When I got my Wesbank statement yesterday, it was pretty obvious that the format had changed. However, it was only once I compared the statement to my accounting record that the extent of the change became apparent.
Now I don't know if hire purchase agreements have changed too, but there is a distinct change for an instalment sale agreement.
At first I thought there was a mistake. The opening balance on this new statement did not match the closing balance on the previous statement. It was a fair bit less. So I called up the Wesbank call centre to check that it wasn't me that had got this wrong.
The long and short of it is Wesbank has changed the way they report your account. In the past, finance charges expected over the full term were captured up front. The balance shown at any given time was the sum of the instalments still to go. The only "hassle" is figuring out exactly how much in finance charges needs to be allocated against each financial year - but I leave that to my auditors to figure out. The main thing for me is that my account in my books reflects exactly every transaction on a Wesbank statement. And my balance and their balance matches to the last cent.
Not any more.
Now the balance shown is the capital portion still outstanding. The interest portion is added each month, and your instalment reduces that balance.
The upside of this is that you know what your settlement balance is at any time. Apparently, this capital balance now has to be reflected anyway in terms of the NCA - so why not base the whole statement system around it.
The downside is that I expect you can't write down the finance charges in equal instalments over the period of the contract. You are going to have to capture those interest charges each month - which means you will be writing down way more finance fee in the first year and carrying over more long term liability than previously was possible. This will result in a shift in your total debt to equity ratio - in the wrong direction.
At some point over the next few days I'll have to figure out exactly how I'm going to change over to this new system on my books. Oh well. Something to look forward to.
So anyway, if you notice that there's this mysterious gap between your closing balance on one statement and the opening balance on the next, this is probably why.