Oracle Loans Lessons Learned

February 26, 2010 (1:20 2:00 PM)

Presented By

Sharon Peariso
speariso@astcorporation.com

Rajan Mankame
rmankame@astcorporation.com
1

Discussion Topics
Oracle Loans Implementation Experiences: How Loans integrates with Financial Modules How Loans Generates Income How Loans Generates Disbursements How Dates and Schedules affect loans processing How to use loan conditions How loan approvals function How loan restructuring works How to update loans What about data conversion? Questions and Answers

Loans Integrates with Other Modules

Accounts Receivable
Loans uses Customer Master file for Borrower or CoBorrower information
Can update Customer Master files from Loans

Loan billing program sends invoices to AR

Invoice number same as Loan number Separate invoices for principal, fees, and interest. Reverse last bill program provided.

Receipts application or adjustments in AR are reflected in Loans immediately.

Loans Integrates with Other Modules

Accounts Payable
Loans uses Supplier Master file for Disbursements
Can update Supplier Master files from Loans Payment need not be to borrower. Multiple disbursements are available.

Loans sends Disbursement Invoices to AP

Invoice number contains Loan number.

Once payment is disbursed, the loan is updated to active status.

Loans Integrates with Other Modules

General Ledger
Accounting
Loan types are defined with accounting for booking and billing of principal and interest. Fees are defined with accounting that will be created on the invoice when fee is billed. Once a loan is active, accounting can be interfaced to GL, similar to other financial modules. Funds checking is available for federal applications.

Loans Integrates with Other Modules

Accounting Setup for Loan Type

Loans Generates Income

Fees
Fees are defined by Administrator and can be recurring, event based, or manual. Fees can be assigned to a loan for every billing or a single billing. One receivable account is defined for use with all fees. Fee revenue accounting is unique for each fee. Fee accounting is passed to AR for fee invoice. Fees are billed at the same time as other billings. Can assign late penalties and grace periods to each loan.
7

Loans Generates Income

Loans Generates Income

Interest
Interest calculations are based on a number of day counts. Indexes can be defined to default interest rates. Interest bills can be on a separate schedule from principal. Interest rates can be changed as of a billing date only. Interest only billing is available.
Balloon payment

Loans Generates Income

10

Loans Generates Disbursements

Disbursements
Made through Payments Module May be single or multiple disbursements for a loan
Multiple disbursements may be to different suppliers.

Billing is possible only after final disbursement.

Loan Status becomes active.

11

Loans Generates Disbursements

12

Dates and Schedules Affect Processing

Dates
Origination Dates Application Date Disbursement Phase Start Date Terms Start Date Payment Start Date Maturity date is calculated based on loan term. Changing dates
Payment start date change does not change maturity date.

13

Dates and Schedules Affect Processing

Amortization Schedules
Created automatically based upon entered loan data. Maybe downloaded, customized, and uploaded
Customized schedule limits functionality Payoff calculation must be done manually If a manual bill is used, remaining balance of schedule must be manually updated. If loan start date changes, schedule must be manually updated. Current amortization schedule created after loan approval Incorporates billing and payment information

14

Dates and Schedules Affect Processing

15

Using Conditions

Conditions
Created before they are assigned to a loan Various types
Approval, Servicing, etc.

May be mandatory or not

If a mandatory for approval a condition must be checked for approval process to run.

Conditions may be added or removed from individual loans.

16

Using Approvals

Approvals
Approval steps use Oracles notification system based upon each loans class and type. Approver may approve, request information, or reject loan. Automatically generating AP invoice upon approval is optional. When approved the loan status becomes In Funding until disbursement is completed.
When payment is disbursed, loan status becomes Active.

17

Using Approvals

18

Using Restructuring

Restructuring using ERS (Extended Repayment Schedule)

ERS can be used to convert AR invoices to a loan. ERS can be used to restructure loan, or loans to same borrower, by combining all loan invoices (principal, interest, and fees) into a new loan This process can capitalize interest invoices Simple extension of time with same or changed interest rate does not require this process.

19

Using Restructuring

20

Updating Loans

Updates depend upon the loan status and field.

Once loan is saved the Borrower Loan number, and loan type cannot be changed. (Loan type dictates accounting.)

Loan officer can be changed on individual loan, or a process will change all of an officers loans to a new officer. This can be done at any status.

Once loan is approved, the payment start date, interest rate on future billings, and fees can be changed. Application date, terms start date, payment frequency, amount, and term of loan cannot be changed.
21

Data Conversion Customer Master files should be updated first. Disbursements

In order to achieve an active status for a loan, either disbursements or custom process can be used. If disbursements are converted, Supplier Master file must be updated before the disbursements are created.

Consider whether to bring over history or current balance only

Opening periods for historical information Allowing accounting flexfield values to be used that may have been end-dated The loan billing program creates one invoice at a time. Assigning a fee to a loan prior to current date

22

Data Conversion Tool

23

Data Conversion Tool

24

Data Conversion Tool

25

Data Conversion Tool

26

Data Conversion Tool

27

Data Conversion Tool

28

Questions and Answers

Questions and Open Discussions

Contact Information

Sharon Peariso
Email: speariso@astcorporation.com Phone:

Rajan Mankame
Email: rmankame@astcorporation.com Phone: For Presentation Copy Visit www.astcorporation.com/papers
29