Loan Type
A staff loan, a salary advance and a motorcycle loan are three different arrangements with three different ceilings and three different sets of paperwork. A loan type is one of those arrangements, and it is what the loan request screen checks a request against before anyone approves it.
What it is for
Two jobs. It names the payslip line the instalments come off, and it holds the eligibility rules that a loan request is tested against.
The wage type is the mechanical half. Every instalment of every loan of this type is deducted through it, and the payroll run picks up an instalment once the period being run has reached the instalment's date. Pick a wage type on the credit side, because that is the only direction that reduces net pay.
The eligibility rules are the half the client argues about. A man must be confirmed, because a loan to somebody still on probation is refused outright, and he must not be serving notice. Beyond that, this screen decides how long after confirmation he has to wait, how much he may borrow as a percentage of his pay or as a flat ceiling, whether the ceiling counts what he has already repaid, whether the loan may be spread at all and over how many months, and which days of the month a request may be submitted on.
Those checks run when a loan request is raised. The day of month window is not applied when finance creates a loan directly on the Employee Loan screen, which is the intended escape hatch for a case that has been agreed outside the normal cycle.
The interest fields are the exception and are worth knowing about before a client is told otherwise. Interest Base, Interest Category, Interest Rate, Interval and Deduction from payroll are all stored and are read by nothing. The interest a loan actually carries is the rate typed on the loan request itself. Fill them in as a record of the client's intent if you like, and do not promise that changing them changes a repayment. The Interest Category list also offers two entries that carry the same code, so the choice between them has no effect either way.
Every field, in plain words
Basic Data
| Field | What it means | What to put in it | Notes |
|---|---|---|---|
| Loan Type | The code | STAFF, ADVANCE, BIKE | Required |
| Name | How the loan type reads in a list | Staff loan | Required |
| Block | Stops the loan type being picked on a new request | Leave it clear | Block it rather than deleting it when a scheme is withdrawn, so the loans already running are not disturbed |
Loan Condition
| Field | What it means | What to put in it | Notes |
|---|---|---|---|
| Wage Type | The payslip line the instalments are deducted through | 7100 Staff loan recovery | Pick from the list. It must be on the credit side. Without it no instalment is recovered |
| Wage Type description | The name of that wage type | Fills itself | Read only |
| Interest Base | What the interest would be charged on | Fill it as a record of the client's intent | Stored and read by nothing. The charged rate comes from the loan request |
| Interest Category | Flat or reducing balance | Fill it as a record of intent | Stored and read by nothing. The list offers two entries with the same code, so the choice has no effect |
| Interest Rate | The percentage the client intends to charge | Fill it as a record of intent | Stored and read by nothing. Type the rate on the loan request |
| Deduction from payroll | That instalments are recovered through payroll | Tick it | Stored and read by nothing. The instalments are recovered through the wage type regardless |
Loan Policy
| Field | What it means | What to put in it | Notes |
|---|---|---|---|
| Required Loan Proof | Whether a request must come with the documents listed on the Proof tab | Tick it for a loan that needs a bill or an estimate | |
| Period Restriction | Whether requests are only accepted during part of the month | Tick it if the client wants a submission window | Checked on a loan request only, not on a loan created directly by finance |
| Day From | The first day of the month a request may be submitted | 1 | Only used when Period Restriction is ticked |
| Day To | The last day of the month a request may be submitted | 10 | A request outside the window is refused with the two dates named |
| Applicable After Months | How many months after his confirmation a man becomes eligible | 6 | Counted from the confirmation date, not the joining date |
| Installment Based | Whether the loan may be repaid in instalments | Tick it for a loan, leave it clear for an advance | Unticked means the whole amount must come off in one go, and the request must say one instalment |
| Installment Period (Months) | The most instalments the loan may be spread over | 12 | Only used when Installment Based is ticked. A request asking for more is refused |
| Maximum % | The ceiling as a percentage of his monthly pay | 300 for three months of pay | Taken of the earning side of his current salary record. When this is more than zero it is what decides the ceiling |
| Maximum | The ceiling as a flat amount | 200000 | Used when Maximum % is zero |
| Consider Repaid Amount in Limit | How much of his ceiling a past loan still uses up | Tick it so only the outstanding balance counts against him | Unticked means everything ever lent to him counts, so a man who has borrowed and fully repaid cannot borrow again. Requests waiting for approval always count either way |
| Interval (Months) | Intended gap between one loan and the next | Leave it | Stored and read by nothing |
Proof
The documents a request of this type has to come with. Used when Required Loan Proof is ticked.
| Field | What it means | What to put in it | Notes |
|---|---|---|---|
| Line # | The line number | Fills itself | Leave it |
| Loan Proof | A document the requester must attach | ESTIMATE, MEDREPORT | Pick from the list |
| Required proof | Whether this one is compulsory rather than optional | Tick it on the documents that are genuinely compulsory |
How to configure it
- Create the recovery Wage Type first, on the credit side, one per kind of loan so finance can see them apart on a payslip.
- Create the loan type: code, name, and that wage type on the Loan Condition tab.
- Set the waiting period in Applicable After Months, counted from confirmation.
- Set the ceiling. Use Maximum % for a ceiling tied to salary, or leave it at zero and use Maximum for a flat figure.
- Decide Consider Repaid Amount in Limit. Ticked is the usual choice, because it lets a man who has repaid borrow again.
- Tick Installment Based and set Installment Period (Months) for a loan. Leave both alone for a one shot advance.
- Tick Period Restriction with Day From and Day To only if the client really wants a monthly submission window.
- If documents are needed, tick Required Loan Proof and list them on the Proof tab.
- Save, then raise one test request for a confirmed employee and check the ceiling and the instalment count behave as the client described.
Scenarios
"Staff may borrow up to three months of salary, repaid over a year"
Maximum % of 300, Maximum left at zero, Installment Based ticked and Installment Period of 12. A request for fifteen instalments is refused.
"A salary advance has to come off the next payslip in full"
Leave Installment Based clear. The request must say one instalment, and the whole amount is recovered in one run.
"Loan requests are only taken in the first ten days of the month"
Period Restriction ticked, Day From 1, Day To 10. Finance can still create an agreed loan directly on the Employee Loan screen outside the window, because this check belongs to the request.
"A man repaid his loan last year and the system says he has no limit left"
Consider Repaid Amount in Limit is unticked, so everything he has ever borrowed is still counted against his ceiling. Tick it, and only his outstanding balance counts.
"We changed the interest rate here and the repayment did not move"
Expected. The interest on a loan comes from the rate typed on the loan request. These fields are a record of intent only.
What it is connected to
- Needs a credit Wage Type for the instalments. Every instalment of every loan of this type comes off through that line.
- Checked by Employee Loan Request when a man asks for a loan, and by Employee Payroll Loan when finance creates one, except for the day of month window.
- The ceiling is worked out from the earning lines of the man's current salary record, so a raise raises what he may borrow.
- Eligibility also depends on his own record: he must be confirmed, and he must not be on notice.
- The payroll run collects an instalment once the period being run reaches its date, so a period's end date decides which instalments are taken.
If something looks wrong
- "A request was refused saying the employee is not confirmed" - exactly that. A man on probation cannot be given a loan of any type.
- "A request was refused saying it is outside the allowed days" - Period Restriction is ticked and today is outside Day From to Day To. Finance can create the loan directly instead.
- "A request was refused saying the loan is not instalment based" - Installment Based is clear on this loan type, so the request has to say one instalment.
- "A man cannot borrow although he owes nothing" - Consider Repaid Amount in Limit is unticked, so his past loans still use up his ceiling.
- "The ceiling is far lower than we agreed" - Maximum % is set and is being taken of his salary. Set it to zero if the ceiling should be the flat Maximum instead.
- "No instalment was deducted this month" - the instalment date falls after the end of the period being run, or the recovery wage type is blocked.
- "The interest is not what this screen says" - the charged rate is the one typed on the loan request. The fields here are not read.