Loans: Same as Cash Period

What does the Loans "Same as Cash" functionality do?  When utilizing the Loans Module, you can turn on the Loans "Same as Cash" functionality which will allow you to process the payments and have ASPIRE apply 100% of the payments toward Principal Only during this short period of time at the beginning of the Loan.  If the Customer happens to pay off the Loan in full prior to the end of the "Same as Cash" period, it is as though the Customer had paid the entirety of the Loan without paying any Interest, as ASPIRE will continue to calculate the interest, but it will not post as it typically does. 

Instead, it is handled as deferred interest and listed on the Accounting Screen as "Same as Cash Accrued Interest" and the interest will not be paid during this time.  But if the Loan is not paid in full before the end of the "Same as Cash" period, once the "Same as Cash" period ends the deferred interest turns into Accrued Interest and will revert that portion of the payments during this period to have split toward Principal and Interest as the Amortization Schedule initially indicated. 

This functionality only works on Loans and does not apply to Leases.

How do you turn on the Loans "Same as Cash" setting?  This can be done in one of 2 ways.

1. If you utilize the Pricing Functionality within the Configurable Forms module, you can tell the Pricing Option to automatically set the contract up with a specified period of time for the "Same as Cash" period.  After you configure your Loan Finance Products, within the Administration > Economics > Pricing > Pricing Templates tab, you are able to indicate that you want the "Same As Cash" period enabled, which will allow you to Set the Duration in either Days or Months.  Then when you complete the pricing from within the Configurable form, the system will automatically build the contract with not only the payment schedule you populated, but it will also set the "Same as Cash" Period on the Contract > Main screen for you (which can be set manually, see below).
   
   
2. Manually set the Loan contract up for "Same as Cash" on the Contract Main screen of the Loan, without needing to use a Configurable Form.  To do this, simply begin building the Loan Contract.  While on the Contract Explorer > Main screen, once you populate the Finance Product to be one of your Loan products, you'll see the "Same as Cash" field display within the Finance Product Details section.  Whatever you have set for the Commencement Date in addition to the Duration/Interval will calculate the Same as Cash End Date.  This must be set manually per individual contract and will not automatically populate for you based on the Finance Product selection.
   

What happens to the Principal/Interest splits for the payments processed during this "Same as Cash" Period?  Upon calculating the payment schedule of the Contract, the Amortization Schedule will populate and display the Principal/Interest splits of each payment.  Turning on the "Same as Cash" functionality will not edit the payments in the Amortization Schedule that fall within that timeframe to display as Principal Only.  The payments remain as initially calculated to help illustrate what the interest splits will revert back to once the Contract is removed from the "Same as Cash" period.  Regardless of the Finance Product setup for the Loan (Fixed Amort, Fixed Amort w/ Prin Adj, or Actual Daily Balance), ASPIRE will process the receipt of cash debit and offset it with a credit to Principal.  Even if the Amortization schedule shows a portion of the payment going to Interest.  However, upon initial payment receipt of these scheduled payments, ASPIRE will process the payments as follows during cash receipt which will match up to what the Amortization Schedule says even though it is within the "Same as Cash" period:

1. Debit the Cash Account
   
1. Credit the Principal interface (set in the Loans Interface).  This interface typically reflects the "Loan Principal Account".
   
2. Credit the Same as Cash Accrued Interest Receivable interface (hard coded within the Loans Module functionality, not able to be edited).  This interface reflects the same account defined within the Loans Interface for Principal:  "Loan Principal Account".
   

Since both the Principal Interface and Same as Cash Accrued Interest Receivable interface reflect the same account, upon posting through the GL entries, it will appear as though you have a Debit to Cash and a Credit to Loan Principal.  But if you go to the Detailed entry tab of the GL posting, you'll see the line-by-line breakdown, which will appear in accordance to the Amortization Schedule.  Looking at the GL Transaction History tab on the Contract, you'll see the payment broken down by the debit to Cash, a Credit to the Loan Principal Interface for the amount that truly hit the Principal, and a Credit to the Loan Same as Cash Accrued Interest Receivable Interface that currently hits the Loan Principal but will eventually move to the Accrued Interest Receivable Account if/when the Contract is removed from the "Same as Cash" Period and has not been paid in full during the "Same as Cash" Period.

 

 

What happens to the Accrued Interest Receivable, Deferred Income, Interest Paid, and Contract Earnings during the "Same as Cash" Period?  Nothing changes for these fields as there are no GL Entries hitting the Accrued Interest during payment receipt OR Month End/Daily Earnings.  Instead, you will see GL Entries hitting the Principal and Same as Cash Accrued Interest Receivable interface accounts when payments are received.  During Month End/Daily Earnings, no entries will hit the Accrued Interest Receivable or Contract Earnings GL accounts.  This process ensures that if the Loan happens to be paid in full prior to the end of the "Same as Cash" period that the Loan doesn't accrue Interest.  Instead, ASPIRE will keep track of the amount of Interest that would have been earned during this time within the Contract Earnings section of the Contract Main > Accounting Tab, within a section called "Contract Earnings", labelled as "Same as Cash Accrued Interest".  This amount is calculated as of "TODAY", which is a bit confusing if you are processing a Loan in the past.  However, when the Contract is removed from the "Same as Cash" period, the Contract Earnings section will rightfully calculate and populate the true amounts for Contract Earnings, Interest Paid, Accrued Interest Receivable, and Deferred Income on the Accounting tab.  

If there are any other Contract Items on the Contract, those items WILL have earnings calculated and posted during the month end process.  

What if the Loan isn't paid off in full prior to the end of the "Same as Cash" period?  What happens to the Interest?  Once you process a Contract Modification to remove the "Same as Cash" indicator, ASPIRE will populate GL Entries to move the portion of the Payments that went to Principal over to Interest as the Amortization schedule indicated.  This process will also update the Accounting screen so that the Earnings section no longer displays "Same as Cash Accrued Interest" and instead displays the Contract Earnings (amount of Interest earned), Interest Paid, Accrued Interest Receivable following the modification, and updates the Deferred Income.  These GL Entries will also be listed within the GL Transaction tab of the Contract.

How do you remove the Contract from the "Same as Cash" period?  Currently, you have to perform a Contract Modification using the date after the Same as Cash End Date passes and deselect the check mark next to "Same as Cash" within the Contract Main screen in the Finance Product Details section and post the modification.  Upon posting the GL Entries, you'll see:

1. a Debit to the Accrued Interest Receivable Interface for the Total Amount of the Accrued Interest Receivable.  This is for the timeframe between Commencement and the Date of the Modification (3/11/2023 in this example for $236.86).  However, on the Accounting Screen, you'll only see the difference between this amount and the Credit to the Accrued Interest Receivable, which is $3.38 in this example because you have accrued through 3/11/2023 in the date of the modification, so 1 day's interest.
   
2. a Debit to the Same as Cash Accrued Interest Receivable Interface for the amount of Interest that was actually paid in the payment stream while the Contract was in the "Same as Cash Period".  This amount will match what the Amortization Schedule said would split to Interest during this timeframe.  This also moves the total amount on the Accounting Screen into the Interest Paid and reduces the amount that previously displayed in Principal Paid.  In this example, $231.48.  This will result in the Contract Earnings section no longer displaying "Same as Cash Accrued Interest Receivable".
   
3. a Credit to The Accrued Interest Receivable Interface for the amount of Interest that was physically received in payments, which matches the Debit to the Same as Cash Accrued Interest Receivable Interface.  In this example, $231.48.
4. a Credit to the Interest Income Interface for the amount of Interest that has been earned between Commencement and the Date of the Modification, given the Contract was not paid in full during the "Same as Cash" Period.  In this example, a total of $234.86.  This amount displays in the Contract Earnings section on the Accounting Tab.
   

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