Loan Products

Loan products are the templates that control how lending works in Pinkapple ERP. A loan account inherits its rules from the selected product, so product setup should be reviewed carefully before users create applications or accounts.

Navigation: Loans > Setup > Loan Products

Workspace Reference

Workspace	How Users Reach It	What Users Usually Do There
Loan Products	Loans -> Setup -> Products	Create, edit, approve, and review loan product behavior before live applications use it.
Credit Score Cards	Loans -> Setup -> Products, then open credit score card setup where available	Configure scorecards, criteria, ranges, and risk grades used during loan assessment.
Pricing	Administration -> Financial Setup -> Pricing	Maintain pricing profiles used for fees, penalties, insurance, tax, or interest components.
Loan Applications	Loans -> Operations -> Applications	Confirm how product rules affect borrower eligibility, schedules, scoring, approval, and disbursement.
Accounting Setup	Accounting -> Setup	Confirm GL posting rules and mappings before approving a product for live use.

What A Loan Product Controls

A loan product controls:

• Who can borrow.
• Minimum and maximum loan amounts.
• Term and installment rules.
• Interest calculation and application behavior.
• Repayment schedule behavior.
• Disbursement behavior.
• Repayment allocation order.
• Fees, penalties, taxes, and waivers.
• Grace periods and prepayment behavior.
• Arrears, collections, write-off, recovery, and restructuring behavior.
• Accounting mappings and income recognition behavior.

Product Types

The product type determines the normal lending pattern and which settings are relevant.

Product Type	Typical Use
Fixed term loan	Standard amortizing loans with a defined repayment schedule.
Dynamic term loan	Loans where schedule values may change or be recalculated over time.
Interest-free loan	Loans with no contractual interest, but which may still have fees or controls.
Tranched loan	Loans disbursed in several approved tranches.
Revolving credit	Credit facilities where the borrower can reuse available limit.

Creating Or Editing A Product

1. Open Loan Products.
2. Click Create Loan Product or edit an existing product.
3. Select the product type.
4. Complete the product identity, currency, category, and eligibility fields.
5. Review interest and schedule settings.
6. Review repayment, penalty, fee, tax, and prepayment settings.
7. Attach the required pricing profile where the product uses pricing-driven charges or interest.
8. Complete the accounting mappings required by finance.
9. Save and complete approval where required.

Product Flags

Product flags are configurable behavior switches and settings. They define what the product allows, blocks, calculates, or requires.

Common flag groups include:

Group	What It Controls
Interest	Calculation method, balance basis, accrual, application, compounding, and repricing.
Schedule	Installment structure, due dates, grace periods, business-day handling, and recalculation.
Limits	Amount ranges, term ranges, tranche limits, and credit-limit behavior.
Eligibility	Borrower type, group support, member count rules, and product restrictions.
Repayment	Allocation order, payment source behavior, early repayment, and future-payment handling.
Penalty	Late-payment charges, grace behavior, and caps.
Tax	Whether taxes apply to interest, fees, or penalties.
Rounding	How schedule and repayment amounts are rounded.
Account	Initial status, account numbering, fees, and operational defaults.

Administrators should override only the flags that intentionally differ from the product type defaults.

Interest And Accounting Method

Interest settings answer: how does the system calculate and apply interest to the loan?

Accounting method answers: when should the interest appear as income in financial reports?

For accrual accounting, interest income is recognized when earned, even if the borrower has not paid yet.

For cash-basis accounting, interest income is normally recognized when cash is collected.

Some institutions want operational interest tracking without immediate income recognition. In that case, product settings and accounting policy must be reviewed together so users understand whether interest affects borrower balances, income reports, or both.

Pricing Profile

Attach a pricing profile when the product uses configured interest, fees, penalties, insurance, taxes, or other charges.

Typical pricing items include:

• Scheduled loan interest.
• Disbursement or processing fees.
• Insurance charges.
• Early settlement charges.
• Penalties.
• Tax-related charges.

If a product depends on pricing-driven interest, the pricing profile should include an active scheduled interest item. If not, account creation or schedule generation may be blocked until a valid interest source is available.

Accounting Mappings

Loan products need accounting mappings so finance activity can post correctly.

Common mappings include:

• Loan principal or receivable control.
• Interest receivable.
• Interest income.
• Fee and penalty income where applicable.
• Repayment rounding gain.
• Repayment rounding loss.
• Write-off expense.
• Provision expense.
• Provision liability.
• Recovery income.

Finance users should verify these mappings before approving a product. Missing or incorrect mappings can block disbursement, repayment, interest, write-off, recovery, or reporting workflows.

Repayment Rounding Accounts

If a loan product rounds repayment schedules, the product must define both a repayment rounding gain account and a repayment rounding loss account.

Use these mappings for small differences created by schedule rounding. For example, if installment totals are rounded to whole currency units, the rounding difference is settled during repayment and posted through the product's rounding gain or rounding loss account.

These accounts are product-level mappings. They are not general system defaults, and existing loan accounts keep the product snapshot they were created with. If finance wants one shared loan-rounding account, both product fields can point to that same chart of account. If finance wants separate reporting, use separate gain and loss accounts.

If either account is missing, rounded repayment posting is blocked until the product accounting setup is completed.

Approval And Activation

Product approval protects the business from using incomplete or unreviewed loan rules.

Before approving a product:

• Confirm the product type is correct.
• Confirm eligibility rules match policy.
• Confirm amount, term, and repayment limits are correct.
• Confirm interest and schedule behavior are understood.
• Confirm pricing profile setup is complete.
• Confirm accounting mappings are complete.
• Confirm operational teams know how the product should be used.

Common Mistakes

• Enabling a product before accounting mappings are complete.
• Selecting accrual accounting when management expects cash-basis income reporting.
• Missing scheduled interest setup on a pricing-driven product.
• Allowing prepayment or restructuring without clear policy.
• Reusing one product for different policies instead of creating separate products.
• Changing product behavior without considering existing accounts.

Related Guides

• Loan Setup
• Loan Applications
• Loan Accounts
• Loan Operations
• Loan Interest
• Loan GL Setup