EDM: Interest Netting Against Principal When Net Deal Cashflows Is NOT Selected
(Doc ID 2832590.1)
Last updated on JANUARY 09, 2022
Applies to:PeopleSoft Enterprise FIN Deal Management - Version 9.2 to 9.2 [Release 9]
Information in this document applies to any platform.
When an initial lending/borrowing are done on the same day interest is being paid and the Net Deal Cashflows is not selected on the Define Instrument or Define Instrument Template, the lending wire nets the interest from the principal amount while the debt side still populates the wire to send. No netting should occur, the lending side should send the initial amount and the debt side should send the wire amount.
1.Define Instruments (note the Net Deal Settlements Cashflows is NOT checked)
Menu > Deal Management > Administer Deals > Define Instruments
2. Define Instrument Template (note the Net Deal Settlements Cashflows is NOT checked)
Menu > Deal Management > Administer Deals > Define Instrument Templates
3. Create Deal
Menu > Deal Management > Capture Deals > Deals
Trans and Settlement Date = 9/30
Facility ID = UW-MOOCV
Term = 22
Rate = .19
Par and Settlement Amount = $1,000,000.00
4. Cashflows (interest row is on 10/1 and initial principal is full amount and interest is full amount)
5. Interest Dates Link
6. Update Payment Date of Interest Row to 9/30 as interest is paid on month end
7. Cashflows (interest is now netted against principal amount but still shows it’s own row for full amount)
8. Select Settlements – wire is netted and should NOT be as there was no netting configuration on the instrument or template (used demo settlement instructions)
Menu > Cash Management > Settlements > Select Settlements
9.Update the interest row payment date to 9/30 as interest is paid on month end
10.Cashflows – (the interest amount is netted against the initial borrowing (should not be as the Net Cashflows is NOT checked on either the Instrument or the Instrument Template)
11.On the debt side, there is still an interest wire to send
12.Update payment date
13.Netted (should not be)
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