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Calculate Savings Interest

Interest on a savings is the amount of money a bank or financial institution pays a depositor for holding their money with the bank. In a way, a bank borrows money from their depositors by using the deposited funds to lend money to other customers. It is the cost of borrowing another person's capital.

Loan Performer calculates savings interest according to the calculation method you set at System ->Configuration ->Savings ->Interest on Savings  for each savings product. Since the interest is booked to three different interest accounts in the bookkeeping, i.e. "Individuals", "Groups" and "Businesses" you can know how much interest has been paid for each client category.

How to calculate savings interest

To calculate savings interest you go to Savings ->Interest ->Calculate Interest and a screen like the one below shows up:

• Product: From the drop-down list select the appropriate savings product, e.g., "Free Savings".The savings products should have been previously defined at the menu System ->Configuration ->Products.

The text-boxes of Interest calculation method, Interest rate, Interest Period, Starting at, Withholding tax on int. paid, Interest also calculated on dormant accounts on this screen will automatically be updated with the data you entered at System->Configuration->Savings for this particular savings product.

• Calculate: Click on this button to preview interest calculated for all your clients for the specified period. Loan Performer calculates all accounts with balances and displays them in a scroll window with their corresponding interest amount as shown above:

In the table at the bottom of the screen displays the Account, Name of the client, Total Interest calculated, Withholding tax on interest (if any), the amount of interest to be paid and the yellow column "Pay Int.?". Accounts that should receive interest should be marked with "Y" and  accounts that should not receive interest should be marked with an “N”.

Click on the OK button the system will prompt the user if they want to view the interest report as seen below.

Click on the YES button to preview the interest report which will look like one below:

• The system will also breakdown in another report the total of interest paid fro the group into what was paid by each member for the group members as seen below:

Close the preview and print the report to update the savings accounts with the interest calculated. A new interest period will be set and displayed in the LPF information window.

Please note that the savings accounts will become updated with the interest amount only after printing the interest report, otherwise the interest calculation will be canceled and you will have to run this module again.

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