Loan Order – An overview

Loaning is a process of borrowing an item, using it for a predefined period and returning it in ‘working condition’ to the loaner. Whenever an item is taken on loan the Loaner and the Loanee enter into a Loan Agreement duly authorized by their respective heads or appointed deputies for the business.

Loans play an increasingly important role in an airline operator’s inventory management process. Loans could be of two types:

• Loan In – The operator decides to loan a part into his/her inventory from another operator or supplier.

• Loan Out (Rentals) – The operator decides to loan a surplus or idle part to another operator.

Loaning, mostly, of component (rotable or repairable) is undertaken whenever there’s a contingency and an operator’s procurement cycle cannot get the item when it is needed. Sometimes economic reasons could prove to be beneficial for loaning instead of buying.

This business component allows you to create a loan order that requests a part to be loaned into the operator’s inventory. You can specify the applicable payment terms and conditions, delivery terms and insurance terms for the loan order. Also, additional taxes and charges applicable and discounts offered can also be recorded. It is also possible to record the penalty charges, both fixed and variable. These will be applicable if the part has been used beyond the agreed period.

The loan order can be authorized after completing data entry. You can return a document in case revision is needed. After authorization, if you wish to make any modifications, you can carry them out through the amendment of loan order. Once the loan order is authorized after amendment and the part is received into the warehouse of the operator, the loan receipt details are recorded. The loan order can be closed after the part is shipped back to the supplier and supplier acknowledgement information on the part receipt is recorded.

Getting familiar with the activities