Loans

When you repay a loan, each payment is partly principal (paying back the money you borrowed) and partly interest (the cost of borrowing). Only the interest is an expense; the principal just reduces what you owe. Early payments are mostly interest, later payments mostly principal.

Debt Amortization works out that split for every payment and posts the interest to your books. You find it under Accounting → Allocation Schedules → Debt Amortization.

Before you start

• You need a role with access to allocation schedules. See Team and roles.
• In your Chart of Accounts, you need a loan or notes payable account on the Balance Sheet and an interest expense account on the Income Statement. To post interest, you also need an accrued interest account on the Balance Sheet.

Create a loan schedule

1. Click New loan.
2. Under Loan details, enter the Lender name, a Loan description, the Loan amount, the Annual interest rate (%), the Loan period (years), the Payments per year and the Start date of loan.
3. Under GL accounts, choose:
   • Loan / Notes payable (B/S): the liability that records what you owe. Required.
   • Accrued interest (B/S): where interest owed is recorded until it is paid.
   • Interest expense (I/S): where the cost of interest is recorded. Required.
4. Click Calculate preview. Bokapsys shows the Scheduled payment, Total payments, Total interest and Total cost of loan, followed by every payment with its beginning balance, payment, principal, interest, ending balance and cumulative interest.
5. Click Save schedule.

Bokapsys uses the standard fixed-payment loan formula, so every payment is the same amount and the balance reaches zero with the final payment.

Post interest

For each payment, the schedule posts the interest portion: a debit to your interest expense account and a credit to your accrued interest account. An entry posts only once its date has arrived.

Caution

Interest is posted only when the schedule has an Accrued interest (B/S) account. If you leave it blank, the schedule still calculates, but no interest entries are posted. You can add the account later with Edit.

The schedule does not post the principal part of each payment. The repayment itself normally comes through your bank statements. Classify it so the principal goes to the loan account and the interest clears the accrued interest account; you can split one statement across several accounts in View Statements.

How due interest entries reach your books depends on your posting settings. On Auto-post Bokapsys posts them for you; on Manual, use the banner’s View pending and Post Now. Entries in a closed accounting period wait until the period is reopened.

Manage saved loans

The Saved schedules list shows each loan with its lender, description, amount, rate, term, start date and status. The tiles at the top show your Active loans, Total outstanding and total interest. On each row you can:

• View the full schedule, including which payments are posted, and Download PDF.

• Edit the description or accounts. New postings use the new accounts. To change the amount, rate, term or start date, void the schedule and create a new one.

• Void the schedule. Interest already posted is reversed with new entries; nothing is deleted.

Related

DepreciationSchedules for fixed assets.

Prepaid expensesSchedules for payments made in advance.

Mapping statementsClassify your loan repayments.

Posting settingsAutomatic or manual posting for loans.