Loan account

[twistgrip]

Hi.
I am in the process of setting up a loan account in Quickfile. The loan is an existing one. When putting in the opening balance of the account do I put in the total amount owing including interest or excluding the interest.

[QFSteve]

Hello @twistgrip

You would record the total amount of the loan (excluding interest) received into a liability code.
when you come to make a payment on the loan the transaction would be in two parts (the capital paid and the interest).

You would pay x amount off the overall loan to reduce the liability and you would pay x amount of interest recorded as an overhead.

You would repeat this process each month until you’ve repaid the loan (and the liability will be clear).

Please see the link below for more information.

Accounting for loans

In accounting a loan is treated much like an overdrawn bank account. On the assumption that you are just setting up QuickFile and have a loan of £10,000 (outstanding), you would create a new “Loan” type bank account in Quick File to represent this. [image] Set the opening balance of £10,000 (minus). [image] If this is a brand new loan you don’t need to set the opening balance, instead locate the deposit for the loan on your current account and tag this as a bank transfer to the loan account…

[twistgrip]

Hi Steve.

So just to clarify. Because the loan was existing when I started using Quickfile I would put the opening balance down as what was owed at the date I started using the system excluding any interest owed. For example I borrowed £15000 and at the time I registered on Quickfile I had paid back £2000. I would then enter -£13000 as the outstanding balance.

Regards Alan.

| QFSteve Support Team
4 March |

• | - |

Hello @twistgrip

You would record the total amount of the loan (excluding interest) received into a liability code.
when you come to make a payment on the loan the transaction would be in two parts (the capital paid and the interest).

You would pay x amount off the overall loan to reduce the liability and you would pay x amount of interest recorded as an overhead.

You would repeat this process each month until you’ve repaid the loan (and the liability will be clear).

Please see the link below for more information.

[QFSteve]

Hello @twistgrip

That would be correct.
In your example you had a loan for £13000 in the “snapshot of your data” when you started using QuickFile.

The £2000 was accounted for in your previous software/books resulting in the opening balance of £13000.