Net Charge-Off Overview
Audience: Loan Servicer or Collector, Accounting, Loan Servicing/Collections Managers
If you're a lender who had to charge off an account, you'll need a clear record of any charge-off transactions. The 'Net Charge-Off' feature in LoanPro is designed to help you track the amounts that you have deemed uncollectible in each account. LoanPro allows you to charge off an amount by logging a payment or credit for the amount and then setting that transaction as a charge-off. This will cause the account to have a charge-off balance. Once the account has a charge-off balance, you can log a recovery payment. Net Charge-Off allows you to reference all of these transactions. Before reading this article, you'll want to have a basic understanding of charge-offs.
How Net Charge-Off Works
The net charge-off section is divided into two areas: History and Adjustments. The History section shows a record of charge-off transactions (which are payments or credits that have been designated as charge-offs) and recovery payments. This section should provide a summary of all charge-off activity on an account. The Adjustments section will show a listing of payments and credits on the account. Here you can designate which, if any, of these transactions should be charge-offs. To navigate to the 'Net Charge-Off' screen open an account then click Servicing > Net Charge-Off.
Common Uses & Questions
What kind of access controls are there? We understand taking a loan off your books is something you want to be careful about. You can set up roles to ensure that only users with access can charge-off loans.
Can the charge-off amount be changed in the adjustment tab? No, the adjustment tab under 'Net Charge-Off' will only allow the user to flag the transaction as a charge-off or remove the charge-off flag. If the charge-off was logged as a payment, you can edit the payment amount in the 'Payments' tab.
Default Charge-Off Process: Learn how to create a default charge-off process that fits your business needs.
Net Charge-Off Rule Trigger: Learn how to automate your charge-off process with rules applied.
Charge-Off Accounting: Understand how charge-offs are accounted for and what they mean for your business.