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Track customer loans in QuickBooks Online

by Intuit Updated 4 weeks ago

Learn how to record, track, and use loans in QuickBooks Online.

In QuickBooks, you can record and keep track of loans and payments. Depending on the purpose of the loan, there are different ways to record them in QuickBooks. Follow the option suited to your needs.

Note: If you don’t see the steps on the page of your QuickBooks, try to switch to Accountant view.

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Option 1: Use loans to close open invoices

Step 1: Create an account to track the loan and its repayment

  1. Go to Settings Settings gear icon., then select Chart of accounts (Take me there).
  2. Select New, then select Assets.
  3. From the Save account under and Tax form section dropdown, select Loans to Others.
  4. On the Account name field, enter a recognizable name like "Loan - customer name".
  5. Select Save without entering an opening balance.

Step 2: Create a journal entry

This journal entry creates the opening balance of the loan and adds credit in the accounts receivable for that customer. You can apply the credit to open invoices.

  1. Go to + New, then select Journal entry.
  2. On the first line, from the Account dropdown, select the account you created to track the loan.
  3. On the Debits field, enter the loan amount.
  4. On the second line, from the Account dropdown, select your accounts receivable.
  5. From the Name dropdown, select the customer you want to give a loan.
  6. Select Save.

Option 2: Issue a multi-purpose loan to your customer

Step 1: Create an account to track the loan and its repayment

  1. Go to Settings Settings gear icon., then select Chart of accounts (Take me there).
  2. Select New, then select Assets.
  3. From the Save account under and Tax form section dropdown, select Loans to Others.
  4. On the Account name field, enter a recognizable name like "Loan - customer name".
  5. Select Save without entering an opening balance.

Step 2: Issue a check for the loan

  1. Go to + New, then select Check.
  2. From the Bank Account dropdown, select the account you used to fund the loan.
  3. On the first line, from the Category dropdown, select the account you created to track loans.
  4. On the Amount field, enter the loan amount.
  5. Select Save and close.

Step 3: Record customer payments

QuickBooks doesn’t calculate interest automatically. To manually calculate the interest due on the current payment, take the loan balance and multiply it by the interest percentage, then divide by 12 for one month’s interest.

  1. Go to + New, then select Bank deposit.
  2. From the Account dropdown, select the account you used to fund the loan.
  3. On the first line, from the Received from dropdown, select the name of the customer with the loan.
  4. From the Account dropdown, select the account you created to track loans.
  5. From the Amount dropdown, enter the amount they paid.
    Important: If you charge customers with interest, on the second line, select the account you use to track interest income and enter the amount of the interest.
  6. Fill out the rest of the fields accordingly.
  7. Select Save and close.

Step 1: Create a service item

Create a service item, then for the Income account, select the account you use to track the customer’s loans. Name the item something you can easily identify like “Loan payment”.

Step 2: Create a recurring invoice

Create a recurring invoice for the customer’s payments. Make sure to select the customer with the loan and the service item you created on Step 1.

Step 3: Receive customer payments

Receive the payments for the loan, then deposit them to Undeposited funds. If you don’t have the account Undeposited funds, add it to your chart of accounts.

Step 4: Record the deposit and adjust for interests

  1. Go to + New, then select Bank deposit.
  2. From the Account dropdown, select the account you used to fund the loan.
  3. On the first line, from the Received from dropdown, select the name of the customer with the loan.
  4. From the Account dropdown, select the Undeposited funds account.
  5. From the Amount dropdown, enter the amount they paid.
    Important: If you charge customers with interest, on the second line, select the account you use to track interest income and enter the amount of the interest.
  6. Fill out the rest of the fields accordingly.
  7. Select Save and close.
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