Odoo 18 Accounting simplifies loan management for business assets such as real estate and machinery. It allows direct linking of loans to assets, ensuring clear financial visibility. The system automates journal entries and payment schedules, while integration with the asset depreciation module shows how repayments impact asset value. Users can generate reports to assess loan performance and repayment status, enhancing financial oversight and reducing manual effort.
Now, let's take a look at the Loan Management features available in Odoo 18 Accounting. The accounting module's menu includes a Loans section, as depicted in the screenshot below.
Here is a list of the existing Loans, displaying the Loan Name, Start Date, End Date, Amount borrowed, Outstanding Balance, and Status. To create a new loan, simply click the "New" button.
First, input the Loan name in the creation form. Then, enter the Amount Borrowed, interest rate, loan date, and the duration of the loan. The Outstanding Balance will be calculated automatically after you specify the Asset Group.
Amount Borrowed: The principal amount that a borrower agrees to receive from a lender, which is obligated to be repaid over a specified term along with accrued interest, is commonly referred to as the loan principal.
The screenshot displays the Amortization Schedule, which is a detailed table that outlines each payment's division into 'Principal' and 'Interest', as well as the total amount due over the life of the loan. Users can choose to manually enter the schedule by clicking the ‘Add a Line’ button', or it can be automatically populated according to the selected Compounding Method.
Next, we have the Loan Settings tab, where the configuration of accounts takes place. This section includes the Journal, Expense Account, Long Term Account, and Short Term Account.
By skipping until the loan is established, Odoo will refrain from generating entries for loan lines that fall on or before this date. 'This feature is beneficial for users who may have manually entered data prior to the creation of the loan'.
Located in the upper left corner of the screen are three buttons. The first button, Confirm, serves to validate the loan. The second button, Upload, facilitates the submission of the necessary documents for the loan. The final button is Compute.
By clicking the Compute button, a new window will be displayed as depicted in the screenshot below. Kindly input the Loan Amount, Interest Rate, Loan Term, Start Date, and Payment details.
There are various Compounding Methods available to choose from, and a preview of the amortization schedule will be shown based on the selected method.
Inside the preview, you can find the date, principal amount, interest, payment, and balance. Click the 'Apply' button to incorporate this into the Amortization Schedule.
The Interest, Duration, and Outstanding Balance will be automatically adjusted according to the chosen calculation method. Then, simply click the Confirm button.
Once the loan is confirmed, the status will transition from Draft to "Running". Additionally, there is a smart tab labeled 'Posted Entries'.
Click on the smart tab to view the 'Journal entries'.
Let's examine the initial journal entry. In this case, the principal amount for the first month is recorded as a debit in the Long Term Account, which represents a noncurrent liability. Since the liability is being reduced, we debit this account. Conversely, the payment is credited to the Short Term Account, another liability account, where an increase in liability results in a credit. Additionally, the interest on the loan is recorded as a debit in the Expense account, reflecting an increase in expenses, thus necessitating a debit entry.
Next, proceed to the second journal entry. In this case, the Long Term Account is debited while the Short Term Account is credited with the remaining balance. This indicates a reduction in liability. Therefore, the Long Term Account (Non-current Liability) is debited, and the Short Term Account (Current Liability) is credited.
Once all entries have been posted, the loan status will automatically update to Closed. If not, simply click the Close button to finalize the loan. Please note that any unposted journal entries will be removed, and the loan will be marked as closed.
Loan Analysis Report
The Loan Analysis Report in Odoo 18 Accounting offers a comprehensive view of loan performance, detailing principal amounts, accrued interest, and repayment schedules. This tool enables businesses to track the status of their loans and assess the impact of these loans on their cash flow and financial statements.
To access the Loan Analysis report, navigate to the 'Reporting' Menu and select 'Loan Analysis', which can be found under the Management report section.
Reporting > Loan Analysis
The Loan analysis report will commence with a pivot view. The Y axis enumerates the loan names, whereas the X axis delineates the total principal, interest, and annual payments, thereby enhancing the understanding of each loan's financial implications within the organization.
An alternative list view is offered. This report ensures compliance with financial management policies and aids in making informed decisions through its customizable filters and actionable insights. Users can filter the report by Current Loans, Closed Loans, and Loan Date. It also allows for grouping by Loan, Loan Date, and Asset Group. Custom Filters and Custom Group By features are available, and users can save their search by clicking on the Save current search button.
In conclusion, Odoo 18 Accounting's Loan Management feature streamlines the handling of loans related to business assets by automating journal entries, interest calculations, and payment monitoring. This innovation enhances financial accuracy and transparency, allowing businesses to better oversee their liabilities and their impact on asset valuation.