Re: [Mifos-users] Solution?

[Sander van der Heyden]

Hi Nayan, Thanks for your feedback. On the insurance workflow, maybe that should be a different closing state of the loan then? The way we have seen it work is that the write off happens after a write off committee meets, who decide which loans will be written off etc. Then the list of write offs gets entered so that they are immediately (positively) affecting the PAR etc. Then the claims go to the insurer but can take a while to be processed (and not sure if even granted!). In that meantime you do not want to still see that loan and have your people follow up.  So whether you solve this by writing off the loan and balancing it off also using an intermediary account for insurance, or whether you leave the balance until the insurance comes through and use that to cover your loan losses is a choice of the organisation. My preference would be the first, because if you do not get insurance money, you do want to still retain those loan losses in the account and in your journals. On the bookings, you are completely right :-) I think it was still too early to do accounting when I wrote it.  -- Sander van der Heyden Mobile (NL): +31 (0)6 14239505 Mobile (Kenya): +254 (0)707211284 Skype: s.vdheyden Website: www.musoni.eu Follow us on Twitter!  Postal address: Hillegomstraat 12-14, office 1.11, 1058 LS, Amsterdam, The Netherlands On 27 Nov 2013, at 10:37, Nayan Ambali <nayan.amb...@gmail.com> wrote: Sander, I realized, i have put Manjuanth comments into wrong thread. instead it has to be new thread with "Handling insurance events" I agree with Manjunath's point. During insured event, instead of write-off, it should be paid-off (or receivable from insurance company). Is this not generic approach or not practiced every where? Steve do you any point here to correct above statement or add additional info? My point is simple, we need to address "Handling insurance events" in the platform. And as you said left over insured amount settlement with nominee can be tracked out side or in Mifos X is not that important. Explanation is end-to-end for that case. But translatig that into requirement needs more input from other users also. and also >> Write off the loan: >> Dr. Loan Portfolio (asset) >> Cr. Written off loans (Expense) I think that was typo or am I understanding it wrongly? For wrtie-off the loan Loan Portfolio (asset) decreases => Credit account entry Written off loans (Expense) increases => Debit account entry Thanks Nayan Ambali Thanks and Regards, Nayan Ambali +91 9591996042 skype: nayangambali On Wed, Nov 27, 2013 at 12:39 PM, Sander van der Heyden <sandervanderhey...@musoni.eu> wrote: Hi All I think the solution described below might be too specific to GK to use in the platform. Mainly because it covers 2 use-cases in one go: the handling of recovery payments, and the handling of insurance claims. To zoom in on the handling of recovery payments (definition: All payments  made into a loan after the date of write-off), the only change to be made there is to allow these payments without having to modify the loan. In a similar way we already allow to do transfers of payments out of overpaid loans without changing their status (but you can't make repayments anymore). The major difference between the recovery payments and the regular payments is in the accounting bookings. At the time of write-off the following bookings should be made: Write off the loan: Dr. Loan Portfolio (asset) Cr. Written off loans (Expense) A normal payment into a loan makes these bookings: Dr. Bank (Asset) Cr. Loan Portfolio account (Asset) Cr. Interest on Loan portfolio (if applicable) (Income) Cr. Fee accounts (if applicable) (Income) A recovery payment would be: Dr. Bank (Asset) Cr. Write-offs Recovery (Income) Once this is in place the handling of the second use case of dealing with insurance money can be easily solved on the portfolio side. Let's assume the insurance claims get handled seperately by seperate manual processes or software by the insurance company. In this case the journal entries that are made as soon as payout is done (Could already be automated from 3rd party apps using the predefined accounting rules): Dr. Bank (Asset) Cr. Insurance Payouts Received (?) Now the payment can be made into the loan (or multiple loans depending on the way the payout is handled) by leveraging on the Advanced Accounting rules already present. By setting up a specific fund-source for Write offs. This can then be linked with the advanced accounting to the Write offs Recovery Income account listed above. In this case whoever is processing the payment can quite easily select this fund source when doing so which would make the booking: Dr. Insurance Payouts Received (Based on Advanced Accounting config) Cr. Write offs Recovery. All recovery's should then be marked as such in the loan_transactions and also preferably captured in the loans table. All of this should not be a major change. You can now start reporting on recoveries and also have accounting in place, whether your recover from debt collectors, next of kin, or insurances. The main changes therefore would be: - Configuration of 2 new accounts (Write offs and Write off recovery) - Tracking of write off recovery in the loan transactions and loan derived fields In the future more fine-grained permissions on the fund sources might be desirable to avoid people using it by mistake, although maker/checker also covers for this. And you can consider whether it is worth automating/digitalising the insurance claims processes into MifosX although most insurance companies also provide their own portals. I think the solution described above is something that could be achieved in the relatively short term and covers 95% of the needs of the small and medium sized MFI's we have been working with.  Keen to help out in drafting this functionality so we can put it in a JIRA item and tackle this. -- Sander van der Heyden <logo.png> Mobile (NL): +31 (0)6 14239505 Mobile (Kenya): +254 (0)707211284 Skype: s.vdheyden Website: www.musoni.eu Follow us on Twitter!  Postal address: Hillegomstraat 12-14, office 1.11, 1058 LS, Amsterdam, The Netherlands On 27 Nov 2013, at 04:08, Nayan Ambali <nayan.amb...@gmail.com> wrote: Hi Amit, Below is the solution proposed by Manjunath ( GK, Acc team). @Praveen, can Manjunath join this discussion? so that we get the correct version of his solution. Proposed solution how it can be implemented in Mifos X. If insured event happens, Do a pre-closure of loan account with type - pre-closure (Insured event) Accounting entries effected GL Account receivable from Insurance increases  (Asset) GL Account portfolio asset decreases (Asset) When Insurance company clears the claim Accounting entries effected GL Account receivable from Insurance decreases (Asset) Left over amount will be posted to liability ( Extra amount from insurance need to pay to client ) increases (Liability) Does something also increase here ?? I think I missed something <Ed Cable> Looks like we still need some type of Debit entries for this transaction sequence as you've noted two credits (decrease to rec eivable and increase to liability. Is there a cash inflow here with cash coming in from insurance company? </Ed Cable> When MFI pay extra cash to nominee Accounting entries effected GL Account liability ( Extra amount from insurance need to pay to client ) decreases (Liability) Cash paid increases ( Is it expense? ) Thanks and Regards, Nayan Ambali +91 9591996042 skype: nayangambali On Tue, Nov 26, 2013 at 7:18 PM, Vishwas Babu <vishwasbab...@gmail.com> wrote: Hello Amit, >>1. Now where I made a receipt entry for the same in Mifos. I do not think this is possible in Mifos. The only solution might be to probably activate the loan from the back-end and then enter the new transaction  >>How this situation will be handled by in Mifos X. A few other folks had similar requirements, we are now planning to add support for this workflow (reactivate a written-off loan and then make payments/edits etc) in the next couple of releases Regards, Vishwas On 25 November 2013 12:04, AMIT JAIN <amitjain....@gmail.com> wrote: Hello all, Can any body guide me on the following situation? We wright off  one account say "A" into the mifos 2.6. After some time we recovered some money from "A". 1. Now where I made a receipt entry for the same in Mifos. 2. If any how it is done what will be the effect on accounting exports. 3 How this situation will be handled by in Mifos X. Thanks and regards   -- AMIT JAIN | E.D | Digamber Finance (Chota Loan Bade Sapne) | +919414041821 | ------------------------------------------------------------------------------ Shape the Mobile Experience: Free Subscription Software experts and developers: Be at the forefront of tech innovation. 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