Loan Servicing
Overview
Loan Servicing encompasses the ongoing management of active loans, including payment processing, account maintenance, customer service, and portfolio monitoring. The servicing module integrates with payment systems, notification services, and reporting tools.
Servicing Setup
Admin Panel Configuration
Servicing Roles and Permissions
Configure which users can perform servicing operations. Permissions are highly customizable based on SDK assembly.
Permission Customization Architecture:
SDK Level: Define loan states/statuses (e.g., Active, Delinquent, Default, Paid Off, Restructured)
SDK Level: Define actions that impact loan states (e.g., Process Payment, Waive Fee, Restructure, Write Off)
Admin Panel Level: Each action becomes an available permission that can be assigned to roles
Example Permission Structure:
SDK Configuration:
Loan States: Active, Delinquent, Default, Paid Off
Actions Impacting States:
- Process Payment (Active → Active or Paid Off)
- Mark Delinquent (Active → Delinquent)
- Restructure Loan (Active/Delinquent → Restructured)
- Write Off (Default → Written Off)
Admin Panel Permissions (derived from SDK):
☐ Process Payment
☐ Mark Delinquent
☐ Restructure Loan
☐ Write Off Loan
☐ Waive Fees
☐ Generate Statements
☐ Modify Payment ScheduleAccessing Role Configuration:
Navigate to Admin Panel → Roles
Create or edit role
Configure servicing-specific permissions from available actions
Available Servicing Permissions (Examples): The exact list depends on your SDK configuration. Common permissions include:
View Loan Accounts: Read-only access to loan details
Process Payments: Record and allocate payments
Modify Payment Schedules: Restructure repayment plans (triggers state change workflows)
Waive Fees: Grant fee waivers or adjustments
Generate Statements: Create account statements
Handle Delinquency: Manage overdue accounts and collections (state transitions)
Write Off Loans: Move loans to written-off state
Note: Each organization's permission list is unique based on their SDK configuration of loan states and state-impacting actions.
Servicing Workflows
Servicing workflows are defined in the SDK through loan state configurations. In the Admin Panel, you can only execute pre-defined actions and state transitions.
SDK-Defined Elements:
Loan states (Active, Delinquent, Default, etc.)
State transition rules (which states can transition to which other states)
Automated actions on state changes
State-based business logic
Admin Panel Operations:
Execute available state-changing actions
Trigger pre-configured state transitions
View loan state history
Monitor state-based workflows
Example:
SDK Configuration:
State: Delinquent
Allowed Transitions: → Collections, → Restructured, → Active (if payment made)
Admin Panel:
User sees loan in "Delinquent" state
Available Actions:
- Move to Collections (if DPD > 60)
- Initiate Restructure
- Process Payment (auto-transitions to Active if current)Accessing Loan State Management:
Navigate to loan account
View current state
Execute available state-changing actions
System enforces SDK-defined state transition rules
Servicing Notification Templates
Configure automated communications for servicing events. Events are related to loan state changes configured in the SDK.
Event Configuration Architecture:
SDK Level: Define loan states and state transitions
SDK Level: Configure which state transitions trigger notification events
Admin Panel Level: Create notification templates and associate with events
Accessing Notification Templates:
Navigate to Admin Panel → Notifications → Templates
Select Servicing category
Key Servicing Notifications (Examples based on SDK states):
Payment reminder (before due date)
Payment confirmation (payment processed, loan state updated)
Payment failure alert (payment failed, state unchanged)
Delinquency notice (state transition: Active → Delinquent)
Collections escalation (state transition: Delinquent → Collections)
Payment plan approval (state transition: Active → Restructured)
Account statement generation (periodic, state-independent)
Loan payoff confirmation (state transition: Active → Paid Off)
Note: Available events depend on your SDK configuration of loan states and state transition event triggers.
SDK Configuration
The majority of loan servicing parameters are configured through SDK-level settings during platform implementation. These configurations define core servicing logic and integrations.
Payment Processing Configuration
Configuration Method: SDK Configuration Files
Configuration Scope:
Payment gateway integrations (bank transfer, card processing, digital wallets)
Payment allocation logic (principal vs interest vs fees)
Payment reversal rules and procedures
Failed payment retry schedules
Payment confirmation and reconciliation processes
Currency conversion settings for multi-currency portfolios
SDK Documentation:
Payment Processing - Payment system integration
Payment Allocation - Defining allocation rules
Gateway Integration - Connecting payment providers
Payment Reconciliation - Automated payment matching
Interest Calculation and Accrual
Configuration Method: SDK Configuration Files
Configuration Scope:
Interest calculation methods (simple, compound, flat rate)
Accrual frequency (daily, monthly, custom)
Interest rate adjustment triggers and calculations
Grace period definitions
Interest capitalization rules
Leap year and day-count conventions
SDK Documentation:
Interest Calculation - Calculation logic configuration
Accrual Schedules - Setting accrual schedules
Variable Rates - Variable rate adjustments
Fee and Penalty Configuration
Configuration Method: SDK Configuration Files + Credit Product Settings (Admin Panel)
SDK Configuration Scope:
Fee calculation logic (flat fee, percentage-based, tiered)
Late payment penalty algorithms
Fee waiver authorization workflows
Fee reversal procedures
Maximum fee cap enforcement
Admin Panel Configuration Scope:
Fee amounts per credit product
Fee types enabled for each product
Penalty thresholds and amounts
SDK Documentation:
Fee Configuration - Defining fee calculation logic
Penalties - Late payment and violation fees
Admin Panel Documentation:
Credit Product Fees - Setting product-specific fee amounts
Delinquency Management Rules
Configuration Method: SDK Configuration Files
Configuration Scope:
Delinquency stage definitions (DPD thresholds)
Automated collection actions per stage
Collection agency integration parameters
Write-off criteria and approval workflows
Legal action escalation rules
Forbearance and hardship program parameters
SDK Documentation:
Delinquency Stages - Defining delinquency stages
Collections Automation - Collection workflow automation
Bad Debt Management - Bad debt management
Payment Schedule Management
Configuration Method: SDK Configuration Files
Configuration Scope:
Amortization schedule calculation algorithms
Payment date adjustment rules (weekends, holidays)
Prepayment handling and penalty calculations
Payment plan modification approval thresholds
Schedule recalculation triggers and logic
Balloon payment configurations
SDK Documentation:
Amortization Logic - Amortization logic
Restructuring - Restructuring configurations
Prepayment - Early payment handling
Statement Generation
Configuration Method: SDK Configuration Files
Configuration Scope:
Statement templates and formatting
Statement generation schedule
Data included in statements (transactions, balances, payment history)
Multi-language statement support
Statement delivery methods (email, postal, portal)
Regulatory disclosure requirements
SDK Documentation:
Statement Templates - Configuring statement templates
Distribution - Distribution settings
Accounting Integration
Configuration Method: SDK Configuration Files
Configuration Scope:
General ledger account mapping
Accounting entry generation rules
Journal posting schedules
Revenue recognition logic
Provision calculation for impaired loans
Integration with accounting systems (e.g., SAP, Oracle)
SDK Documentation:
GL Integration - GL integration configuration
Revenue Recognition - Income booking rules
Loan Loss Reserves - Loan loss reserves
Configuration Coordination
Admin Panel + SDK Interaction
Some servicing features require coordination between Admin Panel and SDK configurations:
Example: Late Payment Fees
SDK Configuration (Implementation Team):
Defines fee calculation logic (e.g., "5% of overdue amount or $25, whichever is greater")
Sets maximum fee caps
Configures fee accrual timing (immediate, grace period)
Admin Panel Configuration (Business Users):
Activates late fee for specific credit products
Sets product-specific fee amounts (within SDK-defined constraints)
Configures fee waiver workflow and approval authorities
Result: Business users can adjust fee amounts within boundaries set by SDK logic.
Example: Delinquency Notifications
SDK Configuration (Implementation Team):
Defines delinquency stages (e.g., Stage 1: 1-30 DPD, Stage 2: 31-60 DPD)
Sets automated actions per stage (notification trigger, workflow escalation)
Admin Panel Configuration (Business Users):
Creates notification templates for each delinquency stage
Customizes message content and tone
Configures delivery channels (email, SMS)
Result: Technical framework defined in SDK, operational content managed in Admin Panel.
Loan Overview Interface
The system displays key loan information including:
Loan Status: Active, Void, Past Due, or other configured statuses
Loan Details: Amount, term, interest rate, and schedule type
Current Information: Last payment date, past due days, principal balance
Navigation Tabs: Organized access to detailed loan information
Servicing Operations
Day-to-Day Activities (Admin Panel)
Once servicing parameters are configured, servicing staff perform daily operations through the Admin Panel interface:
Payment Recording
Navigate to Loan Account → Payments
Record payment receipt
System automatically allocates payment based on SDK-configured rules
Generate payment confirmation
Payment Plan Modification
Open loan account requiring restructuring
Click Modify Payment Plan
Enter new payment schedule parameters
Submit for approval (if workflow configured)
System recalculates schedule based on SDK logic
Account Monitoring
View portfolio dashboard showing:
Current loan balances
Upcoming payment due dates
Delinquent accounts by stage
Payment processing status
Drill into specific accounts for detailed review
Core Servicing Components
Credit Data Tab
This tab displays the loan payment schedule with:
Due dates and payment amounts
Payment status indicators
Historical payment information
Schedule modification options
The system uses color coding for payment status:
Completed payments
Upcoming payments
Past due amounts
Future scheduled payments
Transactions Tab
Tracks all financial movements including:
Incoming Transactions:
Payments received via core banking integration
Payment system transactions
Manually registered payments
Payment source tracking
Transaction Management:
Mark transactions as unsuccessful
Process chargebacks
Register refunds
Adjust transaction details
Outgoing Transactions:
Refunds for erroneous payments
Adjustment transactions
System-generated corrections
Payments Tab
Provides detailed payment information:
Payment distribution across obligations
Allocation to principal, interest, and fees
Refund capabilities
Payment date adjustments
The system supports:
Full or partial refunds
Payment reallocation
Modify payment dates
Adjust payment amounts
Process refunds
Correct posting errors
Implementation Resources
Through the Admin Panel
Servicing Workflows - Operational process configuration
Notification Templates - Servicing communication setup
User Roles - Servicing permission management
Credit Product Fees - Product-specific fee configuration
Through the SDK
Payment Processing - Payment system integration
Interest Calculation - Accrual and calculation logic
Fee Configuration - Fee calculation rules
Collections Automation - Collection automation
Amortization Logic - Amortization configuration
Statement Templates - Statement template setup
GL Integration - GL integration
Related Topics
Credit Products - Product configuration including fees
Workflow Engine - Servicing workflow design
Covenants - Set up compliance monitoring
For additional support, consult implementation team.
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