What is effective capital in SAP FS-CMS - Collateral Management System?

SAP Term: effective capital

• Component: FS-CMS

• Component Name: Collateral Management System

• Description: The value of the receivable including all due items such as interest, fees and commission.

Smart SAP Assistant

• Key Concepts: 
  Effective capital is a term used in the FS-CMS Collateral Management System (CMS) of SAP. It is the amount of capital that is available to be used for collateral management activities. This amount is calculated based on the current market value of the collateral and the amount of capital that has been allocated to the CMS. 
  
  How to use it: 
  The effective capital can be used to determine the amount of collateral that can be used for a particular transaction. This amount is calculated by subtracting the current market value of the collateral from the total amount of capital allocated to the CMS. The effective capital can also be used to determine the maximum amount of collateral that can be used for a particular transaction. 
  
  Tips & Tricks: 
  It is important to keep track of the effective capital in order to ensure that it is not exceeded when making transactions. Additionally, it is important to monitor the market value of the collateral in order to ensure that it does not decrease significantly, as this could lead to a decrease in the effective capital. 
  
  Related Information: 
  The effective capital is closely related to other terms such as margin requirements and haircuts. Margin requirements refer to the minimum amount of collateral that must be provided for a particular transaction, while haircuts refer to the percentage of collateral that must be provided for a particular transaction.