Why this matters
Defining asset terms and conditions is crucial for accurate financial modeling, compliance reporting, and proper asset management. This process sets up the specific terms, interest rates, maturity dates, and other contractual conditions that affect how the asset behaves and is reported in your financial statements.
Prerequisites
- You must be logged in as an Owner or Administrator
- An asset must already be created in the system
- Have the asset's contractual terms and conditions ready
- Understand the specific characteristics of your asset type
Steps
1. Navigate to Assets
Go to Assets → Select your entity → Find the asset you want to configure
2. Access Asset Terms
Click the Terms button (tags icon) in the actions dropdown for your asset
3. Review Asset Information
The Asset Terms modal will display:
- Asset Name - The asset you're configuring
- Asset Type - The type of asset (affects available terms)
- Currency - The asset's currency denomination
4. Configure Terms Based on Asset Type
The available terms depend on your asset type. Here are the main categories:
For Loan Assets (DEBT_LOAN)
Configure loan-specific terms and conditions:
Basic Loan Details:
- Lender - Optional lender name for record keeping
- Loan Type - Standard, Division 7A, UPE, Related Party, or Other
- Loan Term - Duration in years
- Maturity Alignment - How maturity aligns with financial year
Interest Calculation:
- Fixed Rate - Set a fixed interest rate percentage
- RBA Offset - RBA Cash Rate plus a fixed offset
- Division 7A Rate - Use prescribed Division 7A rates
- Retrospective - Calculate from actual transaction data
- Index Linked - Link to a specific index
- Manual - Use historical rate tables
Loan Features:
- Interest Payment Frequency - Monthly, quarterly, annually, or at maturity
- Principal Repayment - Bullet, amortizing, or interest-only
- Security Type - Secured or unsecured
- Guarantees - Personal, corporate, or none
For Property Assets
Configure property-specific terms:
Property Details:
- Property Type - Residential, commercial, industrial, or land
- Usage - Owner-occupied, investment, or development
- Construction Type - House, unit, townhouse, etc.
- Land Area - Size in square meters or hectares
Financial Terms:
- Purchase Price - Original purchase amount
- Current Value - Estimated current market value
- Rental Income - Weekly or monthly rental amount
- Expense Ratio - Estimated annual expenses as percentage
For Investment Assets (Shares, Funds)
Configure investment-specific terms:
Investment Details:
- Investment Strategy - Growth, income, balanced, or other
- Risk Level - Conservative, moderate, or aggressive
- Investment Horizon - Short, medium, or long term
- Dividend Policy - Reinvest, pay out, or mixed
Fee Structure:
- Management Fee - Annual management fee percentage
- Performance Fee - Performance-based fee structure
- Entry/Exit Fees - One-time fees for transactions
- Fee Payment Frequency - How often fees are charged
For Cash and Term Deposits
Configure cash-specific terms:
Account Details:
- Account Type - Transaction, savings, or term deposit
- Interest Rate - Current interest rate
- Interest Payment - Monthly, quarterly, or at maturity
- Minimum Balance - Required minimum balance
Term Deposit Specific:
- Term Length - Duration of the deposit
- Maturity Date - When the deposit matures
- Rollover Terms - Automatic rollover conditions
- Early Withdrawal - Penalties for early withdrawal
5. Set Interest Rate Parameters
Configure how interest is calculated and applied:
Rate Types:
- Fixed Rate - Set a specific percentage rate
- Variable Rate - Rate that changes with market conditions
- Indexed Rate - Rate linked to a specific index
- Stepped Rate - Rate that changes at specific intervals
Rate Calculation:
- Compounding Frequency - How often interest compounds
- Day Count Convention - How days are counted for interest
- Rate Reset Frequency - How often variable rates reset
6. Configure Payment Terms
Set up payment schedules and conditions:
Payment Frequency:
- Monthly - Payments due monthly
- Quarterly - Payments due every three months
- Semi-Annually - Payments due twice yearly
- Annually - Payments due once per year
- At Maturity - Single payment at the end
Payment Types:
- Interest Only - Pay only interest during term
- Principal and Interest - Pay both principal and interest
- Bullet Payment - Pay principal at maturity
- Amortizing - Gradual principal reduction
7. Set Maturity and Renewal Terms
Configure when and how the asset matures:
Maturity Details:
- Maturity Date - When the asset expires or matures
- Maturity Value - Value at maturity
- Auto-Renewal - Whether the asset automatically renews
- Renewal Terms - Terms for renewal if applicable
Early Termination:
- Early Termination Rights - Who can terminate early
- Termination Notice - Required notice period
- Termination Penalties - Costs for early termination
8. Configure Risk Parameters
Set up risk-related terms and conditions:
Credit Risk:
- Credit Rating - Credit quality of the counterparty
- Collateral - Security provided for the asset
- Guarantees - Third-party guarantees
Market Risk:
- Interest Rate Risk - Sensitivity to rate changes
- Currency Risk - Exposure to currency fluctuations
- Liquidity Risk - Ease of converting to cash
9. Set Compliance and Reporting Terms
Configure terms for regulatory compliance:
Tax Treatment:
- Tax Status - Taxable, tax-free, or tax-deferred
- Withholding Requirements - Tax withholding obligations
- Reporting Requirements - Regulatory reporting needs
Accounting Treatment:
- Recognition Method - How the asset is recognized
- Valuation Method - How the asset is valued
- Impairment Testing - When impairment is tested
10. Review and Save Terms
Finalize your asset terms configuration:
- Review all entered terms for accuracy
- Ensure terms are consistent with actual agreements
- Verify that all required fields are completed
- Click Save Terms to confirm the configuration
Expected Results
- Asset terms are properly configured and saved
- Interest calculations use the correct parameters
- Payment schedules are accurately modeled
- Risk assessments reflect the actual terms
- Compliance reporting includes proper term details
Example
Setting up a Division 7A Loan:
- Asset Type: Loan (DEBT_LOAN)
- Loan Type: Division 7A Loan
- Loan Term: 7 years
- Interest Calculation: Division 7A Prescribed Rate
- Interest Payment: Annually
- Principal Repayment: Bullet (at maturity)
- Security Type: Unsecured
- Maturity Alignment: End of Financial Year
Troubleshooting
- Terms not saving → Ensure all required fields are completed and values are in the correct format
- Interest calculations wrong → Check that interest rate and calculation method are correctly set
- Payment schedule incorrect → Verify payment frequency and type are properly configured
- Terms not appearing in reports → Ensure terms are saved and the asset is properly configured
What Can Go Wrong
- Incorrect interest rate settings → May lead to wrong interest calculations and financial reporting errors
- Wrong maturity date → Could affect cash flow planning and investment decisions
- Incomplete term configuration → May result in inaccurate financial modeling and reporting
- Inconsistent terms with actual agreements → Could lead to compliance issues and incorrect financial statements
Related Guides