C-Value!™ Loan Servicing Software

1. Start C-Value!. You should see a screen like the screen in Fig. 1.
2. Before entering the specifics of any loan, there are two setup steps:
   • Click on {Settings} and select {Event Names...} or press [F8]. See Fig. 2a. Set the options as shown. You are choosing to use "user defined loan and payment event names". Notice you can change them to anything you desire. For this example, we'll leave them as they are. Make sure "Save settings from ALL..." is checked. Click "OK" to close.
   • The next setting we must adjust is the option that determines how last period "Rounding" is going to be handled. Normally a schedule will assume that the balance will be paid to zero and adjust the last period payment so that the balance is zero. We don't want that. We want to know the balance after each payment. Therefore, we will set the "Rounding" option to "Open Balance" To make this change, click on the "Step 5 - Additional Cash Flows" tab near the top of the window. Click the "Rounding" option button (the button with the blue "+" and "-") and that will open the "Rounding" setting dialog which is shown in Fig 2b. As mentioned, set the option to "Open Balance". Click "OK" to close.
3. We are now ready to enter the specifics of a loan. (Don't worry too much about what is "right" at this point. All of these can be changed. The point is so show you how C-Value! works.) See Fig. 3a and follow along...
   • Optional: Enter a "Note" if you wish. This will print on reports. We usually enter the borrower's name.
   • Set the anticipated payment frequency — typically "Monthly".
   • Set the compounding frequency. Usually, this would be set to match the payment frequency.
   • Enter the agreed to "Initial Annual Interest Rate". Our sample loan uses "12.5%". (You won't type the "%" sign.)
   • Enter the cash flow details for this loan in the grid:
     • The first event of a loan is usually the loan amount being advanced to the borrower. Therefore, in row one of the cash flow grid, set the event to "Loan Amt". For our example, well set it to $13,750. The amount borrowed is given to the borrower one time, so set the "# Periods" to "1".
     • Tab to or click on the second row. After the borrower has received the loan amount, normally the events that follow are "payment" events. Since at this point, we do not know what the payment will be, we can have C-Value! calculate it. Enter the date the first payment is due (08/01/2010) and type a "U" in the "Amount" column to indicate that the payment is the unknown value. The term of the loan will be five years of monthly payments. Set the "# Periods" column to "60" and set the "Frequency" column to "Monthly". The "End Date" will be calculated by C-Value! (07/01/2015). Fig. 3a.
   • Click the "Calc" button (the button that looks like the equal sign) to solve. The regular monthly payment is calculated to be $311.71. Note: If you check this value with other loan calculators (even ours), you'll get a different result. This is because C-Value! is compensating for the first payment period (June 9th to August 1st) being longer than a month. You can set C-Value! so it does NOT make this compensation and calculates $309.35 instead. Your screen should now look like Fig. 3b.
4. The loan is setup and all the details are entered. Let's start recording payments...
   • The borrower makes his first payment on 07/28/2010. Click on row 2 in the grid. Set the "Date" to "07/28/2010" and change the "# Periods" to "1" since only one payment is being recorded.
   • The second payment is paid on 09/03/2010. Click on row 3 and set the "Date" to "09/03/2010". Enter the amount "$311.71" and, again, set the "# Periods" to "1".
   • Repeat these steps for the third payment made on "10/01/2010". Fig. 4

   • The above steps can be repeated as each payment is made until the loan is paid off. You can view a payment schedule showing how the payments are allocated to interest and principal as well as the balance at any time by clicking on the "Cash Flow Schedule" tab near the top of the window. (You can get the loan balance as of any date too, but we won't cover that here.) Many times, loans are not paid so regularly however. If you keep reading, we'll cover how you can handle missed or skipped payments, late fees and extra payments too.

5. Missed payments. By 11/10/2010, when the 11/01/2010 payment had not been received, the lender wanted to note this and to add a penalty. Fig 5.
   • This is optional: Click on the next empty row and set the "Events" column to "Missed Pmt". Enter "11/01/2010" for the date, $0.00 for the payment and "1" for the "# Periods". Actually showing the missed payment, while not necessary is good for record keeping and it also forces the schedule to accrue interest through the first of the month and to show the balance. (C-Value! will calculate & post interest anytime there is an "event". This is so the balance can be updated.)
   • For this particular loan, if the payment has not been paid by the 10th of the month, then a late fee is assessed. Click on the next available row. Set the "Events" column to "Late Fee". Enter the date, "11/10/2010", $25 for the amount and, again, "1" for the "# Periods".
   • The example shows the November 1st payment being paid on "11/22/2010". Note that the payment amount does not include the late fee. That's OK (from the point of view of the lender any way) as the late fee is added to the loan balance and accrues interest.
   • If and when the late fee is paid, and if you do not want to collect interest on the fee, then right click in the row after the late fee. Select from the pop-up menu"Insert Line...". This will insert a row just after the late fee. Set the "Events" to "Pmt Amt". Enter "11/10/2010" as the date for this row too and the "Amount" to $25.00. This will prevent interest from being charged on the late fee. If you would rather more accurately show when the late fee payment is received and still not charge interest on the late fee, then post the late fee on the date the payment is received.
6. Extra payments. Entering an extra principal payment uses the same techniques that we've been using up to this point. See Fig. 6.
   • Our example shows an extra payment made on 12/15/2010. (If you are following along, you'll have to enter the 12/01/2010 payment.)
   • Click on the row after the 12/01/2010 payment. Select "Xtra Pmt" in the "Events" column. Enter "12/15/2010" for the date, $500.00 for the amount, and yes, "1" for "# Periods".
   • Note: Some of you will look at the schedule and notice that part of the $500 payment is allocated to interest. People often expect 100% of an extra payments to be applied to the remaining principal amount. C-Value! can do it this way. The details are mostly beyond the scope of this brief tutorial. But, what you have to do is set the "Compute Method" to "US Rule" on the "C-Value Setup Window" and select a "Fixed Principal + Interest Special Series". (Set the principal payment amount to $500.) This is all explained in the program's "Help".
7. Additional loan amount added.. This is the last event type. With some loans, the borrower can come back to the lender and borrow additional funds. Often this happens with construction loans. A bank will agree to a total loan amount of say $400,000 but they'll only release funds as various mile stones are reached. C-Value! can handle this scenario — easily. See Fig. 6.
   • To follow the example screens, add the regular payment on "01/02/2011".
   • Optional Step: We want to see the balance of the loan prior to advancing an additional loan. Notice in row 11, we created a $0 payment with the same date as the additional loan. We created this row prior to the row with the "Add'l Loan" but with the same date so that we can look at the schedule and see the balance as 01/10/2011.
   • Click on the next empty row. Set the "Events" column to "Add'l Loan". Set the date to "01/10/2011". Enter $1,000 for the "Amount" and "" for the "# Periods".
8. Reviewing the schedule. Any time you click on the "Cash Flow Schedule" tab when there is active cash flow data, you'll see an amortization schedule. Here are some observations about the schedule. See Fig. 7.
   • Notice that the loan balance is calculated after any event. The "Addl Loan" row shows the balance as of "01/10/2011".
   • Columns only appear on the schedule if an event of that type has occurred. This gives you some flexibility. For this loan, if you would rather see fewer columns you have the option of setting the "Add'l Loan" event to simply "Loan Amt". Ditto for "Xtra Pmt" you could just call it "Pmt Amt". What you do depends on the detail you want to see.
   • Notice the schedule shows totals for the year. The user can control what month represents the last month of the year. This is important if yours or the borrowers tax year does not with in December. You can also change the setting at any time without impacting the data you have entered. The schedule is always calculated in real time.
   • The user can control the look of the schedule. Fonts and colors can be changed. Margins can be adjusted. Columns can be merged. And custom headers and footers can be added.

We think you'll agree, C-Value! can accomplish a lot. However, we also understand that it may not do everything you want a loan management program to do or it may not implement a feature in a way you would like to see it implemented. If that's the case, why not discuss with us the possibility of having custom modifications prepared for you using our consulting services?