Can I record loans on a receipts and payments basis?
This article is for churches and charities that prepare their accounts on a receipts and payments basis (cash basis).
If your church or charity prepares accounts on an accruals basis, see this separate help guide article.
On a receipts and payments basis, for loans you have taken out:
- when a loan is received you need to record it as 'income';
- when loan repayments are made you need to record these as 'expenditure'
(see section 1 of this help guide article).
On a receipts and payments basis, for loans you have given:
- when a loan is given you need to record it as 'expenditure';
- when loan repayments are received you need to record these as 'income'
(see section 2 of this help guide article).
1. Tracking loan repayments and the outstanding loan balance for loans you are repaying
Firstly, we'd recommend for each loan you have, you add the following categories within the category settings screen:
- an income category called 'loan received' (not relevant if the loan was given prior to your ExpensePlus System start date);
- an expenditure category called 'capital loan repayments' (to which you record the capital repayments made on loans you have);
- another expenditure category called 'loan interest' (only relevant if you pay interest on the loans you have).
Secondly, we'd recommend you create a project for each loan and set the opening balance correctly based on the amount of capital still to repay on the loan at your ExpensePlus system start date.
Then:
- link the income category called 'loan received' to the project;
- link the expenditure category called 'capital loan repayments' to the project.
IMPORTANT: Don't link the category called 'loan interest' to the project as this would make your project balance not match your outstanding capital loan balance.
NOTE: If you are not in your first financial year of ExpensePlus but the loan existed in previous years, you will need to create the above categories in each financial year separately and then link the categories in each financial year to the project as well.
Within the projects report, you will be able to see the current outstanding loan balance of the loan, as well as easily see what repayments have been made.
To find out more about how projects work - see this separate help guide article.
NOTE: When recording loan repayments, if you pay interest on the loan, you need to split the amount paid accordingly into the 'capital loan repayment' and 'loan interest' categories.
2. Tracking loan repayments and the outstanding loan balance for loans being repaid
Firstly, we'd recommend for each loan you have, you add the following categories within the category settings screen:
- an expenditure category called 'loan given' (not relevant if the loan was given prior to your ExpensePlus System start date);
- an income category called 'capital loan repayments' (to which you record the capital repayments made on loans given);
- another income category called 'loan interest' (only relevant if those paying you back are paying interest on the loans you have given).
Secondly, we'd recommend you create a project for each loan you have given and set the opening balance correctly based on the amount of capital still to be repaid on the loan at your ExpensePlus system start date.
Then:
- link the expenditure category called 'loans given' to the project;
- link the income category called 'capital loan repayments' to the project.
IMPORTANT: Don't link the category called 'loan interest' to the project (as this would make your project balance not match the outstanding capital loan balance.
NOTE: If you are not in your first financial year of ExpensePlus but the loan existed in previous years, you will need to create the above categories in each financial year separately and then link the categories in each financial year to the project as well.
Within the projects report, you will be able to see the current outstanding loan balance of the loan, as well as easily see what repayments have been made.
To find out more about how projects work - see this separate help guide article.
NOTE: When recording loan repayments, if you charge interest on loans you have given, you need to split the amount repaid accordingly into the 'capital loan repayments' and 'loan interest' categories.