Expenses/charges on a Cash instrument can be distributed proportionately between investors in the instrument.

Setup the charge rate to be used on the interest calculator as explained in Create and update interest rate sets

Go to the Cash Instrument on which charges must be distributed and select the Charge rate as setup on the interest Calculator from the dropdown list

Go to the Supplier Instrument Account at the bottom op the Cash instrument

Complete the date up to which the charges is applicable in the ‘Up to date’ field and complete the ‘transaction date’

The system will calculate the estimated charges based on the charge rate selected on the Instrument and individual client balances on each day.

The ACTUAL charges deducted from the account is typed into the “Charge amount” field. The system will allocate the “Estimated charge amount” to the investor accounts and there may be a recon difference between the charges deducted and the charges allocated.

Match the charge amount deducted

Allocate the charges

Where there is a difference between the “Charge amount” and the “Estimated Charge amount”, the system will bring up a warning message on allocation. if the distribution amount was entered correctly, select ‘Yes” and the Charges will be allocated.

The working portfolio is used to “fund” this difference. Charges to the clients are added to the client portfolios and deducted form the working portfolio. Giving a 0 effect. The actual charges deducted from the account is added to the working portfolio. The net effect is that the total instrument value (sum of all the underlying portfolios including working portfolio) only decrease by the amount the bank deducted as charges.

E.g

Charges deducted: (R13.75)
Charges investor transactions (Estimated Charge amount): (R12.00)
Recon difference: R1.75

Accounts impact
Client A: – R5
Client B: – R7
Working portfolio: +R7, +R5, – R13.75 (net -R1.75)

The workflow list of Interest – and  Charges Distributions can be seen under Bulk Processes -> Distributions

Select the relevant dates, and if already allocated

Last Updated on 7 years ago by Antoinette Van Meyeren