Servicing Cost

Servicing costs are the costs associated with servicing individual accounts such as checking accounts or loans.

You can include an account's servicing cost in the Economic Value of Equity (EVE)/Net Economic Value (NEV) calculations. Express the cost of maintaining the account as a percentage of the account's balance in the Servicing Cost field. The field is on the Risk panel on the Chart of Accounts Setup page.

When EVE/NEV is calculated, an account's servicing cost is added to the forecasted cost of a liability or deducted from the forecasted yield of an asset. The net effect on the balance sheet is negative because a servicing cost is a liability. The higher the servicing costs, then the lower the EVE/NEV of the institution.