Overview
Purchase Orders and Loan Orders are two new transaction types in Fairways Debt. These transactions allow you to manage respectively loan envelopes and individual loans within those envelopes which will be used for projects requiring substantial investments.
These loans are then negotiated between a lender offering the envelope of potential loans (i.e the purchase order) and a borrower requesting for a specific loan from this envelope (i.e. a loan order). The loan order is then submitted to a validation workflow between the lender and the borrower. The lender can thus accept or refuse the request from the borrower.
Using the Purchase Orders feature
As a prerequisite, you need to contact your Finance Active consultant to:
- Enable the Purchase Order transaction type in the list of available products.
- Associate your user with the relevant role : lender or borrower.
As a lender, you will be granted administration rights and you will then be able to fully manage purchase orders.
As a borrower, you will be able to create loan orders and submit a validation request for them to the lender.
Notification subscriptions
Once your access to the Purchase Orders feature has been enabled, you can subscribe to the relevant email notifications across the different steps of the workflow. To do so, please refer to Create an Event Notification.
Three new notification types are available:
- "Loan Order Validation Request": an email is sent each time a loan order validation request is submitted by the borrower to the lender. The new loan order is then in the draft portfolio.
- "Loan Order Validation": an email is sent each time a loan order is validated by the lender. The loan order has then been moved to the actual portfolio.
- "Loan Order Consolidation": an email is sent each time a manual consolidation is created by the borrower on the loan order.
Purchase Order creation
To access the purchase order creation form, navigate to Applications > Debt & Derivatives > Portfolio and then click Add Transaction > Facility > Purchase Order. Please refer to Create a Purchase Order for more details.
Once the purchase order is created, you can define a list of indices at the envelop level, from which the customer (i.e the borrower) can chose which one will be used for a loan order. To do so, please refer to Add an Additional Index for a Loan Order.
Loan Order workflow
Creation
The loan orders can be created from the purchase order.
Note: Both the lender and the borrower profiles can create loan orders.
To access the loan order creation form, open a purchase order from the actual portfolio then navigate to the Loan Orders tab and click New Loan Order. Please refer to Create a Loan Order in a Purchase Order for more details.
An option is available on the creation form to enable an immediate consolidation: if the latter is selected, the loan order will be consolidated as soon as it is validated by the lender. Otherwise, the borrower will have to enter manually the consolidation information.
A new loan order is automatically created in the draft portfolio. It must then be validated by the lender to be moved to the actual portfolio.
Validation
The loan orders of a given purchase order are displayed in the Loan Orders tab, with their main characteristics and a status that indicates whether they are in the actual or the draft portfolio.
The borrower must submit a validation request to the lender for the loan orders in the draft status.
This request can be performed :
- either via a dedicated link from the loan order profile:
- or via a button on the Loan Orders tab in the purchase order profile:
An email is then sent to the lenders who subscribed to receive the corresponding notifications.
The lenders with the relevant role will be able to validate the loan order from its profile.
The borrowers who subscribed to receive email notifications will then receive a confirmation once the lender has moved the loan order to the actual portfolio.
Please refer to Validate a Loan Order for more details.
Consolidation
Consolidation is the last step of the workflow.
If the immediate consolidation was enabled during the creation of the loan order, Fairways Debt will automatically create a consolidation for this loan order once it is validated by the lender. In such a case, the consolidation amount is the total amount of the loan order, and the consolidation date is the start date of the purchase order.
If no immediate consolidation was enabled during the creation of the loan order, the borrower must create consolidations manually from the Consolidations tab on the loan order profile. The borrower will then enter a consolidation amount which cannot exceed the principal of the loan order, and a consolidation date. Please refer to Consolidate a Loan Order for more details.
When a manual consolidation is created, an email is sent to the users (lenders or borrowers) who subscribed to receive the corresponding notifications.
Consolidations for loan orders are only for information purpose in Fairways Debt: they are not managed in the software, nor do they trigger schedule changes, for example.
Indicators and reports
The following indicators are available on the purchase order profile:
- Purchase Order Total Consolidated Amount: sum of consolidated amounts of all loan orders in this purchase order.
- Purchase Order Last Consolidation Date: date of the latest consolidation among all loan orders in this purchase order.
- Outstanding Balance (end of day): sum of principal amounts used in loan orders in this purchase order.
- Available Amount: initial limit amount of the purchase order - sum of principal amounts of loan orders in this purchase order.
- Initial Limit Amount: limit amount specified during creation of the purchase order.
The same indicators are available for reports.
A new aggregation option "Aggregate Loan Orders into Purchase Orders" is available for reports:
- If the option is deselected, reports will show rows for both purchase orders and their related loan orders, with amounts detailed only for the rows related to loan orders.
- If the option is selected, rows related to loan orders are not displayed in reports and rows for their related purchase orders include aggregated amounts from the loan orders.