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Vendor Loan

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We made a loan to a vendor. Payment + interest will come out of his weekly invoice payment. Can you tell me how to add the loan in QB desktop and how to apply the loan payments? Thank you!

QuickBooks Desktop

RainflurryAnswer

@shafferm

So frustrating that QB employees can't even differentiate the difference between making a loan and receiving a loan.

If you haven't already set up a 'Note Receivable - Vendor XYZ' other current asset account. Assign that account to the payment made when you issued payment to the vendor. Then, you can create Vendor Credits whenever you want to apply the loan/interest to a bill. The Vendor Credit should have the following format: on line 1, enter the Note Receivable - Vendor XYZ other current asset account for the amount of the principal portion being applied to A/P. On line 2, enter Interest Income and the amount of interest charged. Save. The Vendor Credit books the reduction in the loan receivable and the increase in interest income, both of which are offset by an A/P credit that can be applied to the vendor's bills.

JenoP

Thank you for being here, shafferm. Let me help with your inquiry regarding loan management in QuickBooks.

Are you the one who took a loan from a vendor? If so, I'll share the steps on how you can set up a loan and how to record the payment as well.

To get started, you need to set up a liability account. Here are the steps you need to follow:

Go to the Lists menu and select Chart of Accounts.
Right-click anywhere, then click New.
Select Other Account Types, then select Other Current Liability if it's a short-term loan or Long Term Liability if it's payable for a longer period.
Click Continue and enter all other details of the account.
Select Save & Close.

Next, create an expense account to track interest payments or fees. Let me show you how:

Go back to your Chart of Accounts.
Right-click anywhere, then select New.
Select Expense, then Continue.
Enter the account name for the interest payments or fees.
Click Save & Close.

After that, you can record the loan as a bank deposit (cash loan) or through a journal entry (non-cash loans). You can refer to the following articles for detailed instructions:

Lastly, create a check to record or apply the payment. Here's an article as a guide: Create, Modify, And Print Checks In QuickBooks Desktop.

You can also check out this article that thoroughly discusses the process of manually recording loans in the program: Manually Track Loans In QuickBooks Desktop.

If you are the one lending money instead of borrowing it, the process would be different. In this case, you can create an asset account and use vendor credit to write off or deduct the payment if you want it to apply to your existing bills.

You can refer to these articles for guidance:

However, I would strongly recommend reaching out to your accountant for additional guidance to ensure everything is recorded properly when it comes to managing loans in QuickBooks.

Feel free to explore or save these additional articles as well, in case you might need them in the future:

Don't hesitate to always ask for help or reply to me if you have follow-up questions with any of the steps above, shafferm. The Community is open 24/7 to make sure all your inquiries are taken care of.

S

shaffermAuthor

Hi there! Thank you for the response. When it comes to the check, would the loan payment & interest portion be entered as a negative to adjust the check amount?

I

Irene R

Hello there, Shafferm.

I appreciate you returning to the thread with further inquiries regarding your vendor loan in your QuickBooks Desktop (QBDT).

When recording your check with the loan payment and interest, you should enter the check amount as positive since the loan payment is a fee and the interest is a charge of a used asset.

Furthermore, refer to this article to know more about recording your loan in QBO: Set up a loan in QuickBooks Online.

In addition, you can check this article for information on how to write off debts if your customer cannot collect them: Write off bad debt in QuickBooks Online.

If you need additional assistance recording your vendor loan, the Community is here to help you. Just let us know by commenting below. Take care, and have a great day ahead!

RainflurryAnswer

@shafferm

So frustrating that QB employees can't even differentiate the difference between making a loan and receiving a loan.

If you haven't already set up a 'Note Receivable - Vendor XYZ' other current asset account. Assign that account to the payment made when you issued payment to the vendor. Then, you can create Vendor Credits whenever you want to apply the loan/interest to a bill. The Vendor Credit should have the following format: on line 1, enter the Note Receivable - Vendor XYZ other current asset account for the amount of the principal portion being applied to A/P. On line 2, enter Interest Income and the amount of interest charged. Save. The Vendor Credit books the reduction in the loan receivable and the increase in interest income, both of which are offset by an A/P credit that can be applied to the vendor's bills.

T

Tracy948

But how would that work? If you put a vendor credit using the 'Note Receivable - Vendor XYZ' account wouldn’t that zero out the balance of that account on the ledger? I’m trying to do the same thing & would love to track this loan in A/R or A/P with applying the vendor repayment checks that way, but am struggling with having the transactions hit the ledger the right way.

In my case, the company gave another individual a loan so there’s no bills to apply it to. The individual is making payments to this loan. But I thought this approach could apply to my situation as well.

Any thoughts?

Rainflurry

@Tracy948

In the OP's case, yes, creating a vendor credit will reduce the note receivable balance by the amount entered on the vendor credit which is what you want if you're applying the note receivable balance to a vendor bill. I'm not sure I understand your situation. You mentioned you have "vendor repayment checks" and "the company gave another individual a loan so there’s no bills to apply it to." If you're receiving checks, you can apply them to the loan when you record the deposit.

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