NetLoan - Month End Playbook

Use Case 

It is easy to miss steps when going through your month end processes. We have provided the checklist below as a baseline of what to check and do regarding your loans to close your books every month.

Month End Playbook

Optional Step: Confirm your bundle is up-to-date. 

1. Verify all loans are accounted for in the system. Specifically look at any Pending loans to verify they should not be active in the current month.
   1. We recommend reviewing this by navigating to NetLoan > Loan Management > Loan Register. Change the view to the "NetLoan DEFAULT REGISTER". You are then able to filter and can filter by the "Pending" status. View full size
   2. If any loans need to be started in the current month, you will need to generate schedules for all new loans. See our guide on how to mass generate loan schedules.
   3. Commence new loans. See our guide on how to commence loans for more detail.
2. Verify all modifications to loans for the month are processed. If any loans need to be modified, see our guide on how to modify loans.
3.  Verify any loans that are ending early have been paid off or forgiven. If any loans need to be paid off, see our guide on how to payoff a remaining balance. If any loans need to be forgiven, see our guide on loan forgiveness.
4. Run the monthly journal entries for the month. A detailed explanation is found in our guide for running monthly journals.
   1. Navigate to NetLoan > Process Monthly Transactions > Monthly Loan Transactions.
   2. Verify the Period is the current month. Check the box "RUN ALL MONTHS UP TO AND INCLUDING" if you want to run journal entries for all previous months (in case prior months have been missed) as well as the current month. If journals have already been run in previous periods, this will not affect those journal entries.
   3. Select Mark All to select all loans with a payment in the selected period.
   4. Press Generate Transactions. View full size

      Approvals Your company may have permission settings such that approvals are necessary to run journal entries. See our guide on approving journal entries for more detail.

5. Run the monthly short term journal entries if applicable. A reversing journal entry is recorded for each loan, this entry reclassifies the short-term portion of the loan liability from long-term to the pre-defined short-term loan liability account. See our guide on how to book short-term reclass journal entries.

   Timing Short-term reclass entries are typically run on a quarterly or annual basis. They can be run monthly if desired.

6. Run Monthly Bills/Invoices (if using the automated billing feature). See our guide on generating bills for more details.
   
7. Reconcile clearing accounts. Verify any balance in the clearing accounts are appropriate and expected. We recommend using the following reports to review the month-end balances in your clearing accounts:
   1. Loan Payable Clearing Account Reconciliation. This report shows payment activity by loan. This activity should net out to zero for each month if the correct payments are made and NetLoan schedules are correct. 
      • Valid Difference: You may have a balance in the loan payable clearing account due to timing differences with payments. 
   2. Loan Receivable Clearing Reconciliation This report shows receipts by loan. This activity should net out to zero for each month if the correct receipts are made and NetLoan schedules are correct. 
      1. Valid Difference: You may have a balance in the loan receivable clearing account due to timing differences with receipts.
8. Reconcile all loan activity. The subledger needs to tie to the general ledger (GL) at the end of every period. We recommend using the following reports to tie out the Loan Liability and Origination Fees:
   1. Loan Liability Reconciliation. This report shows the sum of all loan liability transactions per the GL and NetLoan Subledger by loan. The balances from the "Loan Liability (Contract or Base Currency)" and "Loan Liability (Subledger)" columns should tie to each other. This ensures all expected transactions and balances per the subledger have been properly reflected in the GL.
   2. Cap. Orig. Fee GL to NetLoan Reconciliation. This report shows the sum of all loan origination fees per the GL and NetLoan Subledger by loan. The balances from the "Origination Fees (Contract or Base Currency)" and "Origination Fees (Subledger)" columns should tie to each other. This ensures all expected transactions and balances per the subledger have been properly reflected in the GL.