NetLoan - Financing Assets with NetLoan Process

Overview

When an organization uses both NetAsset and NetLoan, a structured integration process allows a financed asset acquisition to be properly recorded across both modules. The asset is created within NetAsset through a sourcing transaction that posts to the Fixed Asset Clearing account. Simultaneously, the corresponding financing obligation is established in NetLoan through a Loan record and its generated Initial Balance Entry. Because the two systems do not automatically reconcile the loan proceeds to the outstanding Accounts Payable (AP) balance, a manual journal entry is required to clear the intermediary accounts and complete the accounting cycle.

Key Assumptions

• Both the NetAsset and NetLoan modules are installed and licensed within the same NetSuite account.
• The Loan Type used in NetLoan has been configured with a Loan Proceeds / Origination Clearing account.
• The Fixed Asset Clearing account used in NetAsset is a separate balance-sheet account designated to receive the cost of assets pending full processing.
• The user performing the manual journal entry has sufficient NetSuite permissions to create Journal Entries.

Prerequisites

• A Vendor Bill or equivalent purchasing transaction exists in NetSuite, coded to the Fixed Asset Clearing account used by NetAsset. This transaction is used in the asset creation in NetAsset.
• The NetAsset asset record has been created from the sourcing transaction.
• The NetLoan Loan Type is configured with the appropriate GL accounts, including the Loan Proceeds / Origination Clearing account. Navigate to NetLoan > NetLoan Setup > Loan Types to verify this configuration.

Step-by-Step Process

1. Create the sourcing transaction and generate the asset in NetAsset.

   Enter a Vendor Bill (or other approved purchasing transaction) in NetSuite. On the expense or item line, assign the cost to the Fixed Asset Clearing account designated in NetAsset. When this transaction is saved, the resulting journal impact at this stage is:

   Account	Debit	Credit
   Fixed Asset Clearing Account	Asset Cost
   Accounts Payable (AP)		Asset Cost

   You will use this transaction to create the Asset in NetAsset and NetAsset subsequently moves the balance from the Fixed Asset Clearing account to the appropriate fixed asset account upon asset capitalization. Consult the NetAsset documentation for creating assets and for the specific capitalization entries.

2. Create the Loan record in NetLoan.

   Navigate to NetLoan > Loans > New Loan and complete the required fields, including Loan Type, Initial Balance, Origination Date, and relevant financial terms. Ensure the Loan Type selected is mapped to the correct Loan Proceeds / Origination Clearing account.

3. Generate the amortization schedule.

   On the Loan record, click Generate Schedule to build the amortization schedule. Verify that the schedule reflects the correct term, APR, and payment amounts before proceeding.

4. Generate the Initial Balance Entry.

   Once the schedule is confirmed, run the initial period's loan journals by clicking Run Journals on the Loan record, or process the loan through NetLoan > Process Monthly Transactions > Monthly Loan Transactions. For the period corresponding to the origination date, NetLoan generates a NetLoan Initial Balance Entry. This custom transaction posts the following journal impact:

   Account	Debit	Credit
   Loan Proceeds / Origination Clearing Account	Loan Amount
   Loan Liability - Long Term (Primary)		Loan Amount

   At this point, the Loan Proceeds / Origination Clearing account carries a debit balance equal to the loan amount.

5. Create the manual clearing journal entry.

   A manual journal entry is required to relieve the open AP balance from the Vendor Bill (or other approved purchasing transaction) from step 1 and clear the Loan Proceeds / Origination Clearing account. Navigate to Transactions > Financial > Make Journal Entries and create the following entry for the full loan amount:

   Account	Debit	Credit
   Accounts Payable (AP)	Loan Amount
   Loan Proceeds / Origination Clearing Account		Loan Amount

   This entry represents the recognition that the lender has effectively paid the vendor on the borrower's behalf — the AP obligation is satisfied by the loan proceeds. After posting, both the Accounts Payable balance from the Vendor Bill (or other approved purchasing transaction) and the Loan Proceeds / Origination Clearing account should net to zero.

6. Verify the resulting accounting positions.

   After all entries have posted, confirm the following:

   • The Asset account in NetAsset reflects the capitalized cost of the asset.
   • The Fixed Asset Clearing account balance is zero.
   • The Accounts Payable account balance related to the Vendor Bill (or other approved purchasing transaction) is zero.
   • The Loan Proceeds / Origination Clearing account balance is zero.
   • The Loan Liability - Long Term (Primary) reflects the outstanding loan principal.

Considerations

• The manual journal entry in Step 5 must be dated consistently with the Vendor Bill (or other approved purchasing transaction) and the Initial Balance Entry to ensure the accounting period balances are accurate.
• If the loan amount does not equal the full Vendor Bill amount (for example, when a down payment is made), the AP debit in the manual journal entry should reflect only the financed portion, and a separate payment transaction should be applied for any down payment amount.
• The Loan Proceeds / Origination Clearing account must be the same account configured on the Loan Type record in NetLoan. Navigate to NetLoan > NetLoan Setup > Loan Types and confirm the Loan Proceeds / Origination Clearing account field on the applicable Loan Type.
• Classification fields (Subsidiary, Department, Class, Location) entered on the Loan record will be carried to the Initial Balance Entry. The manual journal entry should use matching classifications to maintain consistent reporting.

Limitations/Callouts

• NetLoan does not automatically link the Loan record to the originating Vendor Bill (or other approved purchasing transaction) . The relationship between the loan and the asset purchase is tracked through the manual accounting process described above, not through a system-generated association between the two records.
• The manual journal entry in Step 5 is a required human action. It is not generated automatically by either NetAsset or NetLoan. Failure to create this entry will leave both the Accounts Payable and the Loan Proceeds / Origination Clearing accounts with uncleared balances.
• If the Loan Type in NetLoan is not configured with a Loan Proceeds / Origination Clearing account, the Initial Balance Entry will fail to post and an error will be returned during journal processing. The Loan Proceeds / Origination Clearing account must be set up prior to running journals.