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Calculating and posting loan interest
Calculating and posting loan interest

How to set the interest applied to an intercompany loan

Griff avatar
Written by Griff
Updated over 5 months ago

Balancer makes it simple to calculate the interest due on an intercompany loan. Once you have configured the interest rate, Balancer will calculate the amount due in any given month by calculating the interest due daily, taking into account any changes in the loan balance.


Configuring the Interest Rate

Expand a loan on the dashboard and choose the "Edit interest setting" button. This is also available on the loan details page.

This will show you a screen like this with three options:


No Interest

Choosing No Interest means there will be no interest applied to this loan and we won't show any interest due.


Fixed Rate

Fixed Rate will set a single interest rate which is applied to the loan for all time


Variable

Variable gives you more fine-grained control over the interest rate. Each line represents a change in the interest rate, and we will apply that rate from the given date onwards. In the example below:

  • The interest rate is 0% up until 1st June 2022

  • It is 3% from 1st June 2022 until 31st December 2022

  • It is 3.5% from 1st January 2023 until 30th April 2023

  • It is 4.5% from 1st May 2023 onwards

Once you're happy, hit Confirm and the page will update to reflect the interest due


Posting Interest

You can post your interest adjustments directly into Xero.

You can either select 'Invoice [Xero org name] for interest' or 'Add interest to loan balance'.

Select 'Invoice [Xero org name] for interest' to post as Invoice and Bill.

Select 'Add interest to loan balance' to post as Journals.

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