What is curtailment in SAP FS-CML - Loans Management?

SAP Term: curtailment

• Component: FS-CML

• Component Name: Loans Management

• Description: Early payoff of a part of the loan amount not included in the agreed repayment schedule, and during the fixed interest period. In some cases the lender charges the borrower a prepayment penalty for curtailments using the payoff business operation or when creating the last bill at the end of the loan contract. Whether a curtailment can be entered for a loan is determined in the loan payment plan for the overpayment hierarchy.

Smart SAP Assistant

• Key Concepts: 
  Curtailment is a feature of the FS-CML Loans Management component of SAP. It allows users to reduce the principal amount of a loan, either in full or in part, before the loan's maturity date. This can be done either manually or automatically, depending on the user's preferences. Curtailment can be used to reduce the total amount of interest paid on a loan, or to reduce the amount of money owed by a borrower.
  
  How to use it: 
  To use curtailment in SAP, users must first set up a curtailment plan. This plan will specify when and how much of the loan principal should be reduced. Once the plan is set up, users can then manually or automatically reduce the loan principal according to their preferences.
  
  Tips & Tricks: 
  When setting up a curtailment plan, it is important to consider the impact that reducing the loan principal will have on interest payments. It is also important to consider any fees associated with reducing the loan principal.
  
  Related Information: 
  For more information about curtailment in SAP, please refer to the official SAP documentation for FS-CML Loans Management.