Creating Loans in SuccessFactors
In this blog post you will learn about how to create Loans in detailed steps and what are all the objects that are referred and used.
Introduction: Loans are provided to employees based and eligibility and policy of the company and are recovered based on rules and number of instalments agreed. Let us see how we can set this eligibility and how employee can apply/view this in Employee Profile and Admin in Manage Data. Salary advances are similar to Loans, only changes could be recovery in single instalment instead of multiple and hence non-recurring deduction pay component can be used
Step1: Manage Employee Central Settings
Ensure that Advances is set as ON and since Loans and Advances require either one time or recurring deductions, Deductions Management also should be ON
Step2: Configure People Profile
Ensure that Advances section is enabled in People profile so that Employees can see and apply for Loan or Advances. In this example Advances subsection is available under Employment section, so ensure that Employment section view is available for ESS role in RBP
Check the box – Show this subsection on the profile
Step3: Manage Permissions
Ensure that Role Based Permissions are available for Manage Advances for Administrator and provide similar permission to Self-service (except Advances Admin over view)
Step4: Manage Organisation, Pay and Structures – Pay Component
Create Pay components with type one Earning (loan or advance disbursement) and two Deduction (for deducting one time or recurring from Payroll).
Similarly one Recurring Deduction Pay component (Recurring for Loan instalments) and one non-recurring Pay components are to be created
One time Pay Component for Deduction also to be created as this needs to be mapped (mandatory and may not be used for loans, but if it is one time recovery like incase of Salary advance it will be required)
Step5: Configure Business Rules
Create Business Rule in Advances Management with “Advances Eligibility Rule”
Example: If Legal Entity given in “Eligibility for Advances” is same as the User Legal Entity, then
Set “Is Eligible” as YES; “Unlimited Amount” as No; “Maximum Eligible Amount” as 12 x Basic
Step6: Manage Data – “Eligibility for Advances”
Create new “Eligibility for Advances”; Map Business rule created and Pay components – Earnings for Loan disbursement and Deduction component for recovery
Step7: Employee Profile – Advances Tile
Testing now for an Employee to see if she can request for Loan. Loan will appear with eligibility and user can select “Request Now” to apply
Eligibility for Advances view after applying Loan
Current Advances view after applying Loan
Recurring Deduction view in Employee Profile after the Loan application
“Accumulation for Advances”in Manage Data will show similar info to Admin which Employee views in “Eligibility for Advances” View in Employee Profile based on Loan requested
System will create a Non Recurring Payment in “Manage Data” for the Loan payment or advance requested
Recurring deduction view in manage data (In case of Loan deductions)
These are all the objects (and it’s dependencies) that are used in configuring Loans as mentioned in the steps above. This will also help you to understand how and where Employee and Admin can take a look at the records after Loan is created. Hope you find this blog post useful and feel free to leave your comments and will be happy to listen to your feedback!
It's really have good features…thanks a lot for sharing such a wonderful blog..
Hi baladeba behera
To my knowledge that may not be possible.
Generally loans are given as a benefit to employees and are provided at nominal interest rates to encourage employees to stay with company. Employer/company doesn't operate loans the way a bank or lending institution operates, so it doesn't make sense to me to make it complex. I would like to hear if someone has encountered such real business scenarios and have a solution for such scenarios
One question can we use the same feature for country India and can we also apply the rate of interest on the loan?
Thanks Vikrant Dukre
Yes, should be able to use anywhere as per standard functionality. Rate of interest can be simple, compound or not applicable as per company policy. Nothing more is supported.
The superb and perfect blog for Advances...
Nice and detailed blog. Thanks for the information. I have a couple of queries.
Thanks in advance.
Followup to my earlier queries, I would like to add one more query based on customer feedback.
Customer wants to deduct the EMI in the same Month, if the Loan is requested on or before 15th of the month.
Eg., If my Loan Request is on the 10th of October and Approved on the 12th of October, then the EMI deduction should start from October Payroll itself.
Currently, the EMI is starting effective from 1st Nov, ie the 1st EMI is on 1st November.
Thanks / Rgds
Thanks. Nice blog. Is it possible to include few more conditions in the advance eligiblility such as "Eligible for Advance only if the loan request date is one year from hire date of the employee"
Thanks & Regards,