Manage a vendor loan

Use this workflow when a vendor lets you pay part of an inventory purchase later. The original inventory bill records the amount owed for that purchase. After the upfront payment, its unpaid purchase balance represents the financed principal. Principal excludes interest.

This workflow applies when the financing remains an unpaid balance on the purchase. It does not describe a separate cash loan or a loan that replaces the original bill.

1. Create the purchase order

1. Open Purchasing > Orders.
2. Select New PO.
3. Select the vendor.
4. Add the inventory items and quantities.
5. Enter the full purchase prices.
6. In Notes, record the upfront amount, financed amount, interest charge, and repayment terms.
7. Add a reference or document link for the financing agreement, if available.
8. Select Save and open.

Record the full inventory purchase, including the financed portion. Financing changes when you pay the vendor. It does not reduce the purchase price.

See Create a purchase order for detailed field instructions.

2. Receive the inventory

1. When the goods arrive, find the purchase order.
2. Select Receive goods.
3. Enter the quantities actually received in Received.
4. Select a Put away location for each item.
5. Select Complete receipt.

Financing does not change the receiving process. The completed receipt adds the received quantities to stock. See Goods Receipts for partial deliveries.

3. Create the inventory bill

If the original invoice includes interest, add its separate interest line before posting the bill.

1. On the completed goods receipt, select Create bill.
2. Examine the vendor, currency, and copied lines.
3. Do a check of the purchase order and receipt references.
4. Enter the full inventory purchase amount, including the financed portion.
5. Set Bill date from the vendor's invoice.
6. Set Due date to the agreed repayment date for the financed balance.
7. In Notes, record the financing terms and original invoice reference.
8. Add document references or links for the financing agreement and vendor statement.
9. Do a check of the total.
10. Select Save and post.

Do not add another line or bill for the loan principal. The inventory lines already record that amount.

Set the due date and terms before posting. Posted bills have read-only fields.

See Bills for source selection and posting details.

4. Record the upfront payment

Record the amount actually paid against the posted inventory bill. This action records the payment. It does not send money to the vendor.

1. Open the inventory bill.
2. Examine Payment history for an existing record of the upfront payment.

If the payment already appears in the bill's history, keep the existing record. For a payment that is not recorded, do these steps:

1. Select Record payment.
2. Set Payment date to the actual payment date.
3. Enter only the upfront payment in Amount.
4. Enter the bank or wire reference in Reference.
5. Select Record payment.
6. Examine Paid and Outstanding.

If you paid before the bill existed, keep the actual payment date when recording it now. Do not record the same payment again if it already appears in the bill's history.

For an inventory-only bill without credits, Outstanding is the remaining financed principal. If the bill also includes interest, separate its unpaid principal and interest when comparing the balance with the vendor statement.

5. Examine the repayment date

1. Open the inventory bill.
2. Compare Due date with the financing agreement.
3. Examine the agreement and statement references in Notes.

Use this date to monitor when the remaining balance is due. The bill holds one due date. It does not create an installment schedule.

6. Record interest separately

Record only the interest charge stated by the vendor. Do not treat a combined principal-and-interest total as an interest charge.

Interest billed separately

1. Open Purchasing > Bills.
2. Select New bill.
3. Select the same vendor and currency.
4. Set Bill date and Due date from the interest invoice or agreement.
5. Leave the line's inventory item empty.
6. In Description, enter Financing interest.
7. Set Quantity to 1.
8. Set Unit cost to the interest charge.
9. In Notes, reference the original purchase order and inventory bill.
10. Add a reference or document link for the vendor's interest statement.
11. Select Save and post.

Use document references in Notes for this interest-only bill. Selecting a purchase order or receipt as its source copies inventory lines into the form.

Interest on the original invoice

Before posting the inventory bill, select Add line. Leave the inventory item empty and use Financing interest as the description. Enter quantity 1 and the interest charge as the unit cost.

Do not also create an interest bill for the same charge. The original bill's total will include both inventory and interest.

7. Record repayments

Apply principal repayments to the original inventory bill. If interest has its own bill, apply interest payments to that bill. If interest is on the original bill, record the combined payment against that bill.

1. Open the bill that the repayment covers.
2. Select Record payment.
3. Enter the actual Payment date.
4. Enter the amount paid toward that bill.
5. Enter the wire or bank reference in Reference.
6. In Notes, describe the principal or interest portion, if applicable.
7. Select Record payment.
8. Examine the updated outstanding balance.

One wire covers several bills

The bill payment dialog records one bill at a time.

1. Identify the amount of the wire that applies to each bill.
2. Record each bill's portion against that bill.
3. Use the same payment date and bank reference for each portion.
4. Make sure that the recorded portions add up to the actual wire amount.

Do not enter the full wire amount against every bill. Include earlier financed purchases in the allocation when the wire also pays those balances.

8. Compare the amount owed

1. Open Purchasing > Bills.
2. Find the vendor's inventory bills and separate interest bills.
3. Examine Paid, Credited, Outstanding, and Payment history for each bill.
4. Add the outstanding amounts of the applicable bills.
5. Compare the total with the vendor's statement.
6. Compare the payment dates and bank references with the actual payments.

If interest is on the inventory bill, its outstanding amount already includes unpaid interest. Do not add that interest a second time. For differences, compare the original purchase, upfront payment, repayments, credits, and interest charges separately.

Example

This example uses fictional amounts and a separate interest bill.

Record	Amount
Full inventory bill	USD 10,000
Upfront payment	USD 4,000
Financed principal remaining	USD 6,000
Separate interest bill	USD 300
Total still owed	USD 6,300

A later wire of USD 2,100 covers USD 2,000 of principal and USD 100 of interest. Record USD 2,000 against the inventory bill and USD 100 against the interest bill. Use the same wire reference for both records. The remaining balances are USD 4,000 of principal and USD 200 of interest: USD 4,200 in total.