Skip to main content
T
thewinebrothers
June 24, 2024
Question

Line of Credit

  • June 24, 2024
  • 2 replies
  • 0 views

I recently set up a line of credit in our quickbooks, following instructions that I received from a call with quickbooks - but it's not working correctly. When I "transfer" funds, it's putting the amount in the "increase" section of the report. It's showing correctly in the bank account, but not in the line of credit - so it's showing that the number is a lot higher than what it is, and I am trying to keep it accurate. I sat on the phone with quickbooks for about 3 hours with no luck. I was hoping someone could assist me in keeping and tracking the credit link correct, including the interest and other fees that are associated with it. I can provide pictures if needed. thanks in advance!

2 replies

E
Erika_K
June 24, 2024

Thank you for bringing this concern to our attention, thewinebrothers. Your efforts and time spent with our support are valued. Allow me to contribute further insights and information regarding the process of identifying the differences between your Line of Credit (LOC) and bank account.

 

To provide you with accurate resolutions, I'll need to ask you a few questions. Have you transferred funds from your bank account to the LOC? If you have, moving money from your account to LOC causes an increase in the LOC balance. If not, may I ask for a screenshot of the issues you're experiencing? Also, may I know the specific name of the report you're using? It'll allow me to relay accurate information so you can determine why you're having differences with your balances.

 

In the meantime, I'll further share the details about using LOC. The process of recording and determining which transactions to create depends on how you use the LOC. If you use it to deposit money into your account, use the Transfer Funds or Make Deposits option to increase the bank balance. If you're paying the LOC, you can create a check. When using it for purchases, enter journal entries or other expense transactions in the system. Then, when making payments, use a check for easier recording and tracking.

Additionally, I recommend consulting a qualified accountant or financial professional to provide additional guidance to ensure you're on the right track.  

 

Remember, thewinebrothers, I'm here to support you every step of the way. Feel free to reach out whenever you have questions or need assistance managing your account balances. Let's work together to ensure your account management processes are efficient and effective.

T
thewinebrothersAuthor
July 30, 2024

Hello,

 

I think I may have discovered what the problem is. When I created the line of credit, I was told to put in what the amount of the line of credit received was, but I think that is making it the starting balance and not what is available, so it's looking like we are adding to the balance instead of decreasing it. I have attached the screenshot. I think my opening balance should be $0?

A
Accracy Accounting
July 30, 2024

Correct starting LOC Liability account should be zero

    BigRedConsulting
    BigRedConsulting
    June 28, 2024

    Not sure what report you're using?

    When you have a line of credit, a liability, and you transfer funds to your checking account, balances in both the line of credit and the bank account should increase. Are you seeing something different?

    T
    thewinebrothersAuthor
    July 16, 2024

    No, they are both increasing - but I guess I do not understand why. I guess I was assuming, for example .. if the LOC was for 100,000 - and i transferred $5,000 to the checking account, why it would not go down to $95,000 showing what I have available? I am just trying to accurately keep record of it and I have some knowledge of quickbooks - mostly quickbooks online, so I am kind of lost. When I first started QB desktop had the "loan manager" but when I upgraded, it was no longer there. 

     

    BigRedConsulting
    BigRedConsulting
    July 30, 2024

    RE: if the LOC was for 100,000 - and i transferred $5,000 to the checking account, why it would not go down to $95,000 showing what I have available?

     

    It won't do that. An accounting system doesn't know your available balance, it only knows your actual balance.  This is similar to a credit card account, where it knows the credit card balance, but not how much you can borrow.

     

    When you open a line of credit, and you can borrow up to $100,000, but you haven't borrowed anything yet, the account balance is 0.00.  When you then borrow money, say $5,000, and deposit it in your bank account, the line of credit balance is then $5,000.

     

    Make sense?

      Terms & ConditionsAccessibility statement