Linking Products to Accounting
  • 08 Jun 2022
  • 9 Minutes To Read
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Linking Products to Accounting

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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.

Select corresponding General Ledger Accounts for loan products using cash based accounting

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.

Select corresponding General Ledger Accounts for loan products using accrual based accounting

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.

Interest Accrual Method dropdown with Daily and Monthly options

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 and 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 and 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 and 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 and 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.

Deposit Product - Accounting Rules - Methodology Cash

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.

Deposit Product - Accounting Rules - Methodology 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 (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.
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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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