What is average daily balance in SAP FS-CML - Loans Management?

SAP Term: average daily balance

• Component: FS-CML

• Component Name: Loans Management

• Description: Average amount in an account over a specific period. This amount is calculated by totalling the daily end balances in the period, and dividing by the number of days in the period.

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• Key Concepts: 
  Average daily balance is a term used in the FS-CML Loans Management component of SAP. It is a calculation of the average amount of money owed on a loan over a certain period of time. This calculation is used to determine the interest rate that will be charged on the loan. 
  
  How to use it: 
  The average daily balance calculation is used to determine the interest rate that will be charged on a loan. To calculate the average daily balance, you must first determine the total amount of money owed on the loan over a certain period of time. Then, divide this total amount by the number of days in that period. The result is the average daily balance. 
  
  Tips & Tricks: 
  When calculating the average daily balance, it is important to remember that the interest rate charged on a loan will be based on this calculation. Therefore, it is important to ensure that you are using accurate figures when calculating the average daily balance. 
  
  Related Information: 
  The FS-CML Loans Management component of SAP also includes other calculations such as loan repayment schedules and amortization schedules. These calculations are used to determine how much money must be paid back each month and how much interest will be charged over the life of the loan.