Asset Financing Information

The Asset Finance option is a more substantial process than the Lease Information but Asset Financing can only be applied to non-bulk rental products.
The data in this finance schedule tracks payment dates with the principal and interest amounts, and generates postings to the General Ledger by the date due.
There is no corresponding posting to vendor accounts in the A/P sub-ledger.

Asset Finance payments can be considered in the product costs, when running Gross Margin Analysis Report.

Operator Role Permission in the 'Document Field Access' section controls user access to Asset Finance Information.

G/L Posting Account & Cost Code Setup:
To post the finance transactions setup in this schedule, the four G/L accounts need to be defined in the following two tables:

• These 3 GL posting accounts need to be defined for the Company currency in the "Additional Accounts" window of the Default Accounts:
  "Finance Bank" (defaults to schedule)
  "Finance Loan Liability"
  "Finance Interest Liability" - for Term
  

• The product type specific "Finance Interest Expense Account" must be set in the "Additional Options" window of the Rental Product Class for each relevant class.
  This "Finance Interest Expense" defaults from the Class Defaults when a new Rental Product Class is created or cloned.

• When the 'Activate Asset Finance Interest Dissection' option is activated in the Company Posting Parameters, a 'Repair Code' must be flagged for "Interest" in the Job Cost Codes.

Schedule Setup & Startup Posting:

• Finance schedule data can be imported from a spreadsheet using the Asset Financing Export/Import tools or data can be entered manually into the Asset Financing Header and Payment Details table.

• The 'one time' start-up posting generated to setup the Interest "holding account" for the Finance Contract, occurs when the first Monthly Payment from the Payment Details table is posted by the Asset Finance Report and Posting.
  This 'one time' 'Total Interest for the Contract Term' (interest for all payments) for each product, includes:

  Debit - 'Total Interest for the Term by product' - to the "Finance Interest Liability" defined in Default Accounts for the Company currency, to the "Owning Division" defined on the product's Asset Tag
  Credit - 'Total Interest for the Term by product' - to the "Finance Loan Liability" defined in Default Accounts for the Company currency, to the "Owning Division" defined on the product's Asset Tag

  When this initial setup posting is done, the Initial GL Posting checkbox displayed in the Asset Financing Header for the product shows as checked.

• The Monthly payment can be posted manually from Asset Finance Report and Posting or through Automatic Reporting (AFHDR09) to generate the following postings:
  • The monthly Payment amounts including principal and interest, create the GL transactions as follows:
    Credit - 'Total Monthly Amount' (sum of all products on Finance Contract) - to the "Bank Account G/L" defined in the Finance Schedule header for the Head Office Division
    Debit - 'Total Monthly Amount' but by one trx for each product on Finance Contract - to the "Finance Loan Liability" defined in the Default Accounts for the Company currency, to the "Owning Division" defined on the product's Asset Tag

  • The Interest by product also posts the following transactions in the G/L:

    Credit - one trx per product - to the "Finance Interest Liability" (Interest Term account) defined in the Default Accounts by the Company currency, to the "Owning Division" defined on the product's Asset Tag
    Debit - one trx per product - to the "Finance Interest Expense Account" defined in the specific Rental Product Class, to the "Owning Division" defined on the product's Asset Tag

    When this monthly posting is done, the Fin Post checkbox displayed in the Finance Payment Details for that date shows as checked.

• When the 'Activate Asset Finance Interest Dissection' option is activated in the Company Posting Parameters, a separate Monthly Interest Cost breakdown can be posted by the Asset Finance Interest Report and Posting to further dissect the interest payments.
  This report re-posts the interest already posted to the "Finance Interest Expense Account" for the Rental Product Classes, to show interest paid out over the month as it applies to the actual equipment rentals.
  This postings generated include:

  Credit - (one trx per product on the Finance Contract) - Total Interest for Month - out of the "Finance Interest Expense Account" and "Owning Division"
  Debit - (multiple trx per product) - breakdown of interest paid per time on each rental contract & interest paid for time not on rent - back to the same "Finance Interest Expense Account" but to the Division assigned on the contract.

  The 'Transfer Interest From Owning To Inventory Location' flag in the Company Posting Parameters controls whether the interest portion when the product is not on a contract, posts to the "Owning Location" or to the Inventory Location (RSIL).

  When this monthly interest dissection posting is done, the Int Post checkbox displayed in the Finance Payment Details for that date shows as checked.

• When all the Fin Post checkboxes and also the Int Post checkboxes when the Interest Dissection feature is used, in the Finance Payment Details are checked in a schedule then the Finance Schedule is completed and the Closed checkbox displays as checked in the Asset Financing Header.

Early Lease Termination:

• When a Lease is terminated early with a buy out the following additional postings are required to clear the finance schedule for the Loan balance minus the Net Payout amount:
  Credit - 'Term Interest'
  Debit - 'Finance Interest Expense' account defined in the Rental Product Class,

  Note: If your firm uses the 'Activate Asset Finance Interest Dissection' option activated in the Company Posting Parameters, the Early Termination option is only available when both the Fin Post and the Int Post are completed on the final month to be paid, and more than one scheduled payment is then allowed in the same month for the termination transaction.

The prompts are:

PRODUCT

The non-bulk product number and description are displayed for easy reference.

FINANCE ID

In Add mode accept the auto-assign number for this Finance Contract for this product.
Multiple schedules can be applied to a non-bulk product but only one open schedule is allowed at a time.

In Change mode a drop-down box is provided to view and select from a list of existing Finance Contracts for this product. The list shows the Finance ID, Finance Contract number, Vendor number, Contract Start Date and End Date.
Select a Finance schedule to display the header information.

FINANCE CONTRACT

Enter the Finance Contract number up to 30 characters.

FINANCE VENDOR

Enter the Vendor number or select it from the Vendor Search window.

FINANCED AMOUNT

Enter the total dollar amount financed for this product on this contract, excluding interest payments.
When the payment details are entered in the schedule, the Finance Payment screen cannot be closed until monthly payments are entered to pay off this amount.

RESIDUAL AMOUNT

Enter any residual dollar amount that remains when the payments are completed.
This is displayed as the Principal on the last payment in the Finance Payment detail screen, so the End Bal is zero.

# MONTHLY PAYMENTS

Enter the total number of monthly payments for this schedule.
When the payment details are entered in the schedule, the Finance Payment screen cannot be closed until the number of payments are entered.

BANK ACCOUNT G/L

Accept the default Bank account number setup in Default Accounts for the Company currency or select one from the G/L Account Search window.
The Bank Account G/L assigned to a Finance schedule must be consistent across products that have been assigned the same Finance Contract and Vendor.

COMMENCEMENT DATE

Enter the date of the first finance payment.
This date cannot overlap any previous schedules for this product and the payment details must match this starting payment date.

END DATE

Enter the date of the last finance payment.
The payment details must match this date.

INITIAL GL POSTING

This box is information only, and is automatically displayed as checked when the 'one time' start-up posting to setup the Interest "holding account" for the Finance Contract, has been generated and posted on the first Asset Finance Report and Posting.
Refer to the Schedule Setup & Startup Posting: information above for the more details about the initial Interest GL transactions.

CLOSED

This box is information only and shows as checked if this Finance Schedule payment plan is complete.
The Finance Schedule payment plan is considered complete when the all the monthly payments in the Finance Payment details screen are posted to the G/L as indicated by the Fin Post on each payment record, and when 'Activate Asset Finance Interest Dissection' processing is enabled in the Company Posting Parameters then the Int Post checkboxes must also be checked on each payment record.

PAYMENT DETAILS

Window to access the Finance Payment schedule details as follows:

SEQ

The Sequence number tracks the payment records in the table.# Monthly Payments defined on the header of the Finance schedule.

DATE

Enter the date of the payment.
The payment dates must be entered in sequence and only 1 payment is allowed in each month but the dates can vary within the month.
i.e. A March payment cannot precede a February payment in the schedule and there cannot be 2 payments in April but the payments could be Feb 28, Mar 31, Apr 30

PAY #

This column is information only and can be used to number the payments.

START BAL

Enter the starting balance owed on the Finance schedule after the last payment and before this payment.
This value must match the Financed Amount from the schedule header if this is the first payment in the table, or it must match the End Balance of the previous payment.

PAYMENT

Enter the total amount to be paid on this payment, including any interest or residual amounts.
This can vary between payments.

INTEREST

Enter the amount of interest included in this payment.
This field cannot be left blank but a zero can be entered if there is no interest on the payment.

PRINCIPAL

The amount applied to the principle is automatically calculated and displayed for information.
i.e. Payment less Interest = Principal

END BAL

The ending balance owed after this payment is automatically calculated and displayed for information.
This becomes the starting balance of the next payment in the schedule.

i.e. Start Bal less Principle = End Bal

On the final payment the ending balance should be zero.

i.e. Start Bal less Principle (or Residual) = End Bal of zero

FIN POST

This box is information only and automatically shows as checked when this monthly payment has been posted in Asset Finance Report and Posting.
When a new schedule is imported using Asset Financing Export/Import, any payments on it that have already been paid can be imported as completed so the record is included in the schedule but the Fin Post check box is checked.
The Finance Schedule is closed when the all the monthly payments in the Finance Payment details screen are posted to the G/L as indicated by the Fin Post and the Int Post checkboxes on each payment record.

INT POST

This check box only applies when the 'Activate Asset Finance Interest Dissection' processing is enabled in the Company Posting Parameters.
This box is information only and automatically shows as checked when this interest dissection of the payment has been posted in Asset Finance Interest Report and Posting.
When a new schedule is imported using Asset Financing Export/Import, any payments on it that do not to be posted for interest analysis can be imported as completed so the record is included in the schedule but the Int Post check box is checked.

GL

Once there are any Finance or Interest postings, the G/L Postings for Finance Schedule window is provided to view the General Ledger transactions associated with this payment.

Finished?

Click Accept when the payment schedule is complete.

EARLY TERMINATION

Early termination can be used to buyout and close a lease.

Note: If your firm uses the 'Activate Asset Finance Interest Dissection' option activated in the Company Posting Parameters, the Early Termination check box is only enabled when both the Fin Post and the Int Post are completed on the final month to be paid.

Leave this box unchecked if the Lease is still active.

Check this box to terminate the Lease before it is fully paid and complete the final payout amount as follows.

NET PAYOUT AMOUNT

Enter the net payout amount that is to be paid as the last payment on the lease.

Finance Payment Schedule

In the Finance Payment schedule details Delete all remaining unpaid lease transactions and add one final payment to complete the early termination, as follows:

• Add the final lease transaction as of the early settlement Date.
  More than one scheduled payment is allowed in the same month to complete an early termination..

• Enter the Net Payment Amount provided by the Finance Vendor as the "Payment".
  This would not include any termination admin fee that needs to be entered as a G/L Journal.

• Enter the Interest balance to be paid.
  This is calculated by subtracting the Interest already paid and subtracting an interest adjustment (based on the difference between the 'Loan Balance' and the 'Net Payout') from the total Interest to be paid on the original loan.

• The End Balance will be cleared in the additional Termination postings.

Example:

1. Manually calculate the difference between the 'Loan Balance' and 'Net Payout' to determine the 'Interest Adjustment'.
   This will be the adjustment required in the Term Interest Account.

                   $54,023.667   (Loan Balance)
              Less $52,500.00    (Net Payout to date)
                   $ 1,523.667   (Term Interest Adjustment required)
           
   

2. Manually calculate the Term interest balance:

                   $11,533.45  (Total Interest for the original term included in the original Loan)
              Less    3021.03  (Total of Interest processed in the monthly payment transaction up to and including last payment)
              Less   1,523.667 (Adjustment in Term Interest from step 1.)
                   $ 6,988.75  (Interest Amount to pay in early settlement transaction)
           
   

3. The final schedule line of the early termination postings include:

           Credit  Term Interest           $ 1,523.667
           Debit   Loan Account            $ 1,523.667
           Credit  Bank                    $52,500.00
           Debit   Loan Account            $52,500.00
           Credit  Term Interest           $ 6,988.75
           Debit   Interest Expense        $ 6,988.75
           
   

Errors:

Any errors will be displayed in an Information Log window.
Errors must be correct to save the Finance schedule.

Note: The End Balance does not show negative signs so if an error is thrown on the Residual, check the values to ensure the End Balance is not calculating a negative dollar amount.

Finance Posting to the G/L:

Asset Finance Report and Posting
Asset Finance Interest Report and Posting

Finance Reporting:

Asset Finance Summary Report
Rolling 12 Month Asset Finance Payments
Gross Margin Analysis Report