QuickBooks Loan Manager

QuickBooks loan manager can help users in keeping track of interest rates and payment schedules. When you create a new loan to track in this utility, you can log all of your existing loans payments made repayment. Users can also compare different loan options and look at various scenarios to prepare for any future risks. QuickBooks loan manager is not available in QuickBooks desktop 2022 and may not be available in the future versions as well. If you have a version of this accounting software that was released before 2022, then you can track your loans easily. 

You have the ability to set up expense, vendor, and liability accounts to track loans with QuickBooks loan manager. You can also create an escrow account to keep track of any loans managed by third parties. Once you create a new loan through the banking menu, you can add information such as the due date of next payment, next payment number and payment amount. You can also set reminders for loan payments.

In this post you will learn how to use QuickBooks loan manager efficiently and effectively. 

What is the QuickBooks loan manager?

QuickBooks loan manager is a tool available in QuickBooks desktop to help users keep track of loans, interest and loan payments. You have the ability to track due dates for every payment that you need to make.

Users can also create various liability and expense accounts to track loans that are managed by them themselves. On the other hand, users can create an escrow account to track loans managed by a third party.

How to use QuickBooks Loan Manager to track loans?

Users first need to create relevant accounts that track the loan. Then they can record and track the loan and the various interest rates and due payments. 

Users can also use the “what if” scenario tool to look at possible risks that they may encounter in the future.

Step 1: Create relevant accounts to track loan

To track any item in QuickBooks desktop, you need to associate it with a particular account. As a loan is a liability on your business, you have to create vendor, liability and interest accounts to track the loan.

Here are the steps to create a liability account in QuickBooks desktop:

1. Launch QuickBooks desktop and login to the company file with an admin account.
2. Click on the chart of accounts and right click on an empty area to select new.
3. Click on other account types and select one of the two options provided below:
   1. Other current liability: this option can be used to track short term loans that can be repaid within a year.
   2. Long term liability: this option can be used to track loans that may take more than one year to repay.
4. Click on continue and enter the name and number for the account.
5. Click on save and close.

Here are the steps to create a new vendor account to track the bank or the company that loaned you the amount:

1. Go to the vendors menu.
2. Click on the vendor center and choose new vendor.
3. Input the details for the vendor.
4. Entered optional details such as phone number and email address for the vendor.
5. Click on Ok.

In the end, you have to create an expense account to track any interest payments made towards the loan. Here are the steps for the same:

1. Click on chart of accounts from the lists menu.
2. Right click on an empty area and click on new.
3. Choose expense and click on continue.
4. Input the details for the account and choose save and close.

You have created all the required accounts to track a loan that is managed directly by you. However, you may have to create an escrow account if the loan is being managed by a third party until the fulfillment of a particular condition.

Here are the steps to create an escrow account in QuickBooks Desktop to track loans managed by third parties:

1. Click on chart of accounts from the lists menu.
2. Choose new from the account dropdown option.
3. Click on other account types.
4. Choose other current asset, then continue.
5. Enter the information for the account and click on save and close.

Step 2: Record loans to track them through the loan manager

Once you have created all the accounts that you require to track the loan, you can record the loan and map it to the correct accounts to enable tracking.

Here are the steps to record and track your loans using the QuickBooks loan manager:

1. From the banking menu click on loan manager.
2. Choose to add a loan.
3. Enter all the essential information to the loan:
   • Account name: enter the same name at the account you created in the previous step.
   • Vendor:  choose the vendor or Bank that issued you the loan.
   • Origination date: enter the date on which the loan was sanctioned.
   • Original amount: enter the original amount that was sanctioned for the loan.
   • Term: enter the time it will take to repay the whole loan.
4. Verify the information and click on next.
5. Choose from these two payment options:
   • Due date of next payment:  and put the date on which you have to make the next payment towards the loan.
   • Next payment number: If a payment has already been made against the loan, then enter the payment number for the next payment in this cycle.
   • Payment amount: input the amount of money that you need to pay at the end of each period.
   • Choose the option “alert me 10 days before a payment is made” if you want to keep track of any upcoming payments.
   • Choose yes if an escrow account is associated with the loan that you want to track.
   • When you choose yes, you will have to enter additional information regarding the escrow account.
6. Click on next.
7. Enter the interest rate info for the current loan.
8. Click on finish.

When selecting interest info for a particular loan in the QuickBooks loan manager, you have the following options to choose from:

• interest rate
• compounding period
• payment account
• fees charges expense account
• interest expense account

Note: payments already made towards the loan have to be entered through a journal entry, a check or a bill.

Step 3: Use the what if scenario tool

The what if scenario tool can be used to compare different loan options to see which one will cost you less for a certain period of time. With this tool, you have the ability to maximize your returns while taking the minimum amount of loan.

Here are the steps to use the what if scenario tool:

1. From the banking menu. choose loan manager.
2. Click on what if scenario.
3. Click on the choose a scenario dropdown menu and select one of the loan scenarios.
4. Click on the choose a loan drop down menu and select the Other loan to evaluate against.
5. Enter all the necessary details and click on calculate.
6. Click on print if you want a printout of this result.

By using the what if scenario tool, you can successfully see which loan will cost you less. This is quite an important tool when you are choosing a particular loan.

Conclusion

QuickBooks loan manager lets you manage every aspect of a loan,  from interest calculation to payment reminders. You can also track your loans and your details about them once you have associated them with the correct account in QuickBooks desktop. Also, you can use the what if scenario tool to maximize your returns on your loan.

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