(Contents) (Previous) (Next)

FRV Adjustment Process

This overview provides an insight into current functionality within the system to allow the calculation and editing of the final residual value of a vehicle throughout the life of the agreement.

A new Final Residual Value (FRV) is may be recalculated at the following stages of an agreement:

  1. At Quotation stage
  2. At Contract Start
  3. At an FRV Review
  4. When a contract is informally extended

The criteria used for Contract start and FRV review is as follows:

The criteria used for Automatic Informal Extensions is as follows:

There are two very important factors to be taken into consideration when the FRV is being calculated.

  1. Safety factor application

    The system offers the facility to apply a safety factor % reduction to CAP valuations at all points where the CAP valuation is called. These points are as follows:

  1. Manual Adjustment

    The system offers the facility to apply and record manual adjustments made to the quoted FRV. The manual adjustment is created at either quotation or contract upload and then remains with the vehicle throughout its life and taken into account whenever the FRV is recalculated.

What do you want to do?

Overview of the FRV Process

Relevant System Parameters

  1. There is a parameter in Manufacturer Systems within the System Parameters and Controls option called Inhibit Stock Value Increase. This controls the Write Down Facility in that the system validates the hire group vehicle category (FM.motor.VEHCAT) for each vehicle and look up to the new Mark To Market CAP Valuation file (FC.capva.VCAT). On finding a match the CAP valuation for the vehicle is reduced by the VSB reduction in CAP value % safety factor percentage (FC.capva.SAFEFACV). The reduced CAP value is displayed in the grid. When performing the write down the system looks back to this field (BS.capva.INHIBITSI) and, if it is ticked, and if the CAP value (adjusted by the FC.capva.SAFEFACV %) is higher than the current stock value, then the system does not revalue that stock.

Maintain the Mark To Market CAP Valuation form

  1. The Mark To Market CAP Valuation table is used as the data source for the FRV adjustment processes in that it allows safety factors % reductions to be defined for both Fleet and VSB CAP valuations at all points where the CAP valuation is called. These points are as follows:

FRV Adjustments at the Quotation Stage

  1. An FRV Adjustment form is available by selecting the FRV Adjustment icon within the Quotations form and this enables the 3rd party data supplier (e.g. CAP) residual value to be manually adjusted (via the FRV Adjustment (Value) and FRV Adjustment (%) fields) and a rental hire group vehicle category to be selected or edited. Selection of this vehicle category utilises the associated Fleet reduction in CAP value % FRV safety factor percentage associated with this vehicle category (defined within the Mark To Market CAP Valuation form).

  2. At the Convert Quote stage the system takes across the Vehicle Category Code and its associated safety factor and manual FRV Adjustment values to the Fleet agreement. The manual adjustment is held as FM.motor.FRVADJ and may be a +/- % adjustment.

FRV Adjustments at Start Contract

  1. At the Start Contract stage the system looks back to CAP for the appropriate mileage/age combination for the selected vehicle and the residual value is re-assessed - up or down. The system takes the new RV upload value and applies the 2 adjustment (Fleet reduction in CAP value % and FRV Adjustment Value) values to it.

  2. The criteria used for Contract start is as follows:

Annual FRV Review - Create Batch Process

  1. The Create Batch Details option is a function that is part of the Annual FRV Review process. Annual FRV review is something of a misnomer as this process should be carried out at least on an annual basis but may be performed quarterly or monthly. The system takes the current CAP value and, once again, applies the Safety Factor and Adjustment; however, the system only allows the FRV to go down at this stage. An FRV Review Batch is generated using this menu option.

  2. For a vehicle to be included in the batch and have a value, it must meet the following criteria:
  1. For a vehicle to have a value calculated and set to Automatic, the folowing criteria must be met:
  1. The valuation source is based on:
  1. The system calculates a Proposed FRV for each eligible vehicle (see above) and updates the Vehicle motor record with the following:
  1. The Proposed FRV.
  2. The Valuation source. Either CAP New Monitor or CAP Black Book or CAP Red Book
  3. The CAP valuation Month and Year.
  4. Review Type. If a Proposed FRV can be calculated automatically then the system populates this field with Automatic, else Manual.
  5. Sets FRV under review to Yes

Annual FRV Review - Export Batch Details Process

  1. The Export Batch Details option is then used to generate a file to the local PC drive for vehicles affected by the Create Batch Details process.

  2. The Export Batch Details option is used to generate a file to the local PC drive of all Live contracts that meet the export selection criteria containing the following field values:

  1. The resulting output file name format is as follows: REVUUUDDMMYYYY.CSV. Where REV = Annual Review, UUU = User ID and DDMMYY = Date stamp of when file was produced.

  2. Agreements are only processed if the following criteria is met:

Annual FRV Review - Automatic Update Process

  1. The Automatic Update option is then used to update those contracts that meet the following selection criteria:

  1. The Contract Status is Live
  2. The Review calculation type is set to AUTO
  3. The FRV under review field set to YES
  4. The Review date entered matches the Effective date
  5. Book FRV not equal to zero
  6. The Book FRV is not equal to the existing FRV

  1. If the Contract status is not LIVE an export file is automatically produced. The Export file generated to the local PC drive should contain the following:

The file name format is as follows: UPDUUUUDDMMYYYY.csv (where UPD denotes Update, UUUUU denotes the userid and DDMMYYYY is the date).

  1. The system then performs six processes:

  1. Updates the Current FRV with the Proposed FRV.

  2. Cuts-off the current deprecation profi line to the period up to the Review date. The system locates the profi line that has a from period less than or equal to the Effective period and a to period that is greater than or equal to the Effective period. The Total should then be recalculated to be equal to the cumulative depreciation per above. This may result in a depreciation adjustment.

  3. Creates a new depreciation profi line for the remaining depreciation from the Review Date. A new profi line is written out, which has a from equal to to+1 from above and a to, which is equal to the contract Period. The total depreciation value for this new line is calculated as the New FRV minus the NBV at the point of cut-off. The system determines the NL expense codes from existing profi lines.

  4. The agreement audit file records the automatic FRV update.

  5. The Effective Review Date is recorded at agreement level.

  6. The following FM agreement fields are initialised after the update is complete:

    • BOOKFRV - Proposed FRV
    • FRVSOURC - Source
    • CAPMONTH - Black/Red Book month
    • CAPYEAR - Black/Red Book year
    • FRVREV - FRV Under Review Y/N ?
    • REVTYPE - Automatic or Manual

    The following FM agreement field is not initialised after the update is complete:

    • REVDATE - Review Date

Annual FRV Review - Import FRV Process

  1. The data to be imported should be prepared in the format below, and on taking the option, the system prompts for the import file.

  1. Registration Number
  2. Current Agreement number
  3. New FRV

  1. The system carries out the following processes:

  1. Amends the profi depreciation lines.
  2. Updates the Audit File. The Audit file will record the FRV Review.
  3. Updates the Vehicle Record
  4. The Effective Review Date is recorded at agreement level.

  1. The system rejects records that do not meet the following selection criteria:

  1. The contract is not Live
  2. The Book FRV is zero
  3. The Book FRV is the same as the existing FRV
  4. The Registration and Number combination do not match.

  1. The following FM agreement fields are initialised after the update is complete:

The following FM agreement field is not initialised after the update is complete:

Automatic Informal Extensions

  1. Agreements due to terminate on the date the Automatic Informal Extensions option is run are automatically extended for the period defined in the Automatic Extension Type Group Box held in the Details Tab within Terminations / System Maintenance / System Parameters. The exact way in which the agreement is informally extended is determined by the following criteria:

  1. Having ensured that the parameters/tables are set up correctly then this process is typically run at the end of the month. Agreements for vehicles that have been returned must be terminated prior to running this process.

  2. This routine can be placed within Timed Operations.

(Contents) (Previous) (Next) (Top of the Page)