QuickBooks Loan Manager: How to Setup and Track Loans

Any business will frequently borrow money, especially for major purchases like machinery, new facilities, development, and product research. Therefore, it […]

Any business will frequently borrow money, especially for major purchases like machinery, new facilities, development, and product research. Therefore, it is advised to record this loan as a liability in your company books as soon as you borrow money for your business. This enables you to keep track of every loan payment you make as you pay off your debt. When you set up the liability account for this recording in QuickBooks, the borrowed money becomes a loan. It helps you to keep track of both loan payments and any loan deposits. Since QuickBooks determines interest rates and payment schedules, the two programs are compatible.

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Dancing Numbers helps small businesses, entrepreneurs, and CPAs to do smart transferring of data to and from QuickBooks Online. Utilize import, export, and delete services of Dancing Numbers software.

The software’s QuickBooks Loan Manager is a great feature for keeping track of loans, interest-compounding payments, and principal installments over a given time frame. The amount paid to the principal will rise while the interest portion gradually decreases with each payment you make. The amortization schedule for the loan’s lifetime is created by the Loan Manager in QuickBooks, which also displays how much of each payment goes toward interest, principal, and escrow.

You can also make additional payments or payments for the regularly scheduled amount owing through the Loan Manager. We adore the feature’s ability to assess several loan options by executing “What if” scenarios.

Instructions Before Tracking Your Loans in Loan Manager

There are several things you need to do before you can track your loan with the Loan Manager tool. To track your loans and payments in QuickBooks Loan Manager, follow these steps:

  • Utilize the loan manager only after setting up your loan in QuickBooks- in QuickBooks, you must create separate accounts for the loan itself, loan-related interest costs, and, if necessary, escrow. If you haven’t already, you must set up the lender as a vendor.
  • Make a loan account in your QuickBooks Chart of Accounts– Enter the loan’s starting balance. To do this, either enter the dollar amount as a transaction or as your opening balance in the New Account page directly (an example would be a journal entry). Entering the sum as a diary entry gives you the most freedom. In either case, don’t forget to mention the loan’s initial date. If you have already paid off your loan, record those payments right away as bills, cheques, or diary entries.
  • Create an expense type account for fees and charges and one for interest payments- if you haven’t already configured these.
  • If necessary, Create a bank account type to enter escrow payments.

Creating an Escrow Account for QuickBooks Loan Manager

A portion of a loan known as an escrow is managed by a third party until the loan’s requirements are met. An escrow account is a type of asset account used by QuickBooks to track the escrow component of loan payments. If you require an escrow account for your loan, follow these steps to put one up.

  • Select Chart of Accounts under Lists in the menu.
  • Click on New under the Account menu.
  • Then choose Other Current Asset under Account Types Other.
  • Then click Continue.
  • Type the account name.
  • To save and close, Choose this option.

Steps for Tracking and Recording Your Loans in QuickBooks Loan Manager

  • Pick Loan Manager from the Banking menu.
  • Choosing Add a Loan
  • Enter the loan account information.
    • Choose the loan account you previously created as the account name.
    • Lender: Decide which vendor you will use to repay the loan.
    • Date of Origination: Indicate the day the loan was first funded.
    • Enter the full initial loan amount under Original Amount.
    • Term: Choose how long it will take to pay back the loan.
  • Pick next when you’re ready.
  • Enter the loan’s payment information.
  • Next Payment Due Date: The date on which your subsequent payment is due.
  • Enter the amount you must pay for each period in the payment field.
  • Next Payment Reference: Enter the payment number for the subsequent payment if you have already made payments in the past.
  • Choose yes if the loan has an escrow payment account. Then complete the required fields.
  • (Optional) Select Alert me 10 days before a payment is due if you want a reminder for upcoming payments.

Note: You must record any loan payments you’ve already made as checks, bills, or journal entries.

  • Choose Next.
  • Enter the loan’s interest rate information.
  • Interest Rate: Type in the loan’s interest rate. For instance, Enter 5 for a 5% interest rate.
  • Choose the compounding period that is listed on your loan documentation.
  • Choose the Bank Account you wish to use to make the loan payment.
  • The spending account that will track the interest should be chosen.
  • Choose the spending account that will be used to keep tabs on your loan’s fees and charges.
  • Select Finish when you’re finished.

Note: The Summary tab of Loan Manager is where you can find information about your loan.

Ways to use the What If Scenarios Tool to Evaluate Your Loan

Use the What If Scenarios tool to evaluate various loan possibilities and to learn what else you could accomplish with your loan in various situations.

  • Pick Loan Manager from the Banking menu.
  • Choose What-If-Scenarios.
  • Choose a loan scenario from the dropdown menu under Choose a scenario.
  • Choose the loan account you want to assess from the Choose a loan menu.
  • When necessary, Complete the fields then click Calculate.
  • (Optional) To print the results, Choose Print.

How to Manually Track Your Loans in QuickBooks

Learn how to manually track your loans in QuickBooks including how to set up accounts for them. Liabilities for your business include cash and non-monetary asset loans for things like vehicles and office equipment. You can keep track of the loan balance and record your payments with the help of QuickBooks. We’ll demonstrate how.

Step 1: Setup a Liability Account

A liability account must be chosen when you register a loan in QuickBooks. To create a liability account for your loan, follow these steps.

  • You can find the Chart of Accounts by selecting Lists in the menu.
  • Now, You can perform a right-click anywhere in order to select New.
  • Choose the appropriate account type for your loan under Other Account Types.
  • Use this for short-term loans with a one-year amortization schedule (other current liability).
  • Use this word for loans with long repayment duration (long-term liabilities).
  • Choose Continue.
  • Type the account’s name and number.
  • Then Hit Save and Close option.

Step 2: Establish the Vendor (Bank or Lending Business)

For the bank or business you must pay to receive the loan, create a new vendor.

  • Now, You have to Select Vendor Center by navigating towards the Vendors menu
  • Choosing New Vendor
  • Please enter the name of the bank or business that you must pay back the loan to.
  • Enter additional vendor information, such as a phone number and email address (optional).
  • Choose OK.

Step 3: Establish an Expense Account

Make an expense account so you can keep track of any fees or interest payments.

  • Firstly, You need to select Lists in the Menu section and then you can get Chart of Accounts option over there.
  • Then, you need to Select New. For this, you need to perform a right-click anywhere.
  • Choose Expense and then click Continue.
  • For interest payments or other fees and charges, provide the account name.
  • Finally, You need to choose Save & Close option.

Step 4: Keep Track of the Loan Amount

Here’s how to record the loan amount now that you have a liability account for the loan.

Cash Loans

  • First of all, You have to Hit Make Deposits in the Banking menu.
  • Select cancel if the Payments to Deposit window appear.
  • Making deposits in the window:
  • Choose the account to deposit the loan into in the Deposit To section.
  • Verify the date and add a memo if you like.
  • Choose the Liability account you created in Step 1 in the From Account column.
  • Now, you need to type the loan amount in the column of Amount.
  • Select Save & Close option.

Non-Cash Loans

1. Establish an Asset Account

  • You can get Chart of Accounts after navigating towards Lists from the menu.
  • After that, you have to Hit New option by right-clicking anywhere.
  • Determine the type of account for your non-cash loan:
  • Use this term for items that will continue to be useful beyond one year (vehicles, buildings, and so on)
  • Use this category for goods that have value and can be converted to cash (like prepaid expenses)
  • Use this category for assets that fall outside of Fixed Assets and other current assets.
  • Choose Continue.
  • Type account’s name and number.
  • Once, you have finished, you need to Hit Save & Close tab.

2. Add a Note to Your Journal

  • Select Make General Journal Entries from the Company menu after navigating there.
  • Type date and the journal entry number.
  • Debit the loan asset account by selecting the first line.
  • Choose line two, then credit the liabilities account.
  • Save & Close option.

Record Loan Payments

  • Select Write Checks from the Banking menu after going there.
  • The bank account you intend to use to repay the loan should be chosen.
  • Verify the date and check number.
  • Choose the bank’s name from the Pay to the Order of field.
  • Expenses tab displays:
    • Choose the liability account you created in Step 1 on the first line. The principal payment should then be entered.
    • Select the interest expense account on the second line. Next, insert the loan interest payment.
  • (Optional) If you want QuickBooks to enter the payment automatically on a regular basis, memorize the check.
    • Choose Memorize.
    • As necessary, Fill out the fields.
    • Choose OK.
  • Lastly, You have to press Save & Close tab once you have done.

We anticipate that the information above will be useful to you as you set up and manage loans in QuickBooks Loan Manager. You can call us if you run into any difficulties or are unable to complete the task. Our Dancing Numbers team will assist you with resolving the problem and assisting with loan recording. They will assist you in finding the simplest solution possible to your problem. We have a sizable staff of experts, because they are experts in their fields, can readily assist you.

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+1-800-596-0806 or chat with experts.

Faqs About QuickBooks Loan Manager

How can I Issue a Check for the Loan?

• Select Check after choosing + New.
• Choose the account you used to fund the loan from the Bank Account dropdown menu.
• Choose the account you made to track loans from the Category dropdown on the first line.
• Enter the loan amount in the Amount area.
• Close after selecting Save.

How can I Record Customer Payments?

Interest is not calculated automatically by QuickBooks. To manually calculate the interest owed on the current payment, multiply the loan balance by the interest rate, then divide the result by 12 to get the interest for one month.

• Select Bank deposit by going to + New.
• Choose the account you used to fund the loan from the Account dropdown menu.
• Choose the customer’s name with the loan from the Received from dropdown on the first line.
• Choose the account you made to keep track of loans from the Account dropdown menu.
• Enter the amount they paid using the Amount dropdown.

Note: If you charge interest to your clients, choose the account you use to track interest income on the second line, and then enter the interest rate.

• Complete the remaining fields in accordance.
• Close after selecting Save.

How can I Create a Journal Entry?

This journal entry adds credit to the customer’s accounts receivable and establishes the initial balance of the loan. The credit can be used to pay open invoices.

• Select Journal entry under + New.
• Choose the account you made to track the loan from the Account selection on the first line.
• Now, you need to enter the amount of loan in the column of Debits.
• Choose your accounts receivable from the Account selection on the second line.

How do I Record a Loan Payment?

To document each repayment, adhere to these instructions.

• Choose + New.
• Choose Check.
• Specify a cheque number if you’re sending a real check. Fill out the Check no field with Debit or EFT if you utilize a direct withdrawal or an EFT.

Then, fill out the following information on the check’s Category Details section:

• Choose the liability account for the loan from the Category option on the first line. After that, Enter the payment sum.
• Choose the interest expense account from the Category dropdown on the second line. Next, Enter the interest rate.
• Add any additional charges to the additional lines. From the Category menu, pick the appropriate accounts.
• When finished, Choose Save and close.

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