Amount |
Non-Utilized Amount |
MC #1 |
200,000 |
–200,000 + repayment 1+ repayment 2 |
0+ repayment 1 + repayment 2 |
LO #1 |
–130,000 + repayment 1 |
||
LO #2 |
–70,000 + repayment 2 |