cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 1

Selling a car on loan, invoicing, recurring payments

John Doe buys a car from me for $2000. Puts $500 down, balance due of $1500. His payments are $100 per month starting 30 days from purchase. If I create invoice, can I set up a reminder of the $100 payment due and will it track on the 30/60/90 sheet to show me whose late? For the last year ive just created the invoice and they make their payments online, but i have had no way to track if someone was late on a payment this way.

Ive been playing with the chart of accounts. Looks like i can create an "other current asset"called LoanJD for the initial loan for $2000. Then create a service called LoanPmtJohnDoe for the $100 payment and have the income account set to that. From there setup a recurring transaction to auto send them ??? each month. It wouldnt be an invoice would it? Credit memo? 

Im stuck at this point trying to figure the appropriate mappings. Brain is hurting. I started a new file for 2019. Need a good solid way for new loans and then I will work on moving the existing 8 loans from 2018 into the new file.

Solved
Best answer 02-10-2019

Accepted Solutions
Anonymous
Not applicable

Re: Selling a car on loan, invoicing, recurring payments

So you are financing the car sales and want QB to show and remind you when someone misses a loan payment.

Although loans are not normally included the customer AR accounts, in this case you can use the 'memorized transactions' function to create a monthly invoice. Then if a payment is missed you will see a balance appear in the overdue AR list - I think that's what you want?

The trick will be that the invoice item should a 'loan payment due' which maps to a 'loans receivable account' - not to sales income.

You would then create an invoice for the monthly payment due, (due on receipt) and set it to auto-repeat for the number of times needed.  You will end up with a lot of lines in the memorized entries list. Delete the memorized item once the loan is repaid.

The initial sales invoice would be for vehicle at full price with all taxes, then 'loan payable' item with negative amount so the invoice net is the initial purchase payment only.

View solution in original post

18 Comments
Anonymous
Not applicable

Re: Selling a car on loan, invoicing, recurring payments

So you are financing the car sales and want QB to show and remind you when someone misses a loan payment.

Although loans are not normally included the customer AR accounts, in this case you can use the 'memorized transactions' function to create a monthly invoice. Then if a payment is missed you will see a balance appear in the overdue AR list - I think that's what you want?

The trick will be that the invoice item should a 'loan payment due' which maps to a 'loans receivable account' - not to sales income.

You would then create an invoice for the monthly payment due, (due on receipt) and set it to auto-repeat for the number of times needed.  You will end up with a lot of lines in the memorized entries list. Delete the memorized item once the loan is repaid.

The initial sales invoice would be for vehicle at full price with all taxes, then 'loan payable' item with negative amount so the invoice net is the initial purchase payment only.

View solution in original post

Level 15

Re: Selling a car on loan, invoicing, recurring payments

@Anonymous

 

The initial sales invoice would be for vehicle at full price with all taxes, then 'loan payable' item with negative amount so the invoice net is the initial purchase payment only.

agreed if loan payable is an asset account - maybe loan receivable?
That books the down payment as income

The trick will be that the invoice item should a 'loan payment due' which maps to a 'loans receivable account' - not to sales income.

Where did loan receivable come from?  I think you mean the same loan account that you started with.  That will lower the loan amount, but what about income from the payment?  each payment is income from the car sale as well a banking deposit.

Anonymous
Not applicable

Re: Selling a car on loan, invoicing, recurring payments

Yes your right Rustler - I did mean loan receivable - getting sloppy.
Level 1

Re: Selling a car on loan, invoicing, recurring payments

Thank you both for the advice. Here is what I have so far for a new loan in 2019:

Create sales receipt for John Doe

Used Car for $2800 mapped to Sales Income

LoanJD -$2000 mapped to Other Asset account

Remaining $800 was applied as "downpayment" and recorded into the Cash on Hand account and deposited to Business checking the next day.

Recurring Invoice setup for John Doe for $50/wk ends after 40 occurences.  LoanJD used again as the product for payment and debit of loan account.

 

Almost exactly what I want, customer just cant see a running balance when they login to pay the invoice as i believe it will just show the invoice total, not my loan balance total. Workaround to that is monthly customized report for that loan account that auto-email customer the PDF.

 

 

Level 10

Re: Selling a car on loan, invoicing, recurring payments


@wmautosales wrote:

 

I started a new file for 2019. 


It says you are using QB Online.  Did you start a new subscription? Or should it be QB Desktop?

Level 10

Re: Selling a car on loan, invoicing, recurring payments


@Anonymous wrote:

 

You would then create an invoice for the monthly payment due, (due on receipt) and set it to auto-repeat for the number of times needed. 

 


So it sounds like there are 2 invoices with the identical schedule.

What Item is used in the 2nd invoice?

Level 1

Re: Selling a car on loan, invoicing, recurring payments

New subscription to online. 

Level 1

Re: Selling a car on loan, invoicing, recurring payments

The way I understood it was the first invoice takes the down payment and creates the loan account balance. The second, recurring invoice uses the same line item from the first invoice that setup the loan account. First invoice used a negative number, moving the unpaid balance of the invoice to the loan account. Recurring invoice will debit the loan account, with a deposit into checking.

Level 15

Re: Selling a car on loan, invoicing, recurring payments

@wmautosales

 

the issue that I can not find anyone addressing is income.

monthly payments are income, and they should pay down the due from asset account

 

the problem is to pay down the due from asset account requires a credit entry, which means there is no credit entry for income as there should be.

 

So in my view, unless someone knows a trick, you can not do the way it is being proposed

 

The only way I can see to get it all done, is to create an invoice for the balance due, and accept monthly partial partial payments against that invoice.  You can create an estimate template titled proforma invoice and send it to remind the customer to pay monthly, or send a statement as a reminder that the monthly payment is due

 

And all that assume this is a no interest loan.  If monthly interest is involved QB is incapable of doing that. 

 

If you are in the business of making loans, then you need loan originator software - my opinion.

Anonymous
Not applicable

Re: Selling a car on loan, invoicing, recurring payments

I'm leaving this to you Rustler ...
Level 15

Re: Selling a car on loan, invoicing, recurring payments


@Anonymous wrote:
I'm leaving this to you Rustler ...

I really wish you wouldn't

I'd like to see a way to keep the loan as an asset receivable, receive payments lowering the loan and increasing income using an invoice.

Level 10

Re: Selling a car on loan, invoicing, recurring payments


 

 


 


@Rustler wrote:

 

 

If you are in the business of making loans, then you need loan originator software - my opinion.


Look at the username of the asker.   Asker sells cars, so the income is created when the car is delivered.   Interest on the loan is not being asked about

Level 15

Re: Selling a car on loan, invoicing, recurring payments

malcolm, no it was not, read the procedure, the sales price was entered, then the loan amount was subtracted so the sales invoice only posted the down payment income. the balance is sitting in the loan receivable asset account

Level 1

Re: Selling a car on loan, invoicing, recurring payments

The method I posted above tracks the entire car as income for that invoice. The payments just transfer the loan back to 0. Looking at PL for the month, I can see income for the full purchase price. Is that not right? Looks like its doing what i want, other then customer cant see a loan balance without me sending a report, which can be done auto each month on 1st.

Level 1

Re: Selling a car on loan, invoicing, recurring payments

It looks like it credits me the full 2500 for the month of the sales receipt. So the monthly payments will just be transfers on the loan account back to 0, right? Reports will show me making $2500 that month, but on a cash basis, i only made $800. I think for my purposes this should work. End of the year, i can just deduct the balance of the loan accounts from my Gross so im not paying tax on money i have yet to receive.

Level 1

Re: Selling a car on loan, invoicing, recurring payments

Another screen shot

Level 15

Re: Selling a car on loan, invoicing, recurring payments

You should always work with your own CPA, because you seem to have "Buy Here/Pay Here" and you need to know what is considered Income at which point in your process.

Example:

 

Selling price $3,000 on an invoice for Sales Income. Make a Service Item linked to Other Current Asset for Financed Loans. Not one Account per Borrower. Use Customer Transactions so that you can report on that account Total By Customer Name. Put the Other Current Asset Financed Loan Balance item on a Customer Credit Memo/Return and Apply to the invoice. Then Receive Their Payment for their amount they intend to pay now.

 

Set up that same Financed Loan service on an Estimate for the Total they Financed; this is your reference point. You will progressively invoice that Principal and add the Interest Income item and any fees you charge, as well, for each Invoice, until the Loan Balance is $0 (estimate is 100% charged).

Level 1

Re: Selling a car on loan, invoicing, recurring payments

I like that idea. Ill have to fire up the test company and try that out. Not working with interest at this point. Just selling price of $3000 and make your $200 month payment. Thanks for the advice!

Need to get in touch?

Contact us