What is pro rata interest in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: pro rata interest

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Interest that has accumulated between the most recent interest payment and the valuation key date.

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• Key Concepts: 
  Pro rata interest is a type of interest calculation used in SAP Credit Risk Management (FS-BA-PM-CR). It is a method of calculating the amount of interest due on a loan or other debt based on the amount of time the debt has been outstanding. The interest rate is applied to the outstanding balance for each period, and the total amount of interest due is calculated by summing up all the individual periods. 
  
  How to use it: 
  In SAP Credit Risk Management, pro rata interest can be used to calculate the amount of interest due on a loan or other debt. To do this, first enter the loan amount, interest rate, and repayment period into the system. Then, select “Pro Rata Interest” as the calculation method. The system will then calculate the total amount of interest due based on the entered parameters. 
  
  Tips & Tricks: 
  When using pro rata interest in SAP Credit Risk Management, it is important to remember that the total amount of interest due will be higher than if a fixed rate was used. This is because pro rata interest takes into account the time that has passed since the loan was taken out, and thus charges more interest for longer repayment periods. 
  
  Related Information: 
  For more information about pro rata interest and other types of interest calculations in SAP Credit Risk Management, please refer to the official SAP documentation.