Charge-Offs

Charging off a Lease or a Loan in ASPIRE is a straightforward process although there are a couple different methods and options to do so.  There are two ways to process a Loan charge-off.  The first way uses a contract modification and the other way uses a rewrite type.  There are subtle differences between the two methods.  Leases will always utilize a contract modification.  A global setting controls the variability for loan Charge-Off’s:

Loans

Contract items for charge offs are system defined so users do not need to create a new contract item for them.  The only other configuration for these items are the interface accounts.  Once they are configured, open the contract > Contract Explorer > Main.  Select Rewrite Type > Contract Modification and then Charge-Off for the reason code if applicable.  Go into the Financing and Adjustments tab and add a non-financed contract item.  Using the contract modification allows for partial charge-off to principal.  The value field will default in the outstanding principal but it can be adjusted as necessary. 

Charging off though re-write type requires the configuration change in the first screenshot.  Once this has been updated, rewrite type becomes available.  Simply select a Reason Code, Effective Date, and hit Post.  The contract status will change to Charge-Off using the rewrite type.

Loans – Journal Entries

Below are examples of Journal Entries based on the Charge-Off type for the Loan and what it looks like if the contract continues to be serviced. 

Contract Modification

Re-write Type

Leases

For leases, the process is like the loan example with the contract modification.  There are system defined contract items for Fee, lease, Residual, and Sales Tax Receivable.  Select any one of these to charge-off the respective amount.  The system will default the outstanding amount into the field but this can be changed as in the loan example.

Below are the Journal Entries that would be expected in ASPIRE.