How to treat a 'loan' to a customer

Hi Kevin,

You will have to create a contra account by creating a new bank account on Clear Books and naming it contra. You can then net off the bill and invoice with this account and, in the case of an outstanding balance, transfer from the contra account to your business account or vice versa if you owe money.

Kind regards,

Juan

Hi Juan

Thanks for the fast response. I'm not going to lie though, I may need you to give me a working example of what you mean by 'You can then net off the bill and invoice with this account and, in the case of an outstanding balance, transfer from the contra account to your business account or vice versa if you owe money.'

In my scenario, funds have literally just left the business account one day, to be repaid a few days later. The software i've used since day dot (VT) would simply:

DR Customer
CR Bank

then

DR Bank
CR Customer

Job done.

I appreciate VT is extremely simplified so i'm happy with a proposed workaround so long as I understand the mechanics behind it.

Thanks,

Hi Kevin,

When you go to pay the bill or invoice, select the contra account from the 'Bank account' drop down list. You will then need to settle the bill and invoice with this account and transfer the balance from the contra account to your business account or vice versa if you owe money. You can do this by heading to 'Money > Manage money' and click on 'Transfer'.

I hope this helps.

Hi Juan

Apologies but i'm still not quite following. At what point does a bill or invoice come into it? Are you suggesting both a dummy bill & then invoice would need to be created to support my scenario?

Hi Kevin,

I'm really sorry for this, I completely misunderstood.

The best action to take would be to create a loan account in 'Money > Bank accounts > Add' and transfer the loans from the loan account to the business account and vice versa.

Again, I'm really sorry for the misunderstanding.

Not a problem whatsoever, easily do'able when chatting on here instead of the phone. Still, it's good for those to read who may end up in a similar scenario.

I'm guessing the above scenario wouldn't give me the option of physically linking the transaction to a particular client? In which case i'd just have to keep track of any balance owed by viewing the narrative.

It doesn't happen all that often anyway (did this week though!) but it's nice to know how to handle these things.

Simple solution would to stop being so soft I suppose!! :-)

To get around this you could maybe name the loan account by the client's name, if you prefer?

Good idea - thanks.