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sdlondon
Level 1

Manual intercompany loan transactions?

Company A and Company B are limited companies with the same director. Company A has been in financial trouble during the pandemic, with little income and high overheads. Company B has been better off.  So Company B has been paying for expenses on behalf of Company A from its own accounts. It would have been better practice to transfer the funds to Company A and let Company A pay out of its own bank account, so yes it's bad practice and a real mess.  But nonetheless, this is in essence a loan between the companies. 

 

It's easy enough to account for it in Company B (the lender's) books - any transaction in Company's bank account which was actually on behalf of Company A is just matched to the "Loan Receivable from Company A" asset. 

 

But I'm not sure the best way to manage this in Company A (the borrower's) books, since these expense transactions obviously don't show in any of this company's bank accounts.  Must I create every single transaction as a manual journal entry, matching an expense against a "Loan Payable to Company B" liability?  Or is there a faster way around this? 

 

Could I create the loan as a credit card account, for example? Then I can just upload transactions in bulk. 

1 REPLY 1
PaulGs
Level 2

Manual intercompany loan transactions?

In company B would run a balance sheet, select the loan to A, get the detail and transfer this report to excel. In excel categorize the costs and then post one journal in company A - debit the various expenses and credit the loan with B.

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