Loan Accounts

The Loan Accounts module manages the full lending lifecycle — from application through approval, disbursement, repayment, and closure.

Navigation: Loan Accounts → Operations

Sub-Pages

Page	Description
Accounts	View and manage active loan accounts
Applications	Submit and process loan applications

Workspace Reference

Workspace	How Users Reach It	What Users Usually Do There
Loan Products	Loans -> Setup -> Products	Configure eligibility, interest, penalties, collateral, guarantors, accounting, and lifecycle rules.
Applications	Loans -> Operations -> Applications	Capture loan demand, review borrower details, submit for approval, and disburse approved applications.
Accounts	Loans -> Operations -> Accounts	Review active loans, balances, schedules, arrears, and account-level actions.
Collections	Loans -> Operations -> Collections	Review arrears follow-up and collection activity.
Interest Suspense	Loans -> Operations -> Interest Suspense	Review suspended or cash-basis interest treatment where enabled.
Portfolio Analytics And Snapshots	Loans -> Operations -> Portfolio Analytics / Portfolio Snapshots	Review portfolio quality, balances, movement, and reporting snapshots.
Collateral Disposal And PAR Report	Loans -> Operations	Manage collateral recovery follow-up and portfolio-at-risk review.

Loan Application Flow

1. Submit Application

1. Navigate to Loans -> Operations -> Applications
2. Click Create Application
3. Fill in the form:

Field	Description	Required
Client	Select the borrower (must be approved)	Yes
Loan Product	Select from configured loan products	Yes
Requested Amount	The amount the client is applying for	Yes
Loan Term	Duration in months	Yes
Purpose	Reason for the loan	No
Guarantors	Add guarantors if required by the product	Conditional
Collateral	Collateral details if required	Conditional

4. Submit the application

Product-Driven Checks

Before an application or account can proceed, the selected loan product may enforce:

• borrower-type eligibility, such as individual, pure group, or hybrid group
• special restrictions such as women-only eligibility
• exact group-size rules through required group member count
• grace-period defaults and boundaries
• guarantor, collateral, or investor-fund requirements from the linked package/settings
• amount and installment limits

2. Approval

The application enters the approval workflow:

1. Application status changes to PENDING
2. Approvers at each configured approval level review the application
3. At each level, the approver can approve or reject
4. When all levels approve, the application is APPROVED

3. Disbursement

Once approved:

1. Open the approved application
2. Click Disburse
3. Select the disbursement method (cash, bank transfer, deposit account credit)
4. Confirm the disbursement

The system automatically:

• Creates a loan account with the disbursed amount
• Generates a repayment schedule
• Creates GL journal entries via the bound LOAN_DISBURSEMENT posting rule
• Updates the client's outstanding balance

4. Repayment

Repayments can be made through:

Method	Description
Cash	Teller receives cash and posts repayment
Bank Transfer	Repayment received via bank transfer
Account Debit	Automatic deduction from a linked deposit account

Each repayment is allocated to:

1. Penalties (if any outstanding)
2. Fees (if any outstanding)
3. Interest (accrued interest)
4. Principal (remaining amount)

GL journal entries are created automatically for each repayment.

Loan Account Details

Opening a loan account shows:

Section	Information
Summary	Outstanding balance, arrears, next due date, interest accrued
Repayment Schedule	Full schedule with expected and actual payments
Transactions	All disbursements, repayments, fees, and interest entries
GL Entries	Journal entries generated by this loan
Documents	Loan agreement, collateral documents
Activity Log	Audit trail of all changes

From the Schedule area, users can export the installment schedule as Download PDF. That PDF now uses the same tenant document identity configured under Organisation Details, while still showing the borrower, account, schedule, guarantor, and collateral detail specific to that loan.

Manual Component Adjustments

The Adjustments tab on an active loan account supports governed increases to interest, fees, or penalties. Availability comes only from the loan account's pinned product snapshot:

• Manual Interest Adjustments enables an interest increase.
• Manual Fee Adjustments enables a fee selected from the pinned pricing profile.
• Manual Penalty Adjustments enables a penalty selected from the pinned pricing profile.
• Account-level Manual Fees permits a fee to use the next eligible unpaid installment instead of a specifically selected installment.

The maker selects the component, amount, value date, reason, and supporting reference. The server returns a before-and-after preview before submission. Approval is controlled through the standard approval configuration for the Loan Component Adjustment entity, Create operation, and the loan's business unit. When one or more approved configuration rows exist, the request is reviewed in Approval Items by the configured roles and order. When no matching approved rows exist, approval is switched off and the adjustment proceeds automatically.

The exact approval chain is pinned into the submitted adjustment. Later configuration changes apply only to future submissions. Submitted adjustments are immutable: an approver can approve or reject them, but cannot return them for editing. A rejected correction must be submitted as a new adjustment.

Installment And Amortization Treatment

Rule	Result
Interest or penalty	Applied to one selected installment in the current approved schedule version.
Fee	Applied to a selected installment, or to the next eligible unpaid installment only when account-level fees are enabled in the pinned snapshot.
Due date	Preserved. The adjustment does not move the installment date.
Principal and amortization	Preserved. Principal, installment count, and future amortization are not recalculated.
Paid installment	May reopen when its new expected total exceeds the amount already paid.
Arrears	Refreshed after posting from the adjusted installment and its unchanged due date.
Restructure	Blocked while an adjustment is pending approval or waiting for GL completion.

Transactions And Accounting

Every completed adjustment creates one posted Adjustment loan transaction. Fee, penalty, and dependent tax lines also retain their pricing-ledger references. This keeps the schedule change, audit trail, and repayment allocation tied to one business event.

For an accrual-accounting product, GL posting must complete before the schedule is changed. Manual interest uses the approved interest-accrual rule, normally debiting an interest receivable asset and crediting interest income. Fee and penalty lines use their approved pricing-item rules, normally debiting the configured receivable asset and crediting fee or penalty income. A dependent tax line normally credits a tax-payable liability according to its own pricing rule. The actual accounts come from approved GL rules; the system does not substitute a generic account.

For a cash-basis or non-GL product, approval posts the schedule and canonical loan transaction without an adjustment-time journal. The existing repayment workflow recognizes or clears the components when cash is collected according to product policy.

Product Version Governance

Loan product flags can be changed on the current product configuration and captured by creating a new product version. Existing historical versions are not edited in place, and existing loan-account snapshots are not silently refreshed. A legacy account missing these controls requires an explicit, audited snapshot migration before manual adjustments become available.

Account Statuses

Status	Description
ACTIVE	Loan is disbursed and being repaid
ARREARS	One or more repayments are overdue
CLOSED	Loan is fully repaid
WRITTEN_OFF	Loan has been written off as a loss
RESTRUCTURED	Loan terms have been modified

Interest Accrual

Interest accrues daily through EOD processing:

• Flat rate — Interest calculated on original principal
• Reducing balance — Interest calculated on outstanding balance

Accrued interest is posted to the GL via the LOAN_INTEREST_ACCRUAL posting rule.

The exact accrual outcome depends on the selected product flags, including:

• interest calculation method
• interest balance calculation method
• day-count convention
• accrual accounting method
• whether late interest continues accruing

For compound-interest products, the interest balance calculation method controls what is added to principal before the next interest amount is calculated:

• Principal outstanding uses only unpaid principal.
• Principal plus capitalized interest includes interest that has already been moved into principal.
• Principal plus due interest includes unpaid interest that has been applied to the borrower balance.
• Principal plus overdue interest includes unpaid applied interest whose due date has passed.
• Principal plus accrued not due includes accrued interest that has not yet been applied to the borrower balance.
• Principal plus all interest includes capitalized, due, and accrued-not-due interest.

For cash-basis loan products, applying interest can update the borrower balance without recognizing GL income until cash is collected.

Arrears and Penalties

When a repayment is overdue:

1. Arrears detection — EOD processing identifies overdue accounts
2. Penalty calculation — Penalties are applied based on product configuration
3. Notifications — Automated alerts can be sent to the client and loan officer
4. Collections — Overdue accounts are flagged for follow-up

Penalty and arrears behavior come from the loan product, including:

• penalty calculation method
• penalty grace period
• minimum, default, and maximum penalty rates
• penalty capping method and percentage
• linked arrears setting profile

Next Steps

• Shares & Equity — Share account management
• Reporting — Loan portfolio reports