Loans and Long Term Liabilities

One way you can manage loan repayment in NolaPro is to have the system automatically create vendor bills for the term of the loan and pay those bills each month.

1) Start by creating a long term liability general ledger account for the loan by going to Ledger -> Accounts -> New GL Account.

2) Create a journal entry for the loan disbursement that hits the bank GL account (debit) and the loan account (credit).

3) Create a vendor record for the loan processor via Expenses -> Vendors -> Add Vendor.

4) Generate vendor bills by going to Expenses -> Vendor Bills -> New Vendor Bill.

• For Total put in the total amount of the monthly payment.
• For Bill Into How Many Equal Parts select the number of loan payments required.
• For Bill Into How Many Equal Parts Method choose Copy. The system will create bills spaced one month apart.
• Since you might not have the specific principal and interest breakdowns when bills are created, you can assign the full bill total to a Loan Clearing (or similarly named) GL account (a short term liability type account; temporary holding account until the interest and principal is known).
• When you receive statements on the breakdown of principal and interest for payments, you can create a journal entry and move amounts out of Loan Clearing and into Interest Expense and Long Term Loan (or whatever the accounts are named).

5) Pay the loan bills by going to Expenses -> Checks -> Write Checks.