Loan Manager – A Hidden Feature in QuickBooks

Something that’s not talked a lot about or utilized often is Loan Manager.  You can track new or existing loans inside of QuickBooks so you never have to adjust the loan balances or worry about separating the correct interest and principal.

First, gather up all of the necessary information about your loan:

  • Original Balance
  • Current Balance
  • Payment Amount
  • Interest Rate
  • Term of the Loan
  • Next payment Date
  • Interest Compounding Period
  • Amortization Schedule (if you have one)
  1. Set up a Liability account in Chart of Accounts to handle this new loan.
  2. Enter a Journal Entry for the original loan amount if just starting out, or enter the current loan balance if you are halfway through the payment schedule.
  3. On the Home page, go to the banking drop down menu and click on Loan Manager to set up the actual loan.  Choose the option Add a loan.  When asked for the account name enter the Chart of Account that was recently added for this loan.  Next, enter the Lender (Vendor to whom payments will be made).  Then, fill in Origination Date, Original Loan amount and terms (# of weeks, months, or years).
  4. Click Next to enter the due date of next payment, payment amount (principal and interest), next payment number, and payment period.  Enter 1 if just starting out, or enter the appropriate payment number if you are already halfway through the payment schedule.  Does this loan have an escrow payment?  If so, enter amount and account number for the escrow.
  5. Click Next and enter your interest rate, compounding period, and compute period.  For the last 3 questions, enter your account numbers for the payment (checking most likely), interest expense, and fees expense.  Then click Finish, which will bring you back to the beginning and the new loan will appear in the loan list.

If you click on payment schedule, the schedule inside of QuickBooks should match quite closely, if not exactly, to your amortization schedule.  Should the amortization schedule in QuickBooks be off, choose Edit Loan Details and adjust the compounding period and the compute rate. This way you can see which options best matches your amortization schedule.  Click okay and once again compare your amortization schedule to the QuickBooks payment schedule.

If you need help setting up Loan Manager, or if you want to learn more about some “hidden” features in QuickBooks, please give me a call.

Debra Rockwell, Advanced QB ProAdvisor


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