How to: Handle upfront fees

Upfront fees

For fixed/floating rate loans, credit facility and leasing loans

Enter a new tranch of type ‘L’.

Capital amount: Zero

Interest %: 0

Roll d: Same as End date

Up front amount: Entered as a minus amount in field "Oth C/R amount" and accounted and presented in reports as amount type Other C/R (Cost/Revenue).

When the tranche is generated go to the Interest payments section and change the payment date for the fee to the same date as the value date. If you do not wish to amortize the cost, then set end day to +1BD. Do not change the payment date for the Amortization section (the upper part of the window).The fee amount is displayed to the right in the Interest payment section. If you want to amortize the cost you need to register the cost in your home currency, otherwise you will get FX g/l effects on each amortisation, (exception if you have version 6.19.0, then you can register the upfront fee in any currency).

Accounting

Realized Upfront fee

The fee has its own ‘Amount type’ ‘Oth C/R’

Unrealized upfront fees (Oth C/R)

Upfront fees paid in advance 

Prerequisite: The total fee amount is booked as an expense on a profit/loss account when it is paid, (event maturity)

Month end:  The prepaid remaining fee is booked to deduct the prepaid amount. The most common choice is to reverse the remaining expenses first day in coming month and book new remaining fees the following month end.

Debit – Val C/R prep remain: Balance sheet account

Credit – C/R prep remain: Profit/Loss account (Note! Should be the same account as the paid, realized, fee was booked on)

Pre Close of an upfront fee

Before changing the dates you must set the Status to Reg for both Ref no. Change the Mat date on the transaction (lower part), make sure the payment date is the same as original. Also change the Mat date on the head Ref (upper part) and here the payment date must be the same as Mat date., then save. Confirm and Complete the transactions. The accrual of the fee shall be updated.