NetLoan - Cutover Method / Mid-Life Transition to NetLoan

Cutover Method / Mid-Life Transition to NetLoan

When uploading loan data into NetLoan, users can choose between two methods: (1) upload all historical information (2) upload as of a cutover date. This article will outline how to import loan data using a cutover date. More particularly, this article will focus on how to populate the Loan Upload template using a cutover date.

The cutover date will be the date your loan amortization schedule begins in NetLoan (if the loan commenced on/before your cutover date). Any detailed loan information prior to the cutover date (i.e. historical payment dates, interest rate changes, monthly amortization amounts, etc.) will not be captured in the NetLoan Loan record. If detailed historical data is desired, it can be attached as a separate file under the 'Documents' subtab of the loan record:

The most common cutover dates are (1) the Go-Live date (2) the beginning of the most recent fiscal year. Using the Go-Live date as the cutover date ensures that no historical data needs to be input into NetLoan. Using the beginning of the most recent fiscal year as the cutover date may require some historical data to be input into NetLoan, but provides data that can easily be tied out to financial statements and allows for a full year of reporting within NetLoan.

Note that the cutover method is primarily intended for borrowers (as historical schedule information is generally more easily accessible to lenders than it is to borrowers).

STEP-BY-STEP PROCESS

The following steps are for populating the 'Main' tab of the Loan Upload Template:

  • In the 'Origination Date' column, enter the cutover date (if the loan commenced on/before the cutover date). If the loan commenced after the cutover date, enter the actual date the loan commenced.
  • In the 'Initial Payment Date' column (if this column is being utilized), enter the first payment date on/after the cutover date. If the 'Payments' tab will be used for inputting all payments instead, enter the cutover date in the 'Initial Payment Date' column.
  • In the 'Initial Loan Balance' column, enter the beginning of day loan principal balance as of the cutover date.
  • In the 'Annual Percentage Rate' column, enter the APR as of the cutover date.
  • If the loan had an accumulated accrued interest balance as of the cutover date, enter the amount of accumulated accrued interest as of the cutover date in the 'Beginning Accumulated Accrued Interest' column. 

The following steps are for populating the 'Payments' tab of the Loan Upload Template:

  • In the 'Effective Date' column, only enter payments that were effective on/after the cutover date.

The following steps are for populating the 'Rates' tab of the Loan Upload Template:

  • In the 'Effective Date' column, only enter rate changes that were effective on/after the cutover date.

Loans with Mid-Month Payments

Special consideration must be given to loans with mid-month payments (i.e. payments that occur on a day other than the last of the month). Since NetLoan can only go live on the 1st of a given month, the correct amount of accrued interest for the period from the last payment to the go-live date must be input into NetLoan. There are two cutover methods for loans with mid-month payments:

  1. Cutover Date = Last Payment Date

With this option, the cutover date for mid-month-payment loans will be the last payment date prior to the cutover date being used for the end-of-month-payment loans. For example, if the cutover for end-of-month-payment loans is 6/1/2025 but there is a loan with mid-month payments and payments are made on the 15th, the cutover date for this specific loan would be 5/15/2025.

This option is best for clients who do not currently book accrued interest at month-end. With this option, the client only needs to know the loan balance as of the last payment date. NetLoan will calculate the accrued interest for the period between the last payment date and the end of the month.

Clients will need to manually record accrued interest as of the go-live date on the balance sheet for mid-month-payment loans (as shown in the NetLoan schedule), even if it's not part of their current process. This is because the NetLoan go-live journal entry will record the loan payable/receivable, the accumulated accrued interest payable/receivable, and the go-live clearing account. Clients will then book a manual reversing entry to zero out the go-live clearing account and remove the existing loan payable/receivable and accumulated accrued interest payable/receivable balances from their balance sheet. If accrued interest was not recorded to the balance sheet previously, this manual reversing entry would not balance.

2. Cutover Date = Same Cutover Date as End-of-Month-Payment Loans

With this option, the cutover date for mid-month-payment loans will be the same date as for end-of-month-payment loans.

This option is best for clients who already book accrued interest at month-end, as they will have month-end accrued interest balances readily available to input into NetLoan, rather than relying on NetLoan to calculate accrued interest.

As with the first option, clients will need to manually record accrued interest as of the go-live date on the balance sheet so that the manual reversal journal entry after go-live will balance.


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