Loan Commitment Fee (Undrawn Facility)
Charging a commitment fee on the undrawn portion of an approved credit facility.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Accrued Commitment Fee Receivable | Asset (+) | 2,500.00 | - |
| Commitment Fee Income (Deferred/Amortized) | Revenue (+) | - | 2,500.00 |
💡 Accountant's Note
Commitment fees compensate the bank for holding capital against an undrawn facility. Under IFRS 9 / IFRS 15, commitment fees are part of the EIR calculation if they are likely to result in a drawn loan. If the facility is not drawn, they are recognized over the facility period.
Practitioner & Systems Framework
💻 ERP Architecture
Commitment fees are accrued quarterly in the loan management system. In Oracle FLEXCUBE CL, commitment fee accrual is part of the undrawn line management. In SAP CML, the commitment fee schedule is set in the facility contract. If the facility is drawn, the previously collected commitment fee is included in the EIR calculation.
⚠️ Audit Flags
Auditors check whether commitment fees are correctly included in the EIR for drawn loans. Fees that are functionally origination fees (not true commitment fees) must be deferred. The distinction is important because early inclusion in EIR vs. straight-line recognition over the undrawn period can materially affect income timing.
📄 Required Documentation
Facility agreement specifying commitment fee rate, quarterly accrual calculation, billing advice, and EIR calculation showing inclusion/exclusion of commitment fee.
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Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.