NetLoan - Dynamic Installment Overview

Overview

Simple Interest loan schedules in NetLoan follow a different methodology than other loans, like amortizing loans. NetLoan does not generate a full amortization schedule upfront, but rather only generates the initial schedule line since the schedule does not follow a predetermined amortization, and is heavily influenced by the actual payment dates.

This results in frequent updates to the schedule, at which point it makes more sense to generate the schedule as the loan progresses and payments are made. This article will walk through the general navigation, creation, and schedule generation for a simple interest loan.

Create Simple Interest Loan

  • Add primary and schedule information just as you would with any other loan. Be sure to use your previously created simple interest loan type.

  • Save Loan

Generate Schedule

  • Click the Generate Schedule button to generate the initial schedule line. 


  • Notice, only the initial schedule line has been added to the loan since the go forward schedule will be dependent on when payments are made rather than an amortization schedule. This line establishes the loan balance/note receivable on your balance sheet once journal entries are processed. This differs from how fixed installment loans operate in that the full amortization schedule is not generated upfront. 



Commence the loan, indicating that the loan is active and is ready to be recognized on your balance sheet.

  • Run initial balance entries (origination) by clicking the Run Journals button. This recognizes the loan balance on your balance sheet.

  • Once processed, the initial balance entry can be accessed on the loan record. The initial balance entry is used to establish the note receivable on the balance sheet. 

Automate Payment

The Automate Payment script was added, which creates Payment Requests that replace the use of NetSuite Invoices as previously done for amortized installment loans.

To view the NetLoan Payment Requests, navigate to the Related Records tab. Select the Payment Requests subtab. This is where you will be able to see the most important billing information at a glance.
 
To view the Payment Request record, click the "Edit" button on the left.

The Primary Information section shows the loan it relates to, the status of the payment, how the payment is to be applied to the loan, and at what frequency the payment is expected to be paid.
The Billing Information section shows the date on which the request was processed, the due date of the request, the number of days the payment is overdue, the terms, and the amount that has been paid.

If payments have been applied to this payment request, these amounts will show up as individual lines on the Payment Request Applications tab. When the borrower makes payments and a transaction for the cash payment is added to NetSuite, these can then be synced into the loan schedule to update the loan balance and go-forward interest calculation.

Syncing transactions to the loan schedule adds a schedule line and reduces the interest and principal on the date the payment was received. 

NOTE: Unlike amortized loans, interest continues to accrue on the full loan balance until a payment is received, rather than the date the payment is due and expected to be paid reflected on the forecasted amortization schedule

Sync Transactions

To sync transactions, click the Sync Transactions button on the loan record.

By default, only transaction lines tagged to the loan will be displayed on the Sync Transactions page. Carefully review this article to know how this is setup.

Select the transaction lines you would like to sync by checking the box.

Click the Sync button. 

A new schedule line will be added for the synced transaction which shows the application of the payment toward interest and principal on the date of the transaction.

Note: The timing of the payment that appears on the schedule line is determined by the date indicated on the transaction, NOT the date the transaction is synced.

These amounts will also show up as individual lines on the Payment Request Applications tab under Related Records. In the example above, the $500 payment is recognized as a partial payment towards the $9,108.81 amount.

Since there is no pre-computed amortization schedule, each month-end the system will produce the necessary interest calculations so that an interest accrual entry can be booked, recognizing the interest earned but not paid as of the end of the period.

Calculate Month-End Interest

To have NetLoan calculate the month-end interest, click the Calculate Interest button on the loan record.

Once processed, a new schedule line will appear in the amortization schedule for the month-end interest accrual.

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