Loan from directors to pay customers invoices

Hi Richard_Hill, 

Allocating that 10,000 from the director certainly needs to be correct. It's best to treat it as a director’s loan.

Set up a liability in your chart of accounts called something like Director loan – <name> (tax code N‑T). In Bank transactions, allocate the $10,000 deposit to that director's loan, so it sits in liabilities and boosts the bank balance. Then just pay the customer/supplier invoice from the business bank account as normal. When the business is ready to reimburse the director, record a Spend money/Transfer from the business bank to the director's loan account to reduce what’s owed.

Worth a quick check-in with your accountant as well to confirm it suits your setup.

Regards,
Genreve

Hi Genreve,

Thanks for your input.

The problem I have is that no money is leaving the bank.

I am just paying off our own customer’s invoice as a temporary favour.

So paying from the bank account will leave an unreconcilable entry.

Hi Richard_Hill. 

Thanks for clarifying what you meant. If there’s no cash actually leaving the bank, you can instead leave the bank side out of it in MYOB.

You can still allocate the $10,000 deposit from the director to a Director loan - liability (N‑T) so it sits there correctly, but when you “pay” or clear the customer’s invoice, you don’t use the bank account; instead, clear it via a Receive Payment/journal against a director loan/clearing account. That way, the invoice is cleared, there’s no fake bank withdrawal to reconcile, and the movement is just between Accounts Receivable and the director's loan/equity account ( but I highly recommend double‑checking with your accountant to make sure).

Regards,

Genreve

Thanks but sorry that wont work.

The problem is that when i do a "Receive Payment" - what ever account I use (eg directors clearing account) i will have a balance remaining in that account, this isn't the result i need. 

I cant journal it to "accounts receivable" as then the sales reconciliation report will be out.

sorry, am i on the wrong track?

Hi Richard_Hill​ 

Personally, I create the directors loan account as a 2-**** account as a Credit Card and then you can use it like a normal bank account to pay a bill.

Cheers

Liz

Hi Liz,    thanks for responding.  Yes, correct, however in this case I want to pay off a sales invoice. money that is owed to the business.

Hi Richard

If I understand you correctly, then you can still use the director's account as the "deposit to" account as the original loan entry would be a credit to the director's account and the payment of the sales invoice would be a debit to the director's account.

Cheers

Liz