Loan GL Setup

Loan GL Setup explains the accounting configuration finance users must review before loan products are used in live operations.

Navigation: Loans > Setup > Loan Products and Accounting > Setup > GL Posting Rules

Workspace Reference

Workspace	How Users Reach It	What Users Usually Do There
Loan Products	Loans -> Setup -> Products	Configure product account mappings, interest policy, lifecycle behavior, and settlement expectations.
GL Posting Rules And Details	Accounting -> Setup -> GL Posting Rules	Maintain the accounting-event rules that loan actions use.
Pricing	Administration -> Financial Setup -> Pricing	Configure loan fees, penalties, taxes, insurance, or interest items where pricing drives them.
Loan Applications And Accounts	Loans -> Operations	Test disbursement, repayment, reversal, write-off, recovery, and suspense behavior against the setup.
GL Journals	Accounting -> Operations -> GL Journals	Review the resulting loan accounting entries and failures.

What Loan Accounting Must Support

Loan accounting should support the full loan lifecycle:

• Disbursement.
• Repayment.
• Repayment reversal.
• Interest accrual or cash-basis income recognition.
• Interest capitalization.
• Interest in suspense and release from suspense.
• Fees, penalties, taxes, and waivers.
• Provisioning and provision release.
• Write-off and write-off reversal.
• Recovery after write-off.
• Restructuring where balances move between components.

The exact setup required depends on the loan product behavior. Interest-free products still need write-off, recovery, and provision mappings if those lifecycle actions are allowed.

Product Account Mappings

Each loan product should define the accounts needed for its lifecycle.

Common mappings include:

Mapping	Purpose
Principal or loan receivable	Tracks the principal owed by borrowers.
Interest receivable	Tracks interest billed or accrued but not yet collected.
Interest income	Recognizes earned interest according to accounting policy.
Fee income	Recognizes configured loan fees.
Penalty income	Recognizes late-payment penalties where enabled.
Repayment rounding gain	Records favorable rounding differences from rounded schedules.
Repayment rounding loss	Records unfavorable rounding differences from rounded schedules.
Provision expense	Records expected credit loss or impairment expense.
Provision liability or allowance	Holds the provision balance against loan exposure.
Write-off expense	Records unprovisioned loss or waiver impact where applicable.
Recovery income	Records income from amounts recovered after write-off.

Finance users should confirm these mappings before product approval.

Repayment Rounding

Some loan products round installment totals, for example to whole currency units. The rounding difference is tracked on the repayment schedule and is settled as part of repayment.

Configure rounding accounts on each loan product:

• Use Repayment Rounding Gain when the rounded schedule creates a gain for the institution.
• Use Repayment Rounding Loss when the rounded schedule creates a loss for the institution.
• Point both fields to the same chart of account only if finance policy treats all loan rounding in one account.

These mappings are stored on the loan product and pinned into the loan account's product snapshot. If a rounded repayment cannot find the product-level rounding account, the repayment posting should fail instead of silently using a generic account.

Settlement Source Accounts

Loan transactions also need accounts for the money movement side.

Examples include:

• Cash or teller drawer for cash disbursement and repayment.
• Bank account for bank-funded activity.
• Deposit account for repayments taken from a customer deposit account.
• Wallet or mobile-money settlement account where configured.
• Clearing account where the transaction settles later.

These accounts are normally resolved from the selected payment channel, business unit, till, wallet, bank account, or deposit account context.

Expected Journal Patterns

The exact account names depend on tenant setup, but the accounting meaning should be consistent.

Disbursement

Typical pattern:

• Debit loan receivable.
• Credit cash, bank, wallet, deposit account, or settlement clearing.

Repayment

Typical pattern:

• Debit cash, bank, wallet, deposit account, or settlement clearing.
• Credit principal, interest receivable, fees, penalties, taxes, or excess balances according to allocation.
• Post any schedule rounding difference through the product's repayment rounding gain or loss account.

Interest Accrual

For accrual products:

• Debit interest receivable.
• Credit interest income.

For cash-basis products, income is normally recognized when repayment cash is received rather than when interest is applied.

Interest In Suspense

Moving interest to suspense normally removes doubtful income from normal earnings while preserving the borrower obligation or suspense tracking required by policy.

Releasing suspense reverses that treatment when recognition is justified.

Write-Off

Typical pattern:

• Debit provision allowance up to the provisioned amount.
• Debit write-off expense for any unprovisioned amount.
• Credit loan receivable or the relevant loan control balance.

Recovery

Typical pattern:

• Debit the settlement source that received money.
• Credit recovery income or the configured recovery account.

Control Accounts And Sub-Ledgers

Loan control accounts often require sub-ledger tracking. This means the accounting line must also identify the supporting borrower, loan account, deposit account, wallet, or other supporting ledger context.

If a posting fails because a control account requires sub-ledger detail, finance users should review:

• The loan product account mapping.
• The selected payment or settlement channel.
• The borrower or account context.
• The default sub-ledger configuration for the selected account.
• Whether the posting rule is resolving to the intended account family.

Do not bypass the issue by selecting a non-control account just to make posting pass. That can break reconciliation and reporting.

Product Approval Checklist

Before approving a loan product for live use:

• Principal receivable account is configured.
• Interest receivable and interest income behavior match product policy.
• Provision, write-off, and recovery accounts are configured where relevant.
• Fee and penalty accounting is configured where relevant.
• Repayment rounding gain and loss accounts are configured for products that use rounded schedules.
• Settlement channels are configured for expected disbursement and repayment methods.
• Control accounts have the required sub-ledger behavior.
• Reversal behavior has been tested for common correction scenarios.
• A sample disbursement and repayment have been tested in a controlled environment.

Common Setup Problems

Problem	Likely Cause	What To Review
Disbursement cannot post	Missing principal account or settlement source account.	Product mapping and selected payment channel.
Repayment cannot post	Payment source is not configured or allocation cannot resolve accounts.	Repayment channel, account mappings, and allocation setup.
Interest appears earlier than users expect	Product uses accrual income recognition.	Accounting method and interest policy.
Interest is applied but not reported as income	Product may use cash-basis or suspense behavior.	Interest method, accounting method, and suspense policy.
Write-off fails	Missing provision or write-off account.	Product lifecycle mappings.
Recovery fails	Missing recovery income or settlement source account.	Product recovery mapping and payment source.
Posting fails on sub-ledger validation	A control account needs supporting ledger detail.	Control account setup and selected business context.

Related Guides

• Loan Products
• Loan Interest
• Loan Operations
• Interest In Suspense
• GL Posting Rule Details