BEAM Venture Wizard Quick Start Guide

Transcription

1 BEAM Venture Wizard Quick Start Guide

2 COPYRIGHT 2014 Beam4D Enterprises, LLC Published on 08/03/2014 All Rights Reserved. This document is designed to provide accurate and useful information regarding the Beam debt purchasing and receivables management software for the customers and prospects of Beam4D Enterprises, LLC. Technical information herein is subject to change without notice. No part of this document may be reproduced in any form by any means without the prior written authorization of Beam4D Enterprises. TRADEMARKS The Beam logo is a trademark of Beam4D Enterprises, LLC. Beam, Quick Search and Search Core are registered trademarks of Beam4D Enterprises, LLC. All other names, products and services are trademarks, registered trademarks or service marks of their respective owners. CONTACT 6771 Professional Parkway, Suite 101 Lakewood Ranch, FL Telephone Facsimile info@beamsoftware.com Internet THIS DOCUMENT COULD INCLUDE TYPOGRAPHICAL ERRORS. Beam4D ENTERPRISES CANNOT BE HELD LIABLE FOR ANY DAMAGES RESULTING FROM INADVERTENT OMISSIONS OR ERRORS IN EITHER THE SOFTWARE OR THIS DOCUMENT. CHANGES PERIODICALLY ARE ADDED TO THE INFORMATION HEREIN. Beam4D ENTERPRISES MAY RESERVE THE RIGHT TO MAKE IMPROVEMENTS AND/OR CHANGES IN THE PRODUCT(S) AND/OR THE PROGRAM(S) DESCRIBED IN THIS DOCUMENT AT ANY TIME. 1115

3 Table of Contents Beam s Accounting Model... 3 Investors, Ventures, Economic Deals and Portfolios... 4 Introduction...4 Setting up a Venture...5 Collection Expenses Buying Portfolios Creating a New Portfolio Selling Portfolios Background Creating a Pending Sale and Loading Accounts Awarding the Sale Brokers and Sales Fees Summary of Selling Buy Backs Table of Contents

4 Beam s Accounting Model Beam is built around a real-time, double-entry accounting system. For example, when a payment on an account is recorded, the account s balance is updated; journal entries are posted distributing the revenue to all involved investors (and, of course, to you, the DBO); changed balances are immediately reflected in all reports. The benefit of this approach to internal and external business monitors and auditors is immense. External investors can obtain near-real-time statements of their positions. There is no need for nightly, weekly or monthly batch processing. 1 Of course, there is a downside to this approach, too. Correcting mistakes isn t as easy. Reversing entries have to be made. But Beam provides the means to do this, too. Because of all the accounting entries happening behind the scenes in Beam, we have decided that many accounts in the Chart of Accounts should be created for you. When your company is first set up in Beam, you make very few choices concerning the structure of the Chart of Accounts. Beam then does a lot on its own. For example, if you designate account 325 as the master Accounts Payable G/L account, Beam will add accounts 325.1, 325.2, 325.3, etc. each time you create an entity that might need a payables account. In fact, any entity that you add to the CRM (Contact Relationship System) will be provided with both an A/P and an A/R G/L account just in case they are needed down the line. Similar behind-the-scenes account creation is done as you create Ventures and Economic Deals. We ll describe that activity more completely below. It is important to note two aspects of this behavior: 1. Because of the two-part G/L account numbering scheme, you ll never run out of account numbers. 2. Very little of this matters, because you never need to refer to G/L accounts by number; they all have names. 1 Really, the only monthly processing most DBO s perform is to run reports detailing distributions to Investors. 3 P a g e

5 Investors, Ventures, Economic Deals and Portfolios Introduction Investors join together to fund a Venture. Ventures buy Portfolios. Portfolios contain Accounts. Each Investor s rules linking that Investor to a Venture are described in an Economic Deal. Thus, there are as many Economic Deals for each Venture as there are Investors in that Venture. Investor 1 Investor 2 Investor 3 Economic Deal 1-1 Economic Deal 2-1 Economic Deal 3-1 Venture 1 Relationship of Investors, Ventures and Economic Deals A side note is due here. A Venture is like a formal or informal partnership or LLC that brings partners together for the purpose of investing in debt. The Chart of Accounts in Beam is the DBO s Chart of Accounts, not the Venture s. The DBO is the manager of the Venture and receives compensation from the Venture under certain (Economic Deal-dictated) circumstances. The DBO can be an Investor, too, but if so its participation is tracked like any other Investor s. The major implication here is that the contents and value of the Portfolios purchased by Ventures are not held in the DBO s G/L. This can best be illustrated as follows: 1. Let s say two investors form a Venture in a 2:1 ratio. 2. They are going to purchase a portfolio costing $60, Investor A sends the DBO $40,000; Investor B sends the DBO $20,000. This journal entry is made: Account Debit Credit DBO Cash Account $60, Investor A Capital Account $40, Investor B Capital Account $20, P a g e

6 4. When the purchase is being made, both Investors fund the Venture. Account Debit Credit Investor A Capital Account $40, Investor B Capital Account $20, Venture Capital Account $60, Purchasing the Portfolio from Debt Seller D results in: Account Debit Credit Venture Capital Account $60, Debt Seller D A/P Account $60, Paying the Payable: Account Debit Credit Debt Seller D A/P Account $60, DBO Cash Account $60, What s left in the G/L accounts? Nothing. All affected accounts have balances of $0.00. The Debt Accounts are in-house, but they are not on the books. Look at it this way: if the Venture were a formal entity like an LLC, it would have to track its own income and expenses, depreciation, etc.; file its own tax return; and issue K-1s to its partners (the Investors). The Portfolio doesn t belong in the DBO s books. On the other hand, since the DBO is receiving money from collections and needs to distribute those proceeds to Investors on behalf of the Ventures it operates, quite a bit of Venture-specific information is kept in the DBO s G/L and its database. Setting up a Venture A single Venture can buy many Portfolios over time. Investors will be called upon each time to fund the new purchase according to their Venture ownership percentages. Beam tracks collections against each Portfolio separately from those for other Portfolios, but, if the rules are the same and the owners are the same, you can keep using an existing Venture to buy additional Portfolios. You will need to set up a new Venture any time you don t already have a Venture in the system with the exact same mix of Investors and Economic Deal rules as this new Venture needs. More clearly: If Investor ownership percentages change, you need a new Venture. If an Investor decides not to participate or a new Investor is added, you will need a new Venture. If any terms describing an Investor s Economic Deal are different from prior Ventures, you need a new Venture. You can never go wrong setting up a new Venture, but there is no need unless there is a need. 5 P a g e

7 The following are the steps to follow in setting up a new Venture. 1. Add a CRM record for each Investor (not already in the system). If you re organization is selffunded, simply add your own company as an Investor using these steps. Click CRM from the Maintenance section in the navigation menu: Choose Investors from the list of entities available in the CRM menu. Click on New and then enter in all of the requisite information for your Investor. Again, self-funding organizations should add their own company as an Investor 6 P a g e

8 2. Launch Venture Center under the Collections heading in the Beam navigation menu: 3. Choose the Add new Venture button. 4. Name the Venture according to the convention of your choice. 5. Add each participating Investor to the Venture, specifying his ownership percentage or stake hold: Ventures funded by the debt buying organization (DBO) will have your company as the lone Investor: 7 P a g e

9 6. Enter each Investor s Economic Deal rules, including possible rules on incurred expenses responsibility. 2 Also, see the following section on Collection Expenses. 1 Choose the Investor for which you want to create the Economic Deal 2 Here, Beam will treat this Investor s stake hold as a loan with an APR of 12.00%. After the outsource vendor makes a collection and keeps its contingency fee, the Net Portfolio Income (NPI) is handled like this: for every $1.00 of NPI, your Debt Buying Organization (DBO) keeps $.20 with the remaining $.80 going to the Investor. Until this Investor is made whole, his investment will earn a 12% interest rate. Note: Interest for Investors accrues on constructive receipt to your organization. Basically, interest on the Investors loan is accrued when you get paid by your outsource vendor, not when the debtor made the payment and not when you make your distribution to your Investor. 3 After the Investor returns to basis, your organization splits every $1.00 of NPI 50/50. 4 This Investor is responsible for paying the Expenses entered in Beam s Money System under the GL category of Data Services 2 Unless otherwise stated all expenses incurred for a Portfolio (scrubs, for example) or on an Account (like nonreimbursed court costs) are borne by the DBO. If the Investor is to be responsible (that is, the costs come out of distributions that would have been made to the Investor), the rules must be specified when the Economic Deal is being set up. 8 P a g e

10 Self-funded deals will typically be simple and straightforward in Beam: 7. Finally, if distributions are to be made to non-investor entities, enter all of those rules. In the above example, the investor called Investor Group Partners is responsible for a back-end concession or spiff to the Payee called Acme Firm. The Acme Firm is an entry in the CRM but they are not a formal part of this Venture and are they not investing in any purchases. When does the Acme Firm get its spiff? That s what the Trigger Conditions are for. 9 P a g e

11 You can establish a start condition when the distribution is to be made as well an end condition for it to stop. In our example, Investor Group Partners will make a distribution to the Acme Firm when Investor Group Partners recoups its original investment: Distributions can consist of: A flat dollar amount payment A percentage of an Investor s netback or A percentage of an Investor s share in the purchase of the portfolio Choices for Condition Type for a $ Payment are: N days after the portfolio was purchased When the Investor s cumulative netback becomes X % When the Investor s IRR has reached X or A specific calendar date Choices for Condition Type for a % of Netback include: From the beginning of the Venture When the Investor s cumulative netback is X % When the Investor s IRR target is X or 10 P a g e

12 A specific calendar date Choices for Condition Type for a % of Investor s Share of Deal Cost are: When the Investor s cumulative netback becomes X % When the Investor s IRR has reached X N days after the portfolio was purchased A specific number of monthly payments 8. Record the Venture and the Economic Deal and non-investor distribution rules. 9. Click Next and then finalize the Venture by clicking Finish. A new Venture is said to be Unlocked until its first Portfolio is created. While a Venture is Unlocked, any of its terms Investors, percentages of ownership, Economic Deal rules, etc. can be changed. But once it buys its first Portfolio, the Venture is locked. After that, only one area can be changed: the expensehandling rules. The next section describes them more fully. 11 P a g e

13 Collection Expenses Collection Expenses are a list of named items that can have charges (expenses) allocated to them by a variety of methods. Examples would be Skip Traces, Letters, Court Costs, Repo Fees. Each Collection Expense points to an Expense account in your General Ledger. When charges are made and a Collection Expense is chosen, several things happen: 1. If this charge is of the type that affects Investors and their Ventures, the Collection Expense handling rules in the Investors Economic Deals are consulted to see if the expense amount is the responsibility of the DBO or of the Investor. 2. If the expense is the responsibility of the DBO, then the G/L account tied to the Collection Expense is debited the amount of the expense. 3. If the expense if the responsibility of the Investor 3, then the expense amount flows through Economic Deal processing and effectively brings the Investor backward in his stream of distributions. 4. In setting up each Investor s Collection Expense handling rules it is possible to specify a markup (or handling fee) that the Investor effectively pays the DBO for its trouble. If these exist, they, too, are recorded against the Economic Deal, further retarding the Investor s forward progression and resulting to a credit to the DBO s Markups G/L account. 3 Remember: each Investor s Collection Expense handling rules can be different from those of other Investors even in the same Venture. 12 P a g e

14 Buying Portfolios Buying portfolios in Beam is done in three steps: 1. Add a New Portfolio under the Venture that is actually buying the debt. 2. Import the purchased portfolio. a. Map the import file s fields to their corresponding Beam fields. b. Load the portfolio into a Preview. c. Review the Preview to validate your mapping and the quality of your data in general. Reject and repeat until you are successful. Remember: we will know if you Accept your portfolio without spending ample time checking your work. And if you ve made a mistake asking us to fix it falls outside the scope of normal Beam support. 3. Accept the Preview. Mapping purchased portfolios is fully covered in the Beam Importing Portfolios Quick Start Guide. Please refer to that User Guide for Steps 2 and 3. Creating a New Portfolio The following are the steps to follow in adding a new Portfolio to Beam. 1. From the Venture Center click on New Portfolio: This will open the Portfolio Setup Wizard: These steps are fairly intuitive in Beam to the seasoned debt buyer. 2. Start by entering the Basic Portfolio Info. Give your portfolio a name and choose the Debt Seller (as identified from your Beam CRM). 13 P a g e

15 3. Enter in the financial details of the portfolio. a. You can enter the Purchase Premium or b. The Purchase Price. Beam will calculate the Face Amount for you based on this inforamtion. c. Enter the Contingency Fee Rate if your DBO is collecting on the accounts in this portfolio and wants to be earn a fee before it pays back the Investor(s) that make up the Venture. Let s say your Venture is comprised of outside Investors and your DBO does the collections internally (it doesn t outsource its purchased portfolios). You would enter a Contingency Fee Rate here. How about 50%? So, when a $100 gets collected by your DBO, $50 comes off the top and is entered into your GL as what Beam calls Servicer Fees for you, the servicer. The remaining $50 of Net Portfolio Income (NPI) will flow back through your Venture s Economic Deal and invoke the rules you created earlier. And if we refer back to the 80/20 split between the Investor and you, the DBO, your DBO gets 20% of the NPI or $10. Beam refers to this as Servicer Equity. Then the Investor receives 80% of the NPI or $40. If your Venture is self-funded then you, the DBO, would collect a 0% Contingency Fee Rate and therefore leave this blank at 0.00%. 4. Then enter the Settlement Authority for your internal collection efforts. 5. The next step is to enter in the portfolio-specific dates beginning with your Contract Date and Purchase Date: 14 P a g e

16 And then the recourse dates for this portfolio: 6. Click Next and then click Finish to finalize adding your Portfolio. To actually load your new portfolio into Beam, please follow the steps outlined in the Importing Portfolios Quick Start Guide. 15 P a g e

17 Selling Portfolios Background You may recall from reading the Collector User Guide that Folders let someone organize his or her Queue contents by copying Accounts into any number of named holding places. No real movement takes place. The Accounts are still in their Queue. Folders can be added or deleted at will. Similarly, you have access to Global Folders to hold Accounts from many Queues. Create as many as you like and drag Accounts from any number of Portfolios into your Global Folders. As mentioned above, they are useful for organizing Accounts before a placement. Sales in Beam act much like Global Folders. Accounts are collected in them from any number of places. Accounts can be in more than one Sale at a time. For example, you can simultaneously create a national sales and a number of state-specific sales. You advertise your sales any way you want: newsletters, message boards, brokers. The accounts in a Sale can be exported into a review (diligence) file with or without masking to be sent to prospective buyers. Finally, you award the sale to a Debt Buyer (or a Broker). The accounts are moved to the Closed Domain and their Domain Status becomes Sold. Notes: You will not be allowed to sell any accounts that are Outsourced or already Sold or Repurchased. The awarding of the Sale will be blocked until you rectify the condition. 4 Sold accounts are now moved out of the Queues they were in. They show up in Debt Commander under the Debt Buyer s name once you select Beaming Relationships in the upper left panel. Sold accounts are given the Sold Account Restriction. Of course. If prospective Sale candidates were placed into more than one Sale (the national vs state or regional case), the now sold Accounts are not automatically removed from the other Pending Sales for you. They will still be there, but they will appear in red in the grid to remind you that you should probably tell someone that the accounts for sale have changed. The best way to do this would be to select them, right click to remove them from the Pending Sale and then export another diligence file. Beam handles the accounting for you, treating the net money received as payment in full for each of the sold accounts and distributing the proceeds according to the Economic Deal rules involved. A Sale can be made up of any number of Accounts from any number of Portfolios or Ventures. Beam splits up the money correctly. 4 You are allowed to sell other restricted Accounts, such as Bankrupt. 16 P a g e

18 Creating a Pending Sale and Loading Accounts 1. In Debt Commander click Global Selector in the upper left panel. 2. Right click the Pending Sales node near the bottom of the lower left panel and click Create Sale. 3. Enter a descriptive name for your Sale. 4. Drag and drop accounts (you re actually copying them) into your Pending Sale. You will see this: At this point you may choose export masked account data and provide it to your Debt Buyer. To do this, simply right-click on your Pending Sale and choose Export Accounts: You can easily choose to mask account data before you export to Microsoft Excel: 17 P a g e

19 To deliver additional value to your Debt Buyer you may want to provide them with a stratification of their potential sale file. Right-click on your Pending Sale and choose Run Extract>Stratification>Purchased Debt Breakdown: Awarding the Sale You award the Sale to the winning Debt Buyer by right clicking on the Sale name and then clicking on Award Sale. This opens a dialog that looks like this: 18 P a g e

20 The dialog shows that you are selling 25 Accounts with a total Principal balance of $7, To remove accounts from your Pending Sale simply highlight those accounts from within the grid view and choose Remove from Pending Sale. You may enter either the cents per dollar of principal or the total sale price to the Debt Buyer. Then select the Debt Buyer and click the OK button. This will close the accounts and so forth as described above. The journal entry that is constructed will have a debit receivable from the Debt Buyer and credits as per Economic Deal instructions. Brokers and Sales Fees If you sell by using a Broker, they will most likely keep part of the payment the Debt Buyer makes. In this case enter the cost to the Debt Buyer as above, but enter the broker s fee and select their name before clicking OK. 6 The journal entry that is constructed will have a debit receivable from the Broker and their fee will have been subtracted both from the amount due from the Broker and from the total amount spread amongst the Investors. 5 Beam only figures the Sale on the Principal balance. Other balance components are ignored. 6 You will have had to add the broker in CRM before awarding the sale. 19 P a g e

21 If your DBO is retaining part of the sale proceeds as a sales or management fee, enter that amount in the indicated area. The receivable will be calculated as above, but its amount minus your sales fee will be distributed to the Investors. Your sales fee will be credited to the Sales Fee G/L account (which will be created for you if it doesn t already exist). The following is the journal entry that Beam recorded when this sample Sale was awarded and both the $22 broker fee and the $5 sales fee were entered. 20 P a g e

22 Summary of Selling We will summarize selling by way of an example. 1. Say you are selling a number of Accounts (from one or more than one Portfolio; one or more than one Venture). They have a combined total Principal balance of $100, You are charging $0.05 per $1 of principal balance. $5, There are four cases to consider. a. If you are selling without a Broker and not taking a Sales Fee, Beam will create an A/R due from the Debt Buyer for the $5,000. The complete journal entry will have a debit to that Debt Buyer s A/R G/L account for $5, and a number of credits totaling $5, to the Investors getting income and possibly to your DBO Servicer Equity Income G/L account if the Economic Deals result in income sharing. b. If you are selling with a Broker and not taking a Sales Fee say the Broker fee is 5%, $ Beam will create an A/R due from the Broker for $4, The complete journal entry will have a debit to that Broker s A/R G/L account for $4, and a number of credits totaling $4, to the Investors getting income and possibly to your DBO Servicer Equity Income G/L account if the Economic Deals result in income sharing. Note: repurchase payments, if they occur in the future, will be made at 5 on the dollar; they will not take the Broker s fee into consideration. c. If you are not selling with a Broker, but you are taking a Sales Management Fee say it is 2% or $100 Beam will create an A/R due from the Debt Buyer for the whole $5, The complete journal entry will have a debit to that Debt Buyer s A/R G/L account for $5, and a number of credits totaling $4, to the Investors getting income and possibly to your DBO Servicer Equity Income G/L account if the Economic Deals result in income sharing and a credit for the $100 Sales Fee. Beam will create the Sales Fee G/L account if it doesn t already exist. d. If you are using a Broker and you are taking a Sales Management Fee again we ll use $250 and $100, respectively Beam will create an A/R due from the Broker for $4, The complete journal entry will have a debit to that Broker s A/R G/L account for $4, and a number of credits totaling $4, to the Investors getting income and possibly to your DBO Servicer Equity Income G/L account if the Economic Deals result in income sharing and a credit for the $100 Sales Fee. Beam will create the Sales Fee G/L account if it doesn t already exist. 21 P a g e

23 Buy Backs The process of buying something back in Beam is really more the act of un-selling the account in the first place. You may of course, buy back an account for the same price you sold it for or for more money or less money. Beam will remember the original sale price and auto-populate the Repurchase Cost when you finalize your buy back. To buy back or un-sell an account or group of accounts you must first identify which accounts are to be bought back using any of the methods learned so far: an entire Portfolio the results of a Global Search copied to a Global Folder an Import Selection File against the Sale or a load directly into a Global Folder from a Selection File Go to your Global Folder and right-click on it: Choose the Unsell all sold accounts option. This will open the following dialog window: Select the Queue you want to house the repurchased accounts in and name your repurchase price. Then click okay. 22 P a g e

24 Beam will remove the Sold Restriction from the account: and automatically move the account into the Queue you identified in the previous step. Beam will record the repurchase and reflect it in the General Ledger. 23 P a g e

25 Returns The process of returning a purchased account to the Seller is in Beam is really more the act of unselling the account in the first place. You may of course, buy back an account for the same price you sold it for or for more money or less money. Beam will remember the original sale price and autopopulate the Repurchase Cost when you finalize your buy back. 24 P a g e