PROMOS Individual Value Adjustment

With flat-rate individual value adjustment, the claims to be measured are summarised in measurement groups based on individually definable characteristics, such as due date, contract type or dunning lock. Corresponding devaluation rates are then assigned to these groups. For example, a claim that has been due for 200 days is devalued more than a claim that has a due date of only 90 days. Automatic devaluation of the entire amount as soon as a certain dunning level is reached is for example also possible. A hierarchical measurement structure can also be mapped for the specification of the devaluation characteristics. In a value adjustment run, all claims assigned to a category are measured with the same devaluation rate. Thus, the same credit risk is assumed for all claims in the same measurement group. If the customer accounts still have open credit balances, these are offset against the outstanding claims.

This solution allows semi-individual measurement of large numbers of claims in a single work step, thus combining a reasonable amount of effort for the analysis with a sufficiently precise estimation of the risk by means of forming measurement groups. The only prerequisite is that sufficiently differentiated measurement groups are formed based on experience values. On the basis of the schematic measurement, this can be mapped in the form of an algorithm. Following this, after the devaluation per contract is determined, the responsible processor can check it and finally post it in accordance with the stored rules. The result of the report is summarised in a straightforward ALV list.

• Adjustment criteria: The following adjustment criteria are available for defining the adjustment amounts: due date, amount of the item, dunning lock, special G/L indicators, contract type, contract end date.
• Cancellation: The cancellation function can be used to reverse the adjustment of the values.
• Simulation: A simulation can be run before performing the adjustment and actual posting. The results of this simulation are presented clearly in an ALV list.