NetLoan - Manual True Up Adjustment
Use Case: There may be situations in which a change in rate or payment in the middle of the loan is missed and needs to be corrected retroactively. For example, if a loan started in June of 2024, and the rate changed in January of 2025, but the modification to change the rate in NetLoan was missed until June of 2025, a retroactive adjustment would need to be made to true up the loan for the January to June 2025 periods.
The True Up modification type in NetLoan only supports changes to origination details. For example, the initial interest rate, down payment, or initial loan balance. It does not support changes to mid-term rates or payments. True Ups to mid-loan term periods must be done manually following the steps in this article.
STEP BY STEP PROCESS
- Navigate to the NetLoan Global Settings and ensure that the "Allow Closed Period Selection" box is checked:
- Check what the NetSuite settings are set to related to posting transactions with a transaction date in a closed period. This is found in the NetSuite Accounting Preferences:
- Capture the GL impact of the loan in the periods that will be impacted by the "True Up." For example, consider a scenario where the rate changed for a loan effective in the January 2025 period, but it was missed until June 2025, and the accounting periods have been closed and cannot be reopened through May 2025. Review the G/L impact of the loan from January 2025 -June 2025. Book a manual entry to reverse the G/L impact of the loan for these periods. This manual entry will be posted in the current or first open period, depending on your NetSuite preferences.
- Time Machine the loan back to January 2025. With the "Allow Closed Period Selection" box checked, this Time Machine will reset the amortization schedule on the NetLoan Loan record, but it will not delete the entries recorded in the closed periods. The manual entry in the step above effectively cancels the entries in the closed period so there is a net 0 impact.
Make sure that your past periods are closed. If they are not closed, the time machine will delete all loan-related transactions irreversibly.
- Modify the loan to add the rate change in the January 2025 period. Verify that the NetLoan Loan schedule reflects the correct activity.
- Run all journal entries again for the January-June 2025 period. These entries will either be posted in the next open period or in the current period, depending on what is selected in the Accounting Preferences (noted above).