Interest Accrual Period

interest accrual definition

For an interest type of rule, all the interest-related details have to be specified in the Product ICCF Details screen. Further, the contract has Interest and Principal payment as bullet schedules. Rate Cycle ‘Round-off’ – Indicates that the tenor of the component should be rounded off to the nearest whole number. The rate defined for the derived tenor will be applied to the component.

interest accrual definition

For example, assume a bond has a fixed coupon that is to be paid semi-annually on June 1 and Dec. 1 every year. If a bondholder sells this bond on Oct. 1, the buyer receives the full coupon payment on the next coupon date scheduled for Dec. 1. In this case, the buyer must pay the seller the interest accrued from June 1 to Oct. 1. Generally, the price of a bond includes the accrued interest; this price is called the full ordirty price.

These Interest Rules should, in turn, be linked to a product, so that the attributes of the Interest Rule is applied on all contracts involving the product. However, while capturing the details of a contract, you can modify some of the attributes defined for a rule. Further, for a contract, you can also indicate that the application of a specific Interest component should be waived. A bond’s term, or years to maturity, is usually set when it is issued.

Definition Of Accrue

The accrued interest is reported in the balance sheet as interest payable and comes in the current liability section of the balance sheet. Let us understand the formula for the calculation of the accrued interest of a loan. Let us assume that the yearly rate of interest for the loan is 14%, and the amount of loan is $1000. And the rate of interest charged by the financial institution for the loan is monthly.

interest accrual definition

The interest accrual period may or may not correspond to the payment period. On the annual accrual mortgages in the UK, payments are made monthly. On most monthly accrual mortgages in the U.S., payments are also made monthly, but in some cases payments are made biweekly. To link composite rate code with OL contract, select composite rate code from the list of options available for ‘Floating Rate Code’ in the Loans and Commitment – Contract Input’ screen .

Types Of Interest

If you’re dealing with an investment instead, it’s a good idea to chat with your financial adviser or accountant to see how accrued interest might affect you. You can use accrued interest calculators to see how much accrued interest might add up on your student loan while you’re taking a break, and how much interest-only payments can help you in the long run.

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The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials. Accrued interest is the amount of loan interest that has already occurred, but has not yet been paid by the borrower and not yet received by the lender. The amount of interest earned on a debt, such as a bond, but not yet collected, is called accrued interest.

Do You Debit Or Credit Accrued Interest?

This will indicate the tenor for which the floating rate needs to be picked up from the Floating Rates Table, for contracts using this product. When you input a contract, the interest details defined for the product in which the contract has been entered would be applied automatically on the contract. In other words, the interest rule is ‘defaulted’ from the product under which the contract is processed. However, if required, you can change some of the attributes for interest, for a specific contract. Before a product module becomes operational, you need to maintain certain basic information on interest, which is later linked to a product. To create this information, you have to define floating rate codes and interest rules. You should define the attributes for interest components by way of defining Interest Rules.

interest accrual definition

By dividing this rate by 12, we can see that the monthly interest rate is 0.5%. So, if two months have passed since the last interest payment was made, two months’ worth of interest would be 1% of the par value, or $10. Accrued interest is used when an investment pays a steady amount of interest, which can be easily prorated over short periods of time. Bonds are good examples of investments where accrued interest calculations are useful. If you extend credit to a customer or issue a loan, you receive interest payments. When you accrue interest as a lender or borrower, you create a journal entry to reflect the interest amount that accrued during an accounting period. Loans and lines of credit accrue interest, which is a percentage on the principal amount of the loan or line of credit.

4 Defining Interest Details

Either way, understanding how accrued interest works can help you be more strategic about your finances. Compensation may factor into how and where products appear on our platform .

It is because the interest is paid on the principal ($1000) and the accrued interest ($100), for a total of $1100. Is the amount of interest due on the loan, based on the principal loan outstanding. Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.

  • However, you are allowed to change it at the time of contract processing.
  • However, the interest rate applicable on a contract can be changed after the contract has been initiated.
  • The interest rate applicable for Main Interest Component is defaulted from previous period.
  • You can have several interest components, which you link to a product.
  • Thus, the most general interest application condition can be that an Interest Rule, which is applicable to contracts in any currency, and involving any customer.
  • You can access this screen by typing OLDINTLM in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

The value of this field is defaulted from the ‘Interest Class Maintenance’ screen. Compounding on holidays – You can opt to compound interest on holidays. For more details, refer the section titled ‘Identifying products for agency contract creation’ in the ‘Defining the Attributes specific to a Loan product’ chapter of the Bilateral Loans User Manual. If you have selected the interest accrual definition due date option, Oracle Lending calculates the penalty from 11th October 2003. Select the appropriate Interest class from the list of classes, defined specifically for the Loans module of Oracle Lending. All the other details of the component are to be specified through the ‘Interest Class Maintenance’ sub -screen of the ‘Loans and Commitment Product Definition’ screen.

Origin Of Accrue

Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest. 3 “Annual interest” or “Annualized Return” represents an annual target rate of interest or annualized target return and “term” represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections.

If you can accrue enough extra credit to build up your grade, you won’t have to take the final exam. Use our Accrued Interest Calculator to figure out a bond’s accrued interest. To better understand bonds and bond funds, let’s start with some basic concepts. The Structured Query Language comprises several different data types that allow it to store different types of information… Simple interest would be the equivalent of receiving $5,200 after the first year, withdrawing the $200, and then having $5,000 before the next period. If you put $5,000 in a bank account that earns 4% interest a year, you will have $5,200 by the end of the year. Now, if you keep the $5,200 in the bank for another year, you will have $5,408.

For example, assume interest on a bond is scheduled to be paid on March 1 and Sept. 1 every year. If an investor converts his bond holdings to equity on July 1, he will be paid the interest that has accumulated from March 1 to July 1. After the bond has been converted to shares of the issuer, the bondholder stops receiving interest payments. At the time an investor converts a convertible bond, there will usually be one last partial payment made to the bondholder to cover the amount that has accrued since the last payment date of record.

What Is Accrued Interest?

In accounting accrued interests are generally computed and recorded at the end of a specific accounting period as adjusting journal entries used in accrual-based accounting. A bond is a fixed-income investment that represents a loan made by an investor to a borrower, ususally corporate or governmental.

Before you buy a bond, always check to see if the bond has a call provision, and consider how that might impact your investment strategy. Call provisions are outlined in the bond’s prospectus and the indenture—both are documents that explain a bond’s terms and conditions. While firms are not formally required to document all call provision terms on the customer’s confirmation statement, many do so. When you buy municipal securities, firms are required to provide more call information on the customer confirmation than you will see for other types of debt securities. This is useful to know, especially if you buy or sell a fixed-income investment. As part of the sale, the buyer must pay the price of the bond plus the interest that has accrued since the last interest payment was made. To record the accrued interest over an accounting period, debit your Accrued Interest Receivable account and credit your Interest Revenue account.

Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns.

But rather than requiring daily payments for that interest, lenders keep a running tally of it that you pay in more reasonable increments. When a bond transaction takes place, the buyer buys the underlying asset plus the right to the next coupon payment, which includes the accrued interest since the date of the initial investment. Therefore, as compensation for the loss, the seller requires the buyer to pay the accrued interest that accumulates between the last coupon payment date and the day of the purchase.

Partnerships for change: what if every voice mattered the same?

“No major operation of any kind should be mounted without young people out in front. They are the great change-makers and the great risk-takers. Seeing the world for the first time brings a special insight, just as seeing it for the umpteenth time brings a particular wisdom. The two go well together.”

Hugo Slim, quoted from “Reflections of a humanitarian bureaucrat”

Hugo Slim is the Head of Policy and Humanitarian Diplomacy at the International Committee of the Red Cross in Geneva. The excerpt above is part of a blog in which he examines the bureaucratisation of humanitarian action as “the single biggest change in the sector since the 1980s”. With a humouristic and hard look, Slim talks about joining Save the Children UK in 1983 when “as an enthusiastic 22-year-old theology graduate, setting off to Morocco with a suitcase, typewriter and guitar, the humanitarian sector was still small and led by a few striking individuals.” He then goes on identifying some of the key features that characterise bureaucracy in many humanitarian organisations today and exploring how to encourage simpler and more dynamic forms of humanitarian action. One of his suggestions is to put young talent at the forefront of such organisations and celebrate the charisma and dynamism of young people.

How can humanitarian organisations embrace dynamism?

In the last months, I was on a mission for CHOICE for Youth and Sexuality, a Dutch youth-led (1) organisation specialised in giving young people a voice in developing programs and strengthening youth-led initiatives.

CHOICE is part of major SRHR alliance that works towards young people’s sexual and reproductive health and rights in Africa, the middle-east and, and South-East Asia, through programs such as ‘Get Up Speak Out – for youth rights’ (GUSO), and ‘Yes I Do!’ (2). During the implementation of these programs, organisations have created spaces to think about how to engage with young people. One of their strategies has been to build Youth-Adult Partnerships (YAPs). A Youth-Adult Partnership is a type of partnership in which both young people and adults are equally involved and share power.

Youth-Adult Partnerships (YAP) have become a phenomenon of interest to both practitioners and researchers in recent decades (3), who offer various interpretations of what YAP is. There are different types of Youth-Adult Partnerships with varying degrees of youth and adult control. But there are a few ingredients considered essential. For instance, according to CHOICE’s, in a YAP young people and adults should draw on consensus and participatory decision making: both youth and adults can and should bring their perspectives, experiences, expertise and networks. Additionally, youth should be given decision-making power in and be integrated into all aspects of youth programs (4).

While it was broadly understood that there were challenges with the implementation of these partnerships, CHOICE and I were interested in learning more about the young people and adults who were involved in YAPs: What are the opportunities and challenges they face? What are their ideas for improvement?

To answer these questions, I visited a dozen inspiring organisations in the beautiful countries of Malawi and Kenya, and talked with young people and adults about how they could better support each other achieve remarkable outcomes in Sexual Reproductive Health and Rights (SRHR) projects. Here’s a collage of bits and pieces taken from our conversations:

Snapshots of the findings: what conversations with young people and adults are telling us

To hear youth voices (5), I conducted a total of nine interviews with young people in Malawi and Kenya. I also organised a focus discussion with youth clubs in Malawi and participated in a Youth Council meeting in Kenya. Additionally to these personal meetings, I analysed the responses of 34 young people and young adults (up to the age of 30) to the survey ‘we are all ears’ (6). These young people, while working in geographically and culturally diverse contexts, were increasingly finding ways to engage their voices and talents in SRHR organisations and projects at different levels. From the results of the survey and during field research in December 2019, I identified significant roles for youth in Youth-Adult Partnerships in SRHR projects. YAPs have empowered young people to assume the roles of youth advocates, community educators, advisors to SRHR organisations, non-profit chairs, and direct youth service providers. They shared about their experiences working with adults in YAPs, as well as reflect on their challenges and ideas to build these partnerships.

Decision-making power through community-based structures and youth advisory groups

Access to decision-making cuts to the core of the challenges many young people face in their efforts to work as partners with adults in this research.  Youth advisory groups were found particularly successful, as avenues for ensuring young people’s voices are considered in decision-making. The Youth Council in Kenya, for instance, was founded in 2018 as an advisory board committed to building a network of young people and SHRH advocates. Its members are young people only. However, its Chair and Vice-Chair seat at the decision-making table with adults and vote on decisions to be made by the Kenya Country Alliance.

Another example of a lateral initiative from youth to become more influential in decision making is the Ugunja Youth Parliament (22) in Kisumu, Kenya. This is a parliament formed by young people to discuss issues that affect them in their communities. Like any other parliament, they have clerk officers who take minutes, speakers, and ministers. Local officials and policymakers took notice of this initiative and started consulting young people before they make key decisions or plans. This is a link to their Facebook page:

Negotiating boundaries and letting young people be in charge

Adults in this research also expressed facing a range of challenges that arise when working with young people and youth-led organisations. To bring the voices of adults into the research, I conducted a total of seven interviews with adults in Malawi and Kenya. Additionally to these personal meetings, I analysed the responses of six adults to the survey ‘we are all ears’.

A common challenge for the adults in this research was finding the balance between giving input to youth and stepping back to allow them to take the lead. One adult staff explained how she worried about getting the right outcome or wanted to make sure everything ended up as she predicted it:

“I sometimes get torn. Because NGO world is full of bureaucracy, as much as we don’t say it so you have to account for how things went and nobody wants to say things went wrong because we put an experienced young person in the driving seat. But at the same time, you do see that you were once a young person and you got where you are because of opportunities.”

Adult staff, based in The Netherlands

Moving beyond stereotypes of being young and old

Even though the very definition of YAP emphasises a partnership between youth and adults, some informants (of all ages) felt as if the use of these two universal categories wasn’t helpful. They would rather see people in terms of their skills and individual potential to contribute to the partnership. 

I heard this idea for the first time from a young woman in Kenya. She offered what I thought was both a very cool and accurate observation. She said that young people and adults use the standard social constructs of what it means to be young or older, to point fingers at each other based on broad stereotypes. She used the words’ blame game’.

These are interesting reflections. YAPs create opportunities for young people to be involved in spaces usually dominated by adults, and these opportunities might not have been there if it wasn’t for paying attention to ageism in the first place. But broad interpretations of what a young and an older person are and can bring to YAPs, limit the type of roles and responsibilities they can take from the very beginning. For instance, it partially explains why young people are more often assigned more hands-on responsibilities instead of involved in strategic work.

Helping organisations Walk the Talk of YAPs

A look at the current state of YAPs in international development reveals that they are very different from one another in terms of purpose, programming, approach, challenges and opportunities. Young people and adults are working as partners within SRHR alliances and organisations in many different ways, some through direct work with local communities, and others by including young people in their operations, local programs and staff. There are also varying degrees of willingness and interest in YAPs, as well as different institutional and organisational capacities to embark on this kind of work. Due to this diversity, within organisations and across projects, it is difficult to generalise about SRHR organisations commitment to YAPs and their capacity to realise these commitments.

However, I observed very positive results in the work of a handful of organisations who are genuinely being reflexive about involving young people through partnerships with adults. This is a time when the importance of supporting young people is increasingly on the radar of many organisations, and the leadership and contributions of young people are more and more visible. Examples of progressive YAP approaches have gained strength in the last few years. They can be seen in co-leadership models such as the Youth-Country Coordinator/National Programme Coordinator model in the GUSO programme, as well as in the rise of youth-led advisory boards, who are progressively taking a bigger role in influencing decisions around SHRH programmes and policies.

My experience working alongside CHOICE, and young people and adults in this research, has been one of constant learning. Together, we reflected on key elements for success in YAPs, best practices and ideas to improve future partnerships. We recognise that every context is different, and the learnings and ideas from this research might not work the same way for different organisations. All the same, it is important to share them, both to support other organisations on their journey and to keep challenging organizational practices constructively.

Reach out to me or CHOICE if you would like to read the final report and learn more about the research findings and recommendations for making YAPs work. Happy explorations!

1. Youth-led: When a program, activity or organisation is youth-led, it means that youth have control over all aspects involved. Young people are in the driver’s seat: developing, implementing, monitoring and evaluating. Adults can participate when young people need expertise or experience, but their input is minimal.
2. Get Up Speak Out (GUSO) is a five-year program (2016-2020) developed by a consortium consisting of Rutgers (lead organisation), Aidsfonds, CHOICE for Youth and Sexuality, Dance4life, International Planned Parenthood Federation (IPPF) and Simavi. ‘Yes I do’ (YID) is five-year program (2016-2020) developed by a consortium consisting of Plan International Netherlands (lead organisation), Amref Flying Doctors, Rutgers, KIT Royal Tropical Institute, and CHOICE for youth and sexuality. The GUSO programme continues what had been started by two other programmes (Access Knowledge and Services – ASK, and Unite for Body Rights – UfBR) in the same countries: actively involving young people to claim their sexual rights and right to participation at community, societal, institutional and political levels.
3. See e.g. Zeldin, S. , Christens, B. D. and Powers, J. L. (2013). The Psychology and Practice of Youth‐Adult Partnership: Bridging Generations for Youth Development and Community Change. + Villa-Torres, L. & Svanemyr, J. (2015). Ensuring Youth’s Right to Participation and Promotion of Youth Leadership in the Development of Sexual and Reproductive Health Policies and Programs.
4. The Flower of Participation is a tool that applies the metaphor of a blooming flower to describe how Meaningful Youth Participation can grow and flourish. It helps distinguish between different forms of youth participation and to explore whether they are meaningful or not. YAPs are one of the types of MYP in the Flower of Participation narrative. The tool also defines five core elements of Meaningful Youth Participation (the ‘roots of the flower’: freedom of choice, information, voice, responsibility, and decision-making power) and seven preconditions for MYP (the ‘water’ and the ‘sun’: capacity strengthening, commitment from adults, policies, financial means, safe space, youth friendliness, and flexibility).
5. Youth: The UN defines ‘young people’ as those between the ages of 10 and 24 years old. While most of the literature and programs reviewed in this report acknowledge the UN’s operational definition, as a starting point to address youth and monitor youth projects, they are cautious about contextual factors. Cultural, economic, social and political contexts shape what it means to be ‘young’ across societies. In this research, I considered youth as young people until 24 years old. I used the term young adult to talk about ages between 25-30, and adult for ages above 30.
6. As part of the methodology in this research, CHOICE and I invited young people and adults working together in partnerships to share their experiences working in YAPs through an online survey. The overall purpose of the survey was to assess the perceptions and experiences of youth and adults interacting together within Youth-Adult Partnerships development programs, activities and organisations.

Feminist baptisms and academic breakthroughs

(…) 48 years after the first Women’s Liberation March in London, three feminists reflect about the world-changing shifts we have seen in the last few decades in the Netherlands and the change they would most like to see coming next.

This morning, as I recover from a nasty cold with my favourite mug filled with ginger-honey tea, I open the Journal of Gender Studies & Feminist Anthropology (LOVA), which pilled up at the door with the Christmas postcards. I move my breakfast aside and quickly go through the pages until I find, on page 87, the essay I wrote about my interview with three feminist anthropologists: Joke Schrijvers, Ina Keuper and Karin Willemse.

From preparing and doing this interview, back in November, to writing about it, I enjoyed all the steps of learning about the incredible lives of these and other women, these feminists who have changed laws and policies, hearts and minds, and academia itself. Here’s a small excerpt of the text:

Backlash and new-feminisms: The effects on women’s words, minds and jobs
In 2017, ‘feminism’ became one of the most searched words online. The search volume increased by more than seventy per cent compared to 2016, according to the Merriam-Webster online dictionary. “No one word can ever encapsulate all the news, events, or stories of a given year, particularly a year with so much news and so many stories. But when a single word is looked up in great volume, and also stands out as one associated with several different important stories, we can learn something about ourselves”, said the dictionary.

The contemporality of the F-word seems justified. In 2017 the ‘post-feminist illusion’, that feminism has reached its goals, and that contemporary women have little or nothing to nag about, shattered. To start with, 2017 was the year of Trump’s election as president of the USA, an event followed by a record number of women’s marches around the world. It was also the year of the pussy-hat, a pink hat, handcrafted and used by thousands involved in those marches for added visual impact. Above all, 2017 showed the world that feminist mobilization still works, not only in the streets but also digitally. With the Hashtag MeToo, the movement to expose women’s protest against experiences with sexual violence began to spread globally and went viral on social media.

Also, 2019 is a very special year for Dutch women, says Karin. The Dutch celebrate a hundred years of women’s suffrage in The Netherlands. Around the country, a comprehensive programme of events includes history, art, and theatre (note to myself: do not miss De Verleiders Female on stage until 28 February 2020) to celebrate a year so special for Dutch women.

But while feminist activists seem to be sweeping the world again and bringing gender to mainstream discussions, its position as a central subject in academia and research should not be taken for granted, Karin says. In universities, gender is brought up to the discussions only when teachers have an affinity with it, lacking overall institutional anchoring and continuity. This can be partially explained by the fact that universities in The Netherlands are fairly hierarchical institutes. Most decision-making positions are still dominated by men who are generally unaware of what is going on in the field of gender studies. “Men in power prefer to appoint in higher positions other men with a similar background and attitude, which is mostly white, middle-class and of a certain age’, says Karin. Also, nepotism and ‘us-know-us-networks’ complicate institutional change and the establishment of gender authority at and from the top.

Attempts to address this issue more radically are often met with suspicion. This summer, the Eindhoven University of Technology took radical action to increase its share of female professors by opening job vacancies to women only, Joke tells us. The university was met with a lot of criticism. Many academics, women and men, have double feelings about this type of quota arrangements.

A second dimension to mainstreaming gender in academia concerns the shift from gender used in relation to social change and activism towards the concept of gender as a neutral analytical tool. First of all, the term ‘women’s studies’ has been replaced by ‘gender studies’, and in gender studies, the ‘women’s oppression’ of the 1970s has given way to ‘intersectionality’. It is as if “gender has lost some of its sense of urgency”, Karin says. Joke, for whom commitment to the good cause always mattered the most, thinks this happened mainly because gender research has “lost its activist orientated social goal. It has become an analytical concept, a popular academic concept, but there is little action or immediate relation with changing the real world.” LOVA has struggled with this transition too, Ina explains. “In the past ten years, in the LOVA board, we have had lots of discussion about these concepts. Including discussions about re-naming LOVA.” After all, LOVA derived its name from the old term ‘women’s studies’. “In the end, we decided on gender studies and feminist anthropology. We decided to keep the word feminist in it because we thought that activism should continue being part of it.” 

Nowadays, even if without the sense of urgency that characterised feminist activism in the old days, LOVA continues to connect researchers, lecturers, students and alumni outside the regular study program (the four of us are a strong example). The challenge for LOVA and each one of us as feminists seems to be: how we channel this new awareness and activism into productive and strategic action in academia and research?

From “Three feminists, five decades of feminism, and forty years of LOVA“, by Filipa Oitavén, in Annual LOVA JOURNAL, Issue 40 / December 2019.

If you want to read the rest and more (I tell you, there are many other interesting articles in this issue) consider supporting LOVA’s work*, by becoming a member, and receive the LOVA Journal for free with your next Christmas. You can become a member here:

*LOVA is an active network of engaged feminist anthropologists within and outside the Netherlands. LOVA’s members are very diverse: they consist of students, junior and senior academics and professionals working outside of academia. LOVA’s academic members study gender in relation to a wide variety of topics such as development, sexuality, ethnicity, poverty, multiculturalism, conflict and globalization. LOVA members are also actively involved in governmental and non-governmental organizations.

Fieldnotes from Malawi

Prisca is 27 and she is an advocate for young people’s rights. She works for an NGO that runs several projects with youth and their sexual reproductive rights (think teenager pregnancy and HIV awareness). Malawi has one of the world’s highest rates of child marriage. Half of girls are married before the age of 18, many because their families are too poor to support them. Teen pregnancies contribute to 20-30 per cent of maternal deaths in the country, and the low share of girls, only about 45 per cent, remaining in school past the 8th grade (UN statistics from 2017). But Prisca is relentlessly hopeful for the young people of Malawi. Her laugh is contagious. She is a total hero. 

Prisca and me in Lilongwe.

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