Loan product accounting

This is step 6 of the create wizard. After save, accounts appear on the product only when accounting is not None. Payment-channel, fee, penalty, and reason mappings are a separate mappings step.

The walkthrough on this page creates Normal Loan With Accounting: a normal fixed product on Cash, with a payment-channel mapping, and saves it. The first create video stops on None and does not save.

Accounting rule

Fineract has three posting styles. Accrual is split, so the picker shows four choices.

• None — no GL accounts, and mappings do not apply. Use this when the product should not keep books in Fineract (still designing, paper process, or another system is the ledger).
• Cash — income posts when money moves. Interest hits income on repayment, not as it accrues. Requires the nine accounts below.
• Accrual (periodic) — the cash set, plus receivable interest, fee, and penalty asset accounts. A job books earned amounts onto those receivables before cash arrives, then clears them when the client pays. Optional accrual activity posting adds a visible accrual transaction, not only the receivable balances.
• Accrual (upfront) — the same receivable set, but interest income is recognized at disbursement instead of spreading over the term.

Every required account is a searchable list of detail GL accounts of the matching type (asset, income, expense, or liability). Header accounts are for grouping and never appear here. Create them under Accounting → Chart of accounts.

Fund source on this step is a cash or bank GL account. It is not an Organization fund (those names tag whose capital a product or loan uses).

Loan-loss provisioning uses separate liability and expense GL accounts on provisioning criteria — not the mappings on this product step. See Loan-loss provisioning.

Cash accounts

On the seeded chart these codes are:

• Fund source (1220) — cash or bank asset that disbursement draws from and repayment returns to.
• Loan portfolio (1210) — outstanding principal asset. Disbursement increases it; principal repayment decreases it.
• Transfers in suspense (1410) — money in flight between accounts.
• Interest on loans (4110) — interest income. On cash accounting this posts when the client pays, not when it is earned.
• Income from fees (4210) — default for every fee on the product. A mapping can send one fee somewhere else.
• Income from penalties (4310) — the same default for penalties.
• Income from recovery (4410) — cash collected after a write-off.
• Write-off (5110) — expense when outstanding principal is written off.
• Overpayment liability (2140) — money the client paid above what the loan owes, until you refund it or apply it.

Accrual extras

Periodic and up-front both add:

• Interest receivable (1310)
• Fees receivable (1320)
• Penalties receivable (1330)

Income capitalization and buy-down add still more accounts, and only with accrual plus the advanced payment strategy.

Transaction strategy

How a repayment is allocated is set on settings, not here. The walkthrough saves Penalties, Fees, Interest, Principal order — the usual Mifos order — on a cumulative, horizontal schedule.