Managing loans between companies

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Loans made between companies are standard loan transactions, not intercompany transactions. Loans are debts that require the payment and receipt of funds between the lender and the borrower; the general ledger must accurately reflect the assets and liabilities for both companies.

In contrast, an intercompany transaction occurs when companies in your organization share resources and happen automatically in Ajera. For example, an employee for one company works on another company's project. In this case, you must enter an intercompany bank transfer to reconcile the cost of the employee's time.

The following steps describe the general workflow for managing loans between companies.

Before you begin

  • Set up an account for the lending company, with an account type of Non-current Asset.
  • Set up an account for the borrowing company, with an account type of Non-current Liability.

Company 1 loans Company 2 $1,000.

First, create asset and liability accounts for the loan from Company 1 to Company 2.

  1. In the Account window, create a Non-current Asset account for Company 1 called Loan to Company 2.

  1. In the Account window, create a Non-current Liability account for Company 2 called Loan from Company 1.

To manage a loan between companies

  1. Make the loan by entering a vendor invoice:
  1. From the Vendor field, select the borrower. (Set up the borrower as a vendor, if needed.)
  2. From the Company field, select the lender.
  3. In the Cost Amount column, enter the loan amount.
  4. In the Account column, select the Non-current Asset account for the loan.
  5. Pay the vendor invoice.

Company 1 makes the $1,000 loan to Company 2.

  • In the > Manage > Vendor Invoices window, create a vendor invoice with Company 2 as the vendor, Company 1 as the company, 1000 as the cost amount, and Loan to Company 2 as the account.

  1. Record the loan receipt by entering a miscellaneous receipt:
  1. In the Payer field, enter the lender.
  2. From the Receipt Company field, select the borrower.
  3. In the Account column, select the Non-current Liability account for the loan.
  4. In the Amount column, enter the loan amount.

Company 1 records that it made the loan to Company 2.

  • In > Manage > Client Receipts, enter a miscellaneous receipt with Company 1 as the payer, Company 2 as the receipt company, Loan from Company 1 as the account, and 1000 as the amount.

  1. Pay back the loan by entering a vendor invoice:
  1. From the Vendor field, select the lender.
  2. From the Company field, select the borrower.
  3. In the Account column, select the Non-current Liability account for the payment.
  4. In the Amount column, enter the cost amount being repaid.

Company 2 pays back the $1,000 to Company 1.

  • In > Manage > Vendor Invoices, enter a vendor invoice with Company 1 as the vendor, Company 2 as the company, Loan to Company 2 as the account, and 1000 as the amount.

  1. Record the loan payment by entering a miscellaneous receipt:
  1. In the Payer field, enter the borrower.
  2. From the Receipt Company field, select the lender.
  3. In the Account column, select the Non-current Asset account for the loan.
  4. In the Amount column, enter the amount received.

Company 1 records the payment of $1,000 from Company 2.

  • In > Manage > Client Receipts, enter a miscellaneous receipt with Company 2 as the payer, Company 1 as the receipt company, Loan to Company 2 as the account, and 1000 as the amount.