Walkthrough: Loan with scheduled pay back and interest invoice

Contract Management for Drink-IT  •  Article  •  7/6/2023  • 

With the Loan Card, you manage information about a loan with a customer or vendor. You can specify the details of the agreement and from here you can also drill down on past and ongoing transactions for a loan.

Our customer 30000, John Haddock Restaurant is going to renovate his premise. We will help him with the investment by giving them a 12.000 loan at 4% interest. The duration of the loan is 5 years with a monthly pay-back. In addition, we charge the customer for 10,00 administration cost per month.

Step 1: Register the loan

  1. Choose the Search icon , enter Loans, and then choose the related link.
  2. Choose the New action.
  3. Select Customer as Source Type and 30000 John Haddock Restaurant in the Source No. field.
    Enter John Haddock 12000 pay back 5 yrs; 4% interest in the Description field.

We will send them a monthly separate invoice for the interests.

  1. Select SCHEDULE1 in the Loan Category field. The Status of the loan is PROGRESS. With this status, we can still modify the loan and are not able to post transactions with it.
  2. Fill in the Duration fields:
    • Duration in Months = 60
    • Starting Date = January 1st 2022 (calculates the Ending Date)
    • Loan Pay Out Date = January 1st 2022
    • First Loan Pat Back Date = February 1st 2022
  3. Fill in the Amounts fields:
    • Loan Amount (LCY) = 12.000
    • Interest Rate = 4
    • Additional Charges = 10,00.
    • The Interest Invoice Type field is already set by the Loan Category: Non-Capitalize (interest amounts for this loan do not impact the loan balance).
  4. The Pay Back fields are is already set by the Loan Category:
    • Scheduled Pay Back = Scheduled Amount
    • Pay Back Period Type = Month
    • Choose the Calculate the Scheduled Pay Back Amount action to fill the Scheduled Pay Back Amount (LCY) field. The value should 200.00.
  5. Connect the loan to Contract Object CMO-0002 John Haddock Restaurant in the Contract Object field.
  6. Change the Payment Terms to 7 DAYS and Payment Method Code to BANK.

Now we finished the registration of the loan details. We can create loan lines for the pay out and pay backs:

  1. Choose the Create loan Lines action and select OK:

  2. This batch creates one line for the pay out and one line for each pay back.

  3. The first line shows the pay out of the loan amount.
  4. The other lines show the calculated pay back per period, including the interest amount and the additional charge for that period.
  5. In our loan, the pay out date was January 1, 2022. This date is not included in the loan (interest) days. The number of days for a full month is 30, so we calculate 30 -/- 1 = 29 loan (interest days).


In the calculation of interests:

  • The number of loan (interest) days is 360 days for a year.
  • The number of loan (interest) days is 30 days for each month.
  • The loan pay out day is not included in the loan (interest) days.
  • The loan pay back day is not included in the loan balance change

The registration of the loan is now finished. You can print a loan document and ask the customer to sign it.

  1. The agreement is now signed and we can change the Status of the loan to CUST_CONF. This means:

  2. We are allowed to Pay Out the loan amount

  3. It is allowed to Pay Back amounts for the loan.

Step 2: Pay the loan

The pay out of the loan was done with a bank transfer by the finance department. They post the transaction in the payment journal:

  1. Choose the Search icon , enter Cash Receipt Journals, and then choose the related link.
  2. Select the CASHRCPT template and choose OK to open the Cash Receipt Journals page.
  3. Select the GIRO Batch Name and create a new journal line (Personalize the page and add the fields Loan No. and Loan Entry Type).
  4. Fill in fields:
    • Posting Date = January 1st 2022
    • Account Type = Customer
    • Account No. = 30000
    • Loan No. = your new loan
    • Loan Entry Type = Pay Out Cap (this updates the Posting Group to CM-LOAN-CAP, the Customer Posting Group that we have setup in the Loan Category)
    • Amount = 12,000
  5. Choose the Post action to post the journal.

On the Loan card page for your loan, you can now see the Balance Loan (Cap.) (LCY) of 12,000.00 in the Balance FactBox.

Step 3: Post the first pay back journal

The First Loan Pay Back Date is February 1st 2022. We will post a general journal that will create a customer ledger entry that we can apply when we receive the payment for the installment.

  1. On the Loan card page, choose the Create Loan Pay Back Journal Lines action.
  2. On the Create Loan Pay Back Journal lines request page, select February 1st 2022 in the As per Date field and choose OK to create the journal.
  3. Choose the Search icon , enter Cash Receipt Journals, and then choose the related link.
  4. Select the CASHRCPT template and choose OK to open the Cash Receipt Journals page.
  5. Select the LOANDUE Batch Name and verify the journal lines:
    • The posting of the first line with the -200.00 amount will automatically be applied to the payment of the loan amount, so it will change the remaining amount for the payment to 11,800.00. The due date is set to the ending date of the loan (31st December 2026).
    • The posting of the second line with the 200.00 amount will create the customer ledger entry to collect the payment for the installment.
    • The posting of the journal is neutral. When the customer ledger entry that will be created by posting of the second line is applied by a payment, the loan balance will be reduced with 200.00
  6. Choose the Post action to post the journal.

Step 4: Post the first interest invoice

The interests and the administration cost for the loan will be collected by sending the customer a monthly invoice.

  1. On the Loan card page, choose the Create Loan Interest Invoices action.
  2. On the Create Loan Interest Invoices request page, select January 31st in the Invoice to Date field and choose OK to create the invoice.
  3. Verify the invoice and choose the Post action to post the invoice.

On the Loan card page for your loan, you can now see the Balance Loan (Non-Cap.) (LCY) of 48,67 in the Balance FactBox.

Step 5: Receive the payment for pay back and interest

On February 8, 2022 the customers pays the pay back and the interest. The finance department registers the payment in the cash receipt journal:

  1. Choose the Search icon , enter Cash Receipt Journals, and then choose the related link.
  2. Select the CASHRCPT template and choose OK to open the Cash Receipt Journals page.
  3. Select the GIRO Batch Name and create a new journal line:
    • Posting Date = February 8, 2022
    • Account Type = Customer
    • Account No. = 30000
    • Amount = -248.67 (200 pay back + 48.67 interest and charges)
  4. Choose the Apply Entries action.
  5. On the Apply Customer Entries page, select the entries for the Pay Back and Interest Invoice and choose the Set Applies-to ID for them. Choose OK to close the page.
  6. In the Cash Receipt Journal, you can now see two journal lines. The entry for the pay back has a different Posting Group as the entry for the invoice splits the payment in lines per posting group to avoid mixing up receivables with different Receivables Accounts.
  7. Verify the journal lines and choose the Post action.
  8. The Balance FactBox on the Loan card for your loan now shows 11,800.00 as Balance Loan (Cap.) (LCY) and 0,00 Balance Loan (Non-Cap.) (LCY).