Debt Management Overview

Debt Management is a large functional area within CGI Advantage Financial consisting of transactions for the definition and maintenance of debt, inquiry pages to view that debt, and automatic processes to perform accounting for that debt. This functional area is tied into almost every other functional area within Advantage Financial through the use of a Debt ID, which is very similar to a chart of account (COA) in many respects.

Debt Management is structured into two hierarchical levels: Authorizations and Debt Instruments. Use of the Authorization level is not optional, but the amount of information required at that level is minimal with many of those fields having default values. For example, when taking out a short term loan, the Authorization may not be actively used. When there has been a referendum to authorize the issuing of bonds, however, the Authorization will certainly be used.

The three Major Types of Debt are: Loans, Leases, and Bonds. All have separate transactions and inquiry pages (also referred to in this user guide as registry pages).

Although just Loans, Leases, and Bonds are listed, do not think that Debt Management is limited to just items that are 100% one of those three. Taken one level higher, those three types of debt are a set of structured payments or billings defined by a set schedule. There will be cases where you may have an item that will loosely fit into one of those three types of debt. Please refer to the "Loan Functionality" topic for more details as this type of debt is the most basic of the three and would be the likely choice in most situations.

The three Major Types of Debt are broken down into several sub types that control data entry requirements and edits. These sub types are set and delivered, but can be further defined into smaller groupings to meet any site-specific needs for reporting, control, accounting, and workflow. The sub types are listed below with much more information in later topics of this user guide.

Major Type of Debt	Sub Type	Description
Major Type of Debt	Major Type of Bond	Description
Bond	Capital Appreciation	A bond issued at a substantial discount, which accretes in value through the compounding of interest over the life of the bond, so that discount is not amortized. Interest is paid out at maturity with the full amount of principal. The bond authorization is only reduced by par value minus the amount of discount as a Capital Appreciation bond is entered with the un-accreted amount as principal.
	Convertible Capital Appreciation	A bond issued that starts off as Capital Appreciation but then later converts to a form that pays interest out instead of compounding.
	Coupon	A bond issued where only interest is paid on a rate or fixed amount basis with all principal being paid at maturity.
	Zero Coupon	A bond issued that is much like the Capital Appreciation bond in that it has a discounted amount that is not amortized, but is made up through the compounding of interest. The difference is that the full amount of Principal is entered for a Zero Coupon bond to reduce the Authorized Amount rather than an amount of principal that is less by the true amount of Discount.
	Variable Rate	A bond issued where the interest rate will vary over the life of the issue.
	Amortized	A bond issued where coupon payments pay interest in a decreasing schedule and principal in an increasing schedule.
	Unspecified	A bond issue that is not completely one of the previous sub types.
Major Type of Debt	Major Type of Lease & Lessor/Lessee	Description
Lease	Operating (short term lease) as Lessor	A lease not meeting capital criteria with one or more external lessees (customers) with you as the lessor.
	Operating (short term lease) as Lessee	A lease not meeting capital criteria from an external lessor (vendor) with you as the lessee.
	Capital as Lessor	A lease meeting one or more capital criteria with one or more external lessees (customers) with you as the lessor.
	Capital as Lessee	A lease meeting one or more capital criteria from an external lessor (vendor) with you as the lessee.
Major Type of Debt	Major Type of Loan	Description
Loan	External Given	A loan where you are the lender and the borrower is an external borrower (customer).
	External Taken	A loan where you are the borrower and the lender is an external lender (vendor).
	Internal	A loan where the lender and the borrower are entities on the same Advantage application.

A common set of status values are delivered for each Major Type of Debt. These status values control whether or not records are selected for automatic processing and whether or not accounting and budgeting transactions can reference a debt instrument. That reference is done via the usage of a Debt ID, which is a code from one to twenty characters in length and that is assigned either manually or by automatic numbering to each debt instrument. Each of the following six status values can be found with either the words "Bond", "Loan", or "Lease" incorporated before or after the status given below, giving a total of eighteen status values:

Status	Description	Batch Processing	Transaction Referencing
Started	The initial status that defaults. When in this status, a user is gathering information to create a debt instrument.	Not selected	Not allowed w/pre-active error
In Review	The status to indicate information has been collected but the instrument is not yet active.	Not selected	Not allowed w/pre-active error
Active	The status that indicates a debt instrument is now binding and in progress.	Yes	No restrictions
Completed	The status that indicates the debt instrument proceeded through the complete payment and amortization schedule.	No	Alerted* with a finished status message.
Manually Closed	The status to indicate that the debt instrument ended before the stated maturity date.	No	Alerted* with a finished status message.
Cancelled	The status will remove all the inquiry records for a debt instrument. This status should not be used if the instrument has had a payment or amortization occur; otherwise, there will be a Debt ID in the Accounting Journal for which information cannot be found.	n/a	n/a

*Alerted is the term used because the message can be configured as informational, warning, or override as you deem necessary, keeping in mind there is only one message used for all types of debt.

The status choices of Completed and Manually Closed also trigger an edit that prevents certain updates to a Debt Instrument. Updates to descriptive information will not be impacted, as those are often necessary even after completion. The edit is in place to ensure that those settings previously used for accounting remain as they were defined when the Debt Instrument or Authorization was finished.

The transition between different status values is limited by system edits to certain paths. It is not a requirement that a Debt Instrument start with the Started status. Started does not have to be the initial choice in 1, 2, and 3 as In Review can be the initial status value. Also, one can skip the In Review status shown in 1, 2, and 3 below.

Paths 2 and 3 (as well as 5 and 6) differ in that the user has chosen to retain information about the Debt Instrument with the Manually Closed choice instead of purging it from the system with the Cancelled choice.