USING THE LOAN MANAGER
The Loan Manager feature in QuickBooks allows you to properly record the principal and
interest portion of loan payments. It’s easy to set up and use from month to month and keeps the
balance in the liability account more accurate.
Prior to setting up a loan in the Loan Manager, you need to have the liability loan account and
the interest expense account set up in the chart of accounts. You’ll also need to have your
original loan document papers.
Yes, you can start using the Loan Manager for existing loans as well. If the information is
entered correctly in the Loan Manager, QuickBooks will calculate the principal and interest
amounts for the remaining payments.
ADDING A NEW LOAN
TIP! Prior to setting up a loan in the Loan Manager, you need to have the liability loan account
and interest expense account set up in the chart of accounts along with the original loan
document papers.
If you have an existing loan in your chart of accounts, make sure the balance is current when you
set up the loan in the Loan Manager. Choose Banking | Loan Manager and the following screen
appears:
If there are no loans, the screen is blank.
Copyright © 2011 Anderson ZurMuehlen & Co., P.C. Once loans are set up, they will appear in the Loan List column. To add a loan, click the
button.
Account Name
Select the loan liability account from the chart of accounts.
Lender
Choose the vendor name (the financial institution that gave the organization the loan). This is
who the checks will be payable to when they are created in QuickBooks from the Loan Manager.
Loan Origination Date
Enter the original date of the loan, not today’s date. QuickBooks determines the remaining
payments and amounts based on the original loan date.
Original Loan Amount
Enter the original amount of the loan.
Term
Enter the number of weeks, months or years of the loan.
NOTE: When you add a loan to the Loan Manager, the liability account information is pre-filled,
including the current balance of the loan and the account details you entered when you set up the
liability account.
Copyright © 2011 Anderson ZurMuehlen & Co., P.C. The next screen allows you to enter payment information for the loan, which is used to calculate
the principal and interest portions of the loan payment and build the payment schedule.
Due Date of Next Payment
Enter the date your next loan payment is due.
Payment Amount
Enter the monthly payment amount.
Payment Period
Use the drop-down list to select how often payments are made.
Select Yes or No to indicate whether there is escrow information associated with the payment;
you can enter it on this screen.
The Alert me checkbox (when selected) posts an Alert to your Reminders List 10 days before
your loan payment is due, so you’ll be reminded about the upcoming payment.
TIP! You can change this information at any time by clicking Edit Loan Details in the Loan
Manager window.
Copyright © 2011 Anderson ZurMuehlen & Co., P.C. The third screen used in setting up a loan allows you to enter interest information for the loan.
The loan interest information is required to calculate the interest portion of your payment and
establish your payment schedule.
Interest Rate
Enter the interest rate of the loan.
TIP! The Loan Manager does not work for variable interest rate loans.
Compounding Period
Select the interest compounding period from the drop-down list. You can find this information
on the loan documents.
Payment Account
Select the bank account the loan payment will come out of when it is made.
Interest Expense Account
Select the account from the drop-down list where you want the interest portion of the loan
payment to be recorded.
Fees/Charges Expense Account
The account selected in this drop-down list is used in the event there are late charges associated
with a payment.
Copyright © 2011 Anderson ZurMuehlen & Co., P.C. Once the loan information is entered, you can select the Payment Schedule tab to see the
amortization of the loan.
Copyright © 2011 Anderson ZurMuehlen & Co., P.C. GENERATING A LOAN PAYMENT
To generate a payment on a loan, access the Loan Manager and select the Set Up Payment
button. QuickBooks automatically generates the next payment due, based on the information
entered.
This payment is
Use this drop-down to make an extra payment if desired.
Payment Method
You can have QuickBooks create a check or a bill with the payment information.
Copyright © 2011 Anderson ZurMuehlen & Co., P.C. When you generate the loan payment, QuickBooks will either write a check or create a bill based
on the option you choose. The transaction will split the principal and interest amounts, keeping
your loan liability account with an accurate principal balance.
What If Scenarios
Don’t forget to check the button that opens the What If Scenarios screen. This screen allows you
to analyze different loan alternatives and even lets you compare two different loan scenarios.
If you haven’t been using the Loan Manager provided in QuickBooks, I hope this article has
convinced you to start doing so!
Copyright © 2011 Anderson ZurMuehlen & Co., P.C.