Insurance Expense that has been financed

In theory you should post expense of $1250 monthly.  If you were simply paying the insurance company this amount each month or the net after a down payment you would expense the cost when paid (if cash basis) but since you are borrowing the money from a third party you are borrowing working capital to cover a one time charge that happens to cover two different tax years.

Thus as I started, you should book your insurance company bill in 1/12 increments.  Pay the lender and post to Accounts Payable with the insurance company name (you need a name to post to AP). Periodically (monthly) "pay" the insurance invoice by applying any credit in AP

Thank you for your comment. Could you please clarify a little more for me?

Set up a recurring Bill for monthly insurance expense that will auto post monthly. You enter a  Bill from insurance company and then select the option to memorize it. Every month a bill for 1250 will be entered.

Record your down payment to the insurance company not as an expense, but to Accounts Payable and with insurance company name. Yes. The company name will appear twice. 

Record payments to the lender. You can set up recurring bills if you wish or monthly write a check.  Here also you will enter Accounts Payable with insuranxe company name for premium portion and second line for interest expense.

Monthly when you Pay Bills you will have credits in AP for the insurance company vendor name to apply against the monthly insurance bill and no payment will be due.

If uou feel this has solved your question you may wish to edit and note that on your other two duplicate unanswered threads on this same exact query

@john-pero Hi, I'm having the same dilemma - but I have to bill some of the insurance premiums back to a client.

How do I bill back a portion of the premium if it is being financed?

So

1. We are financing our insurance premium

2. A  partial amount of that needs to be billed back to a client

But if I cannot record the full amount until it is expensed - how would I record it? 

Thank you.