Tools for Accounting Contract Debt in Brainysoft Software

In Brainysoft software, all balance changes on contracts occur through such tools as Operations, Documents, Processes

Processes can contain several Documents.

Documents can contain several Operations.

I.e., an Operation has minimal logic, while a Process has the most complex logic.

Operations

Consists of several parameters:

1. Amount type
2. Movement type
3. Sign
4. Payment type
5. Balance/Off-balance
6. Corresponding tranches where movements occurred
7. Amounts

where,

• Amount type AmountTypes, a directory of possible types of debt on contracts.

Obtaining the directory amount types

• Movement type, ActionType - this is what happens with the debt (accrual/repayment/write-off/reversal....)
• Sign - sign 0 - plus 1 - minus Increase of client's debt occurs with a "plus" sign, decrease with a "minus" sign, i.e. accrual of principal (disbursement), interest, penalties on credit contracts occurs with a plus sign, as this increases the client's debt, while on deposit contracts (client's deposits) - with a minus sign, as this increases the organization's debt to the client
• Payment type "paymentTypeId", possible values: 101171 - Bank 101172 - Cash 101173 - Empty

For operations that occur at the expense of "payments", i.e. directly related to cash flow (Disbursement, Repayment, Prepayment, Overpayment), values can be Bank/Cash, depending on how the payment was made

For internal operations that are not related to cash inflow or outflow - the payment type is always "empty". (Accrual/prepayment offset/repayment from prepayment/write-offs/reversal/restructuring/assignment, etc.)

• Balance/Off-balance "Balance"/"outBalance" - additional attribute for

Accounting for interest, penalties, and fees can be moved off-balance when overdue, which allows these accruals to be separated from the general accounting and not uploaded to 1C, while continuing to maintain accruals in the system. When debt is repaid, accruals from off-balance can be transferred to balance.

• Tranches - periods from the contract payment schedule where movements directly occur: "issueDate" - tranche start date, "repaymentDate" - tranche end date

The schedule may consist of one or several tranches. Each subsequent tranche always starts from the repayment date of the previous one. Accruals for a tranche begin from the day after the tranche start date through the tranche end date inclusive. For example:

1. "issueDate": "2015-09-20", "repaymentDate": "2015-10-20",
2. "issueDate": "2015-10-20", "repaymentDate": "2015-11-20",

interest on the first tranche will be accrued from 21.09.2015 to 20.10.15 inclusive of both dates. Therefore, the next tranche starts from 20.10.15

• Amount. "amount" is reflected in local currency (in which accounting is maintained) and foreign (recalculation is done by exchange rate). Local for Russia is always rubles. Foreign is specified in the contract "local": 25434.7, "foreign": 0

One operation can form only one movement for one amount type. For example, interest accrual: Amount type "Interest", Movement type "Accrual", sign "Plus", payment type "Empty".

There is a restriction on the combination of all these parameters in the system, since operations are ultimately uploaded to 1C, where corresponding postings are prescribed for each operation type (possible variants), i.e. Accounting must understand the meaning of this operation and how to reflect it in the records. You cannot make an Accrual operation with a minus sign, or a repayment with a plus sign. Or from an accounting point of view, you cannot reverse principal or other similar restrictions. For this purpose, BS has a "correct postings" directory where these restrictions are set.

However, due to the fact that the system has configurable Contract Processing logic and automatic payment distribution, it is more convenient to "manage" several operations at once.

List of possible operations

Documents

Can contain several operations at once, for example: Document "Repayment" contains the operation: standard operation "Interest Repayment" and operation "Principal Repayment". Both operations in this case relate to operations associated with cash flow

Processes

Can contain one or several documents. For example, Process "Processing with early prepayment offset and schedule recalculation" - contains documents: Interest accrual, prepayment offset, schedule recalculation.

The entire list of processes can be divided into two categories:

1. Related to Cash Flow:

• Disbursement
• Repayment
• Early repayment
• Repayment with prepayment

These processes can only be executed if there is cash flow on the contract, since the process references the cash flow amount on which balance changes are made.

The order of debt type repayment applied is specified in the contract product.

2. Internal - not related to or not referencing cash flow on the contract:

• Contract processing
• Processing with prepayment offset
• Processing without penalties
• Processing with additional accrual without penalties
• Processing with early prepayment offset
• Processing with prepayment offset and schedule recalculation
• Prolongation
• Mandatory interest accrual
• Transfer of prepayment from interest to principal
• Early prepayment offset
• Transfer of interest to deferred interest
• Future interest accrual
• Stop penalty accrual
• Start penalty accrual
• Schedule recalculation
• Discounting
• Stop interest accrual
• Start interest accrual
• Closing by assignment
• Interest accrual until end of loan
• Forced schedule recalculation
• Repayment fee accrual
• IFRS Reserve
• IFRS Reserve rate calculation

These processes can be created for a single contract, for a selection, or in batch for all contracts without selection.

Each process performs accruals and balance adjustments on the contract according to the embedded process algorithms (description of each below).

Disbursement – accrues principal debt by tranches according to the Schedule. If the product conditions provide for a fee upon disbursement, additionally, the fee is accrued and repaid (provided there is incoming cash flow for the fee amount)

Repayment – repays current debt in the order specified in the contract's credit product for the amount of unaccepted cash flow on the contract.

Early repayment - repays current and future debt in the order specified in the contract's credit product for the amount of unaccepted cash flow on the contract.

Repayment with prepayment – repays current debt, as well as distributes the excess amount paid to Prepayment for principal or interest in accordance with the order specified in the credit contract (prepayment offset method).

Contract processing – accrues debt as of the processing date on the contract according to the settings established in the contract.

Processing with prepayment offset - accrues debt as of the contract processing date, as well as offsets the existing prepayment on the balance for the amount of accrued debt already due for repayment, according to the settings established in the contract.

Processing without penalties - accrues debt (EXCEPT PENALTIES!) as of the processing date on the contract according to the settings established in the contract

Processing with additional accrual - accrues debt on the contract processing date, but calculated "until the end of the current tranche", i.e. debt is actually calculated and accrued for the future period until the end of the tranche on the processing date.

Processing with additional accrual without penalties - accrues debt (EXCEPT PENALTIES!) on the contract processing date, but calculated "until the end of the current tranche", i.e. debt is actually calculated and accrued for the future period until the end of the tranche on the processing date.

Processing with early prepayment offset – performs: 1) current debt accrual; 2) prepayment offset and repayment from it not only of current but also future debt

Processing with prepayment offset and schedule recalculation - performs: 1) current debt accrual; 2) prepayment offset against current debt repayment (due for payment); 3) Schedule recalculation for the remaining principal amount with annuity payment change only under certain conditions!

Prolongation – extends the schedule for the specified prolongation period in the credit contract ("Prolongation period" field).

Mandatory interest accrual – Accrual of interest mandatory for accrual upon full early repayment. The number of days (starting from the disbursement date!) for which accrual must be performed is specified in the contract's credit product in the "Mandatory interest accrual period" field.

Transfer of prepayment from interest to principal – transfers Prepayment from interest to principal for the entire available Prepayment amount on interest as of the process date. The need for such a process arises if previously Prepayment amounts were distributed according to the Schedule, but at a certain point the contract needs to be repaid early. Since the remaining principal can only be repaid from existing Principal Prepayment (not interest), it is necessary to transfer the Prepayment.

Early prepayment offset – offsets prepayment and repays all debt (current and future) for the amount of existing prepayment.

Transfer of interest to deferred interest - writes off accrued interest from one tranche and accrues them (for the same amount) to the next tranche, but as amount type "Deferred interest", for example, to postpone overdue on them until the next tranche.

Stop interest/penalty accrual – stops interest accrual from the process date by adding an attribute according to which accruals on the contract are not performed

Start interest/penalty accrual – resumes accruals from the process date. Important!!! For the period from the stop date to the resumption date, accruals - amounts are not restored! I.e., the period between these processes remains without accruals.

Schedule recalculation – recalculates the Schedule for the remaining principal, only on the scheduled tranche repayment date, provided there is an "Schedule recalculation on scheduled payment date" attribute in the credit contract

Closing by assignment – writes off the contract balance as of the process date and sets the closing status "Written off by assignment"

Interest accrual until end of loan – accrues interest on the contract according to the Payment Schedule for the entire future period until the end of the term as of the process date.

Forced schedule recalculation – recalculates the Payment Schedule on the scheduled payment date with annuity amount recalculation, without checking credit product settings

Repayment fee accrual – accrues repayment fee. The fee amount is calculated at the rate specified in the Banks directory. The process is included in auto-accept if necessary.

Discounting – accrues the Discount amount, provided there is a "Discounting" attribute in the contract's credit product

IFRS Reserve rate calculation – determines the rate for IFRS reserve by running the scoring model on the contract and writes the rate to the contract in the "IFRS Reserve rate" field

IFRS Reserve – accrues reserve according to the specified IFRS reserve rate in the contract.

Regular reserve - accrues reserve on the contract based on settings entered in directories: Loan Categories, Overdue Degrees, Asset Classification by Scores. The process performs accruals only when run on the last day of the month.

Debt Formation

In Brainysoft, debt formation on a contract occurs through operations.

All operations occur within the contract schedule framework. All debt is distributed by tranches.

1. Cash disbursement: at the moment of disbursement, a cash flow object is created (cash flow: payment order/cash order/online payment) and acceptance (operation) for accruing the entire principal debt amount by tranche (i.e. debt is immediately distributed according to the schedule calculated in accordance with the credit product settings specified in the contract)

2. Interest/penalty accrual and other debt types: such accruals occur daily or by event.

• Interest - daily (processing runs at 00:01 and within 1-2 hours).
• Penalties – upon overdue (off-balance), daily (the same overnight Processing).

3. Repayment/Repayment from prepayment: occurs by event – cash flow creation. I.e. when reflecting a received payment from the client. Brainysoft has auto-accept configured – an algorithm for launching necessary processes and operations depending on the situation (early repayment, overdue, partial early repayment).
4. Contract cancellation: initiated by an API method from an external system. The method launches the corresponding operation for debt adjustment and contract closure with closing status "Cancelled".
5. Product return: initiated by an API method from an external system. The method passes the amount to be returned. In the program, a series of operations occur, through which the schedule is recalculated for the remaining amount taking into account the return.
6. Other adjustments: reversal, write-off – manual operations created by users.

List of possible operations

API Methods

Below are API methods for obtaining operation information:

1. Method allows obtaining all operations on a contract with a date less than or equal to the passed date inclusive, meaning roughly - if the date passed to the method is, for example, 2017-09-20, then all operations returned are actually less than or equal to 2017-09-20 23:59:59 In the Brainysoft interface, it is used to display the "Detailed operation breakdown" table in the Contract Financial Information
2. In the method actors (processes, documents, operations) for the specified period are returned i.e. if a period is set with two dates 2017-09-01 and 2017-09-20, then the final selection will be for operations from 2017-09-01 00:00:00 to 2017-09-20 23:59:59 This method has an optional parameter portion-size, in which you can pass the number of elements per page. If this parameter is not specified, then the value from Constants "Number of elements per page" is used (currently set to 100).