Linking Products to Accounting
- 17 Feb 2023
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Linking Products to Accounting
- Updated On 17 Feb 2023
- 9 Minutes To Read
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Each action taken against an account will have an effect on your company's balance sheet, whether it's a deposit, a withdrawal, or the application of interest or fees. If you have set up a Chart of Accounts, you can link individual actions and transaction types to one of your General Ledger (GL) Accounts.
After linking them to GL Accounts, Mambu will automatically post journal entries on the corresponding GL Account whenever a transaction occurs. You can only link to Detail type accounts. Header accounts will not be selectable, as these are designed to provide a sum total for all of the detail accounts under them rather than record individual transactions. For more information, see Creating Your Chart of Accounts - Chart of Accounts Structure.
This article provides an overview of Mambu's standard behavior for loans and deposit accounts and provides examples based on a simple chart of accounts.
If you need additional support configuring your system, we invite you to reach out to our support team - for more information, see Contacting Support.
For Loan Accounts
| Category | Type | Description | Example Account |
|---|---|---|---|
| Portfolio Control | Asset | The current asset account that is controlling the product portfolio. | Loan portfolio control |
| Transaction Source | Asset | The current asset account that is managing your money source. | Cash on hand |
| Write-off Expense | Expense | The expense account that you use when cancelling or writing off an account. | Un-recoverable expenses |
| Interest Receivable | Asset | The account used when interest is owed by a customer but not yet paid. Accrual Methodology only | Loan account interest receivable |
| Taxes Receivable | Asset | The account used when taxes are owed but are not yet paid. Accrual Methodology only | Loan account tax receivable |
| Fee Receivable* | Asset | The account used when fees are owed by a customer but have not yet been paid. Accrual Methodology only | Loan account fees receivable |
| Penalty Receivable | Asset | The account used when penalties are owed by customer but not yet paid. Accrual Methodology only | Loan account penalties receivable |
| Deferred Interest Income | Liability | Only available when the product has been configured to accept pre-payment of future interest | Loan account interest liablities |
| Deferred Taxes | Liability | Only available when an amortization profile is applied for a fee | Loan account tax liablities |
| Deferred Fee Income* | Liability | Only available when an amortization profile is applied for a fee | Loan account fee liablities |
| Fee Income* | Any | The account used when you receive income from fees charged to a customer account | Loan account fee income |
| Interest Income | Income | The account used when you receive interest on an outstanding loan | Loan account interest income |
| Taxes Payable | Liability | The account used when government taxes are paid based on the value of a loan in your book | Loan account tax liablities |
| Penalty Income | Income | The account used when you recevie income from penalties applied to customer accounts | Loan account penalty income |
Please Note
When adding fees to a product, you can opt to use the product default General Ledger Accounts for Fee Receivable, Fee Income, Fee Losses, and Deferred Fee Income or set these to custom GL accounts. This allows you to have much more granularity in your reporting by, for example, differentiating between manual and automatic fees. For more information, see Fees accounting.
Loan Product Rules under Cash basis Accounting
The following table shows Mambu's behavior after the accounting rules per product have been set:
| Transaction Type | Debit | Credit |
|---|---|---|
| Loan Disbursement | Portfolio Control | Transaction Source |
| Principal Write-Off* | Write-Off Expense | Portfolio Control |
| Principal (Re)paid | Transaction Source | Portfolio Control |
| Interest Paid | Transaction Source | Interest Income |
| Fee Paid | Transaction Source | Fee Income |
| Penalty Paid | Transaction Source | Penalty Income |
| Taxes (VAT) Paid | Transaction Source | Taxes Payable |
Please note
Under cash based accounting rules, as nothing accrues, there are no separate general ledger entries for writing off interest or taxes that would have been payable on the loan account.
After enabling the Cash basis Accounting method, Mambu will display dropdown menus where you can choose the accounts depending on the type (asset, expense or income) in each one of them.
After saving the changes the transactions will start being logged automatically in Accounting following those rules.
Loan Product Rules under Accruals Accounting
In the following table you can see Mambu's internal behaviour when you define the accounting rules in a Loan Product under Accruals Accounting:
| Transaction Type | Debit | Credit |
|---|---|---|
| Loan Disbursal | Portfolio Control | Transaction Source |
| Interest Applied | Interest Receivable | Interest Income |
| Fee Applied | Fees Receivable | Fee Income |
| Penalty Applied | Penalties Receivable | Penalty Income |
| Principal (Re)paid | Transaction Source | Portfolio Control |
| Interest Paid | Transaction Source | Interest Receivable |
| Fee Paid | Transaction Source | Fee Receivable |
| Penalty Paid | Transaction Source | Penalty Receivable |
| Principal Write-Off | Write-Off Expense | Portfolio Control |
| Interest Write-Off | Write-Off Expense | Interest Receivable |
| Fee Write-Off | Write-Off Expense | Fee Receivable |
| Penalty Write-Off | Write-Off Expense | Penalty Receivable |
| Taxes Applied | Taxes Receivable | Taxes Payable |
| Taxes (VAT) Paid | Transaction Source | Taxes Recievable |
| Tax Write-Off | Write-off Expense | Taxes Receivable |
Like in the previous method, after enabling the Accruals Accounting method, Mambu will display dropdown menus where you can choose the accounts depending on the type (asset, expense or income) in each one of them.
For loan product types with accrual accounting you can select for the Interest Accrued Method to be Daily. Every day, when the End of Day Process runs, Mambu will log journal entries in accounting for the total amount of interest that is accrued (and not yet applied) on your active accounts. On the next process execution, Mambu will reverse the previous day's entries and log new ones with the updated accrued amounts.
Click on save and from this point onwards Mambu will log all of your transactions according to these rules.
For Savings / Deposit Accounts
| Category | Type | Description | Example Account |
|---|---|---|---|
| Transaction Source | Asset | The current asset account that is managing your money source. | Cash on hand |
| Savings Control | Liability or Equity | The current liability or equity account that is controlling the product portfolio. | Deposit Portfolio Control |
| Interest Expense | Expense or Income | The expense or income account that you use when have to pay interest for the deposits. | Deposit account interest paid |
| Interest Payable | Liability or Asset | The account used for interest earned by a saver but not yet paid into their account. Accrual Methodology only | Deposit account interest accrued |
| Negative interest income | Income or Expense | The income (or expense) account that you use to recognise negative interest from positive balance for the deposits. | Deposit account negative interest income |
| Negative Interest Receivable | Asset or Liability | The account used to hold negative interest accrued from a positive balance that has not yet been debited from the accountAccrual Methodology only | Deposit account negative interest accrued |
| Taxes Payable | Liability | The account used for taxes payable on interest earned from a deposit or savings account. Only available when interest is paid into the account and withholding taxes are applied | Deposit account tax liablities |
| Fee Income* | Any | The income accounts you recognize when cash is received | Deposit account fee income |
| Overdraft Write-Off Expense | Expense | The expense account that you use when cancelling or writing off an account. Only available when the product offers an overdraft facility | Non-recoverable overdraft expenses |
| Overdraft Portfolio Control | Asset | The current asset account that is controlling the product portfolio. Only available when the product offers an overdraft facility | Deposit account portfolio control |
| Overdraft Interest Receivable | Asset or Liability | The account used to hold interest accrued from a customer's overdraft that has not yet been debited from their account. Accrual Methodology only. Only available when the product offers an overdraft facility | Overdraft interest payable |
| Overdraft Interest Income | Income or Expense | The income (or expense) account you recognize when cash is received. Only available when the product offers an overdraft facility | Overdraft interest income |
Please Note
When adding and configuring fees for your product you can indicate that the product default General Ledger Account for Fee Income should be used for this fee or select any other account. This will allow for greater granularity in reporting.
Just like for Loans, after enabling the accounting in the product, select the account depending on the type (asset, liability, expense or income) in the dropdown menus > save it and from that moment on, the transactions will be automatically logged in Accounting.
Deposit Product Rules under Cash Basis Accounting
For deposits, Mambu will manage the accounting using the rules below. See the sub-sections for additional information regarding interest application/accrual.
| Transaction Type | Debit | Credit |
|---|---|---|
| Deposit into account | Transaction Source | Savings Control |
| Withdrawal from account | Savings Control | Transaction Source |
| Fee Applied | Savings Control | Fee Income |
| Overdraft Written Off | Overdraft Write-Off Expense | Overdraft Portfolio Control |
| Overdraft Withdrawal | Overdraft Portfolio Control | Transaction Source |
| Overdraft Principal (Re)paid | Transaction Source | Overdraft Portfolio Control |
| Overdraft Interest Paid | Transaction Source | Interest Income |
| Overdraft Fee Paid | Transaction Source | Fee Income |
| Interest applied (positive interest rate) | Interest Expense | Savings Control |
| Interest applied (negative interest rate) | Savings Control | Negative Interest Income |
| Withholding Taxes Paid | Savings Control | Taxes Payable |
Deposit Product Rules under Accruals Accounting
For deposit product types with accrual accounting, the Interest Accrued Methods available are Daily or Monthly. The process is the same as for loan product types, meaning that every day, when the End of Day Process runs, Mambu will log journal entries in accounting for the total amount of interest that is accrued (and not yet applied) on your active accounts. On the next process execution, Mambu will reverse the previous day's entries and log new ones with the updated accrued amounts.
If you allow overdrafts and want to use this option, define all Overdraft-related GL accounts, and journal entries will be posted.
When overdraft interest or fees are applied on the account, accounting entries will be posted. Mambu will credit the Overdraft Interest or Fees Income rule and debit the Overdraft Portfolio Control.
| Transaction Type | Debit | Credit |
|---|---|---|
| Deposit into account | Transaction Source | Savings Control |
| Withdrawal from account | Savings Control | Transaction Source |
| Fee Applied | Savings Control | Fee Income |
| Overdraft Written Off | Overdraft Write-Off Expense | Overdraft Portfolio Control |
| Overdraft Withdrawal | Overdraft Portfolio Control | Transaction Source |
| Overdraft Principal (Re)paid | Transaction Source | Overdraft Portfolio Control |
| Overdraft Interest Paid (positive interest rate) | Transaction Source | Interest Income |
| Overdraft Interest Paid (negative interest rate) | NOT SUPPORTED | NOT SUPPORTED |
| Overdraft Fee Paid | Transaction Source | Fee Income |
| Interest accrued (positive interest rate) | Interest Expense | Interest Payable |
| Interest applied (positive interest rate) | Interest Expense | Savings Control |
| Interest accrued (negative interest rate) | Negative interest receivable | Negative Interest Income |
| Interest applied (negative interest rate) | Savings Control | Negative interest receivable |
| Withholding Taxes Paid | Savings Control | Taxes Payable |
Accounting in Multicurrency
Early Access Feature
If you would like to request early access to this feature, please get in touch with your Mambu Customer Success Manager to discuss your requirements. For more information, see Mambu Release Cycle - Feature Release Status.
When creating a new deposit product, if the Accounting in Multicurrency feature is enabled, Mambu will display dropdown menus under Accounting Rules where you can choose between the accounts created in the currency of the product or in the base currency.
Please be aware
- Only Journal entries for GL accounts in a currency other than the base currency will contain information regarding the foreign currency debit and credit amount and the currency of the transaction.
- Deposit and loan product transactions will be allowed as long as the accounting rules of the related products have the GL accounts in the same currency
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