Converting Fines to Loans

When a fine amount is too large to deduct in a single payroll cycle, or when the employee or driver requests to pay in installments, you can convert the fine to a loan. This creates a structured repayment plan that spreads the cost over multiple months.

When to Convert a Fine to a Loan

Consider converting a fine to a loan in these situations:

The fine amount is significant relative to the person's monthly salary
The employee or driver has requested installment payments
Deducting the full amount at once would cause financial hardship
Company policy requires fines above a certain threshold to be converted to loans

Requirements

Before you can convert a fine, the following conditions must be met:

The fine must have a workflow status of APPROVED
The fine must have a payment status of UNPAID
The fine must not already be converted, waived, or paid

Fines that are still pending, rejected, cancelled, or already resolved cannot be converted.

How to Convert a Fine to a Loan

Step 1: Open the Fine Detail

Navigate to Finance > Fines and locate the approved fine you want to convert. Click on the fine to open its detail view.

Step 2: Click "Convert to Loan"

In the fine detail view, click the "Convert to Loan" button. This opens the loan configuration form.

Step 3: Configure Loan Terms

Set up the repayment terms for the loan:

Field	Description
Repayment Tenure	The number of months over which the fine will be repaid (e.g., 3, 6, or 12 months)
Interest Rate	Optional interest rate applied to the loan. For fine conversions, this is typically set to 0%
Monthly Installment	Automatically calculated based on the fine amount, tenure, and interest rate

The system will display a preview of the repayment schedule showing the monthly installment amount and the total repayment timeline.

Step 4: Review the Repayment Schedule

Before confirming, review the repayment schedule preview carefully. Verify that:

The monthly installment amount is reasonable for the person's salary
The repayment tenure is appropriate
The total amount (including any interest) is correct

Step 5: Confirm Conversion

Click "Confirm Conversion" to complete the process.

What Happens After Conversion

Once you confirm the conversion, several things happen automatically:

Fine status updates -- The fine's workflow status changes to CONVERTED_TO_LOAN. It will appear as "Converted" in the Fines List.
Loan record created -- A new loan record is automatically created in the Loans module. The loan is linked to the original fine for traceability.
Repayment schedule generated -- The loan includes a repayment schedule with monthly installments based on the terms you configured.
Payroll deduction begins -- Repayment begins from the next payroll cycle. Each month, the installment amount is deducted from the person's salary until the loan is fully repaid.
Original fine preserved -- The original fine record is preserved for audit purposes. You can always trace back from the loan to see the original fine that triggered it.

Once converted, the fine cannot be reverted back to a regular fine. The loan will need to be managed through the Loans module, where you can track repayment progress, view the schedule, and handle any adjustments.

Example

A driver receives a fine of AED 3,000 for vehicle damage. Rather than deducting the full amount from one paycheck:

The fine is approved through the normal workflow
The finance team converts it to a loan with a 6-month tenure at 0% interest
The monthly installment is calculated as AED 500
The driver's salary is reduced by AED 500 each month for 6 months
The fine shows as "Converted" in the Fines List, and a corresponding loan appears in the Loans module

Approval Workflow -- Understanding the fine approval process
Loans -- Managing loans and repayment schedules

Make sure to review the employee's or driver's existing loan obligations before converting a fine to a loan. Multiple active loans with concurrent deductions could result in a significant reduction in take-home pay.

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