What is non-financial covenant in SAP FS-FBS-CML-LWP - SAP Loans Workplace?

SAP Term: non-financial covenant

• Component: FS-FBS-CML-LWP

• Component Name: SAP Loans Workplace

• Description: Additional agreement within a credit relationship. This refers, for example, to negative pledges made by the customer. This means that, during the term of the contract, the customer is not permitted to provide any collateral against other creditors. If the customer does not comply with this obligation, other contractual consequences such as termination of the commitment depending on the agreement within the loan contract or credit contract may arise.

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• Key Concepts: 
  Non-financial covenants are contractual agreements between a lender and a borrower that are not related to the financial performance of the borrower. These covenants are typically used to protect the lender’s interests by ensuring that the borrower meets certain conditions, such as maintaining a certain level of liquidity or not taking on additional debt. 
  
  How to use it: 
  The SAP Loans Workplace (FS-FBS-CML-LWP) is a tool that allows lenders to manage their loan portfolios and monitor their borrowers’ compliance with non-financial covenants. The tool provides lenders with an overview of their loan portfolio, including details on each loan, such as the amount, interest rate, and repayment schedule. It also allows lenders to set up alerts for when a borrower is in breach of a non-financial covenant. 
  
  Tips & Tricks: 
  When setting up alerts for non-financial covenants, it is important to ensure that they are set up correctly so that lenders can be notified in a timely manner if a borrower is in breach of a covenant. Additionally, lenders should ensure that they have access to all relevant information about their borrowers so that they can accurately assess whether or not they are in breach of any covenants. 
  
  Related Information: 
  For more information on non-financial covenants and how to use the SAP Loans Workplace (FS-FBS-CML-LWP) to manage them, please refer to the SAP Help Portal.