Managing Loan Amortization Schedules

Tracking Borrowed Money Over Time

A Loan record is the mirror image of a fixed asset — instead of spreading an owned asset's cost over time, it spreads a borrowed liability's principal and interest over a repayment schedule, automatically posting each period's split.

Creating a Loan

1. Go to Accounting > Accounting > Loans → Create.
2. Lender – the bank or individual/company that lent the money.
3. Periods and Period Length – e.g. 60 periods of 1 month each for a 5-year monthly loan.
4. Rate and Rate Type – Nominal APR, Effective Annual Rate (EAR), or a Real Rate, matching how your lender quoted the rate.
5. Is Leasing – flag if this is actually a lease being accounted for as a loan.
6. Set the Journal and the Short-Term/Long-Term Loan and Interest Expense accounts.

The Amortization Schedule

Click Compute to generate one line per period, each showing:

• Payment Amount – the total instalment for that period.
• Principal Amount and Interest Amount – how that payment splits between reducing what you owe and the cost of borrowing it.
• Pending Principal – what's still owed after this payment, split into short-term (due within a year) and long-term portions — exactly the classification the Balance Sheet's Current vs Non-current Liabilities sections need.

Posting Each Period

Confirm the loan to move it to Posted, then post each period's line as it comes due — same discipline as the Fixed Assets batch depreciation run: do it on a fixed schedule so the liability balance and interest expense stay current rather than catching up several months at once.

Closing a Loan

Once fully repaid (or paid off early), mark it Closed. If paid off early, the remaining schedule's future lines are no longer posted — confirm the final payoff amount matches what the lender actually charged, since early payoff sometimes includes a fee not reflected in the original schedule.