SECTION 15 LINE OF CREDIT PROCESSING
This section describes how the BANCADO Deposit Account System and the BANCADO Installment Loan System are used together to perform the accounting functions necessary for overdraft protection and other line-of-credit type loans.
Options are provided for automatic loan repayment from customers' checking accounts and for scheduled repayment by customers. A supplemental statement listing detailed loan activity is available for inclusion with the customer checking account statement. Interest and insurance charges are calculated on a daily basis and are added to the loan account by the normal installment loan system update procedures.
On a daily basis, bank personnel will enter new line-of -credit account data, advances, and loan payments. As an option, advances to cover overdrafts may be made automatically by the Automatic Transfer section of the deposit account system. The special supplemental statements are printed at the same time as the customers' regularly scheduled deposit account statements.
There are several coding conventions used to control line-of-credit loan processing. Basically, funds are advanced and supplemental statements are printed based on the presence of an automatic loan number in the deposit account record. It is suggested that the same six digit account number be used for both the deposit account and the loan. There may be only one loan per deposit account and only one deposit account per loan.
The maximum available loan amount is stored in the overdraft limit field of the deposit account record. Reporting programs deduct the current loan balance from this amount to show the current credit available.
The loan repayment plan is entered into the payment schedule section of the installment loan record. This must be changed as advances are made. The advances are entered as transactions using transaction code 11.
All other features of deposit accounts and installment loans, such as flexible service charge calculation and variable interest rates are available to line-of-credit accounts.
The following chaart illustrates the relationships that must exist between the installment loan and the deposit account systems:
| Element | Deposit Account System | Installment Loan System |
| Account Number (6 digit maximum)
|
Account Number | Automatic Payment Acct. Number (only if payment is to be automatic) |
| Loan Number | Overdraft Loan Number | Loan Number |
| Loan Limit | Overdraft Limit | N/A |
| Loan interest type | N/A | Simple Interest (3) |
| Insurance type(s) | N/A | Simple (3) |
| Day of month for payment | N/A | Same as day of month for deposit account statement cycle |
| Payment Due Date | N/A | Same as date of next statement cycle |
| Payment Schedule | N/A | 99 payments at monthly amount plus 1 payment at $99,999.99 |
15.3 DAILY PROCESSING
As a new line-of credit accounts are established, the deposit account involved must be coded with the associated loan number in the Overdraft Loan Number field or the deposit account record. This is accomplished through the New Account routine for new deposit accounts and through the Change Account routine for pre-existing accounts. There is no need to create a loan record for an account until funds are actually advanced.
Each day, the overdraft list must be reviewed to determine if line-of-credit advances are required. The individual performing the review will look for those accounts appearing on the list with an Overdraft Loan Number and sufficient available credit.
When an advance is made, the following steps are performed:
1. Stamp the customer's Overdraft Notice to indicate that an advance has covered the overdraft.
2. Prepare an Installment Loan Advance ticket (transaction code 11) and a Deposit Account Credit ticket (transaction code 41) for entry to the system.
3. Create a new loan record for the amount advanced if the loan doesn't already exist in the installment loan file.
4. Adjust the Payment Schedule in the installment loan record to reflect the increased balance if necessary.
15.4 MONTHLY PROCESSING AND STATEMENTS
Because of the relationships between deposit accounts in the Deposit Account System and Line-of-credit loans in the Installment Loan System, care must be taken to perform monthly statement procedures in the proper sequence.
Although the term "monthly processing" is used here because most banks will be preparing statements on a monthly basis, the procedures described may actually be performed on any clcle chosen by the bank. And the procedures could be performed several times during the month for line-of-credit accounts assigned to various cycles during the month.
On statement day for any given cyclel, the following processing sequence must be followed:
1. Post normal daily transactions as necessary to both the Deposit Account System and the Installment Loan System to bring both systems to the point that you would normally run the Transaction Journal Update for the day.
2. Perform a backup procedure in case of an error during the following processing.
3. Print the supplemental line-of-credit statements by using selection number 43 from the Deposit Account System menu. Upon entry of this selection, the following prompts will be dispslayed on the screen:
4. For cycle start date, enter the date that statements were last run for this cycle and press RETURN.
5. For cycle end date, enter the current date. Both the Installment Loan System date and the Deposit Account System date must agree with the date entered here.
6. For payment due date, enter when customer payments will be due. If payments are automatic, enter the current system date.
7. After the prompt "Enter cycle(s) to be printed", key one or more deposit account cycle codes separated by commas and press RETURN.
8. For sort sequence, enter the appropriate code for the sequence desired.
9. After the prompt "Print Bank name and address? (Y/N)", respond with an "N" if your forms have been pre-printed with your bank's name. Otherwise enter a "Y" and press RETURN.
10. Enter two lines of message to be printed on the bottom of the statement.
11. Check the statements printed carefully.
12. Repeat the above procedure as necessary for additional copies of the supplemental statements.
13. Post the appropriate debits (transaction code 51) to any deposit accounts set up for automatic payments.
14. Post the appropriate credits (transaction code 40) to any loans set up for automatic payments.
15. Continue with your normal processing procedures for statement days, including the Transaction Journal Update, Service Charge posting, and Customer Statement processing.
16. Include a copy of the supplemental line-of-credit statement with the deposit account statement for each line-of-credit customer.