Loans

What this module is for

Most factories carry borrowings in more than one shape at once: a machinery term loan being repaid by EMI, a working-capital cash credit line that rises and falls every week, and perhaps an overdraft against property. Tracked in a spreadsheet, these drift — the interest split gets estimated, the closing balance stops matching the bank statement, and the auditor asks questions at year end.

The Loans module removes that drift. Each loan gets its own sub-ledger account in your chart of accounts, so the general ledger itself carries the outstanding. The EMI schedule is computed on a reducing balance, and each payment automatically splits into principal (reducing the loan) and interest (hitting Interest Expense). You never decide the split yourself.

Who typically uses it: the accounts team records payments day to day; management watches the outstanding and overdue tiles; the auditor reads the ledger trail it produces.

Where to find it

• Top navigation: Assets & Loans → Loans
• Accounting Home: the Loans tile, described as “Loan register + EMI schedule + Pay”
• If any EMI is past its due date, Accounting Home also shows a warning card — “Loan payments past due. Pay or reschedule.” — with an Open Loans button

There are three screens in total: the loan list, the loan detail page you reach by clicking any row, and the Add Loan form.

Choosing the right loan type

The Type dropdown offers three choices, and the choice changes the entire behaviour of the loan — so it is worth getting right the first time. There is no edit screen to change it later.

Term loan

A fixed amount borrowed once and repaid in equal monthly instalments. Choosing this gives you a principal, a tenure in months, and a full EMI amortisation schedule generated at creation. The money is treated as arriving immediately, so the create button reads Create + disburse.

Cash Credit (CC) and Overdraft (OD)

Revolving facilities. You are sanctioned a limit and draw against it as needed, so there is no instalment plan and no EMI schedule — the detail page states plainly that “No EMI schedule for revolving facilities.” Instead of principal and tenure you enter a Sanctioned limit and a Drawing power.

Critically, creating a fresh CC/OD facility posts no accounting entry at all. A sanction is not borrowing — nothing has moved yet. The button reads Create facility, and you pull money later with the Drawdown action.

Creating a new loan, step by step

Every field on the Add Loan form

Onboarding an existing loan

When you start using OEMup you will almost always have loans that are already part-way through their life. Selecting Existing loan (already running) handles this properly instead of forcing you to fake a disbursement.

The form changes to match: Principal becomes Current outstanding, Tenure becomes Remaining tenure (months), and the disbursement mode disappears entirely. Two extra fields appear — Original principal, kept purely for reference, and an optional Next EMI due date that pins the first instalment exactly where the bank expects it rather than one month after your go-live date.

No money moves. The outstanding is brought on-book with an opening-balance journal that debits Opening Balance Equity and credits the loan, and a fresh EMI schedule is built off that outstanding. The loan is then tagged Existing loan · onboarded <date> on its detail page so the origin is never ambiguous.

Reading the EMI schedule

For term loans the schedule is generated the moment the loan is created, one row per month, using the standard reducing-balance EMI formula. The first instalment falls one month after disbursement unless you pinned a date while onboarding.

Each row shows the split for that month: Opening balance, the Principal and Interest components, the Total EMI, and the Closing balance. Interest is calculated on the opening balance, so early EMIs are interest-heavy and later ones principal-heavy — exactly as your bank's own statement will show.

Each row carries a Status — PAID, PENDING or OVERDUE once the due date has passed — and an Action column with a Pay button.

Recording repayments and other actions

Paying an EMI

Click Pay on the relevant row. The dialog shows that instalment's principal, interest and total, along with the live balance of the linked bank so you can see the money is actually there. Set the Payment date — note it defaults to today, not the due date, so change it if you are recording a payment made earlier — and optionally override the bank. Paying the final EMI closes the loan automatically.

Change rate

For floating-rate loans that reprice, or any rate correction. Enter the new rate, the effective date, and choose how to re-amortise: keep the tenure and let the EMI change (the usual choice), keep the EMI and let the tenure change, or adjust the last EMI only. Instalments you have already paid are frozen and untouched — only pending and overdue rows are rebuilt. Every change is written to a Rate change history timeline on the detail page.

Reschedule

Keeps the rate but stretches or shortens the remaining tenure, solving for a new EMI. Like a rate change, it posts no accounting entry and is logged in the same timeline.

Prepay

A part-prepayment out of surplus cash. Enter the amount and payment date, and choose whether to keep the EMI and finish earlier (the usual reason for prepaying) or keep the tenure and reduce the EMI. The payment is posted and the remaining schedule rebuilt. If you try to prepay the entire outstanding, the system will stop you and point you to Foreclose instead — which is the correct instrument for settling a loan in full.

Foreclose

Settles the loan completely and early. You can add any foreclosure interest or charges the bank levies, which post to Interest Expense alongside the principal settlement. All remaining instalments are cancelled but retained for audit, and the loan moves to FORECLOSED.

CC/OD actions

• Drawdown — pulls funds from the facility into a bank account. The dialog shows your sanctioned limit, current utilisation and available headroom. Exceeding the drawing power produces a warning that the bank may reject it, but does not block you.
• Repay line — pays money back into the facility, capped at the current utilisation.
• Accrue interest — posts the month's interest on the average utilisation. Enter the period as MM-YYYY; you can override the rate, or type the bank's exact figure when their debit differs from the computed one. Re-running the same month does nothing, so it is safe to repeat.

What gets posted to the ledger

Every loan is given its own sub-ledger account under a parent head chosen from its type and security, so borrowings never sit in one undifferentiated lump:

Interest always posts to 125001 Interest Expense, and opening balances to 107003 Opening Balance Equity. The full picture:

Each entry carries a readable narration in the day book, such as “LOAN0001 EMI #3” or “LOAN0001 interest for 05-2026 on avg util ₹X”. Loans are numbered LOAN0001 onwards, and the prefix is configurable in your numbering-format settings. Every posting is transactional — if any part fails, the loan, its schedule and its ledger entries all roll back together, so you never end up with a half-created loan.

The loan list and what the statuses mean

The list gives you four summary tiles — Active loans, Total principal, Total outstanding and Overdue EMIs — above a grid showing each loan's code, lender, type, principal, outstanding, rate, tenure, instalments paid, next EMI date, overdue count and status. A status dropdown filters the view.

Permissions

Access is controlled under Accounting → Loans with the four standard flags:

• View — open the loan list and any loan's detail page.
• Add — create a loan or onboard an existing one.
• Update — every action that moves money or changes the schedule: pay EMI, change rate, reschedule, prepay, foreclose, drawdown, repay line and accrue interest.
• Delete — present in the permission matrix but unused, because loans cannot be deleted.

In practice, give your accounts executive View and Update so they can record payments, and reserve Add for whoever is authorised to record a new borrowing.

Frequently Asked Questions

Related

• Fixed Assets & Depreciation manual — often the other half of a machinery term loan
• All module manuals
• Accounting & GST features overview