Loan Management in Odoo 18
Introduction
Odoo 18 Accounting simplifies debt tracking by enabling companies to associate loans with their corresponding business assets. It automates tasks such as journal entries, interest calculations, and payment schedules, reducing manual effort and ensuring accuracy. Businesses can set up amortization schedules, allowing Odoo to handle monthly adjustments effortlessly. With detailed reports on loan performance and upcoming payments, companies can enhance financial transparency and make well-informed decisions with ease.
Create a New Loan
To create a new loan: navigate to Accounting ➔ Accounting, then select Loans.
In the creation form, begin by specifying the Loan Name, followed by the Amount Borrowed, Interest Rate, Loan Date, and Loan Duration. The Outstanding Balance will be filled in automatically.
Amortization Schedule
Amortization Schedule is a detailed breakdown of loan payments, showing how each payment is divided into principal and interest components while displaying the total amount owed over the loan term. It provides a clear view of the repayment structure, ensuring accurate tracking and transparency.
In the Amortization Schedule tab, users can manage the schedule using three flexible options:
Importing from a File: Upload a supported file containing the schedule details.
Automatic Calculation: Use the Compute button to generate the schedule based on input values such as the Amount Borrowed, Interest Rate, and Loan Duration.
Manual Entry: Add lines individually by clicking the Add a Line button and entering the required details.
Amortization Schedule Calculation Using Compute Button
Clicking the Compute button opens a new window, as shown in the screenshot below. You can enter the Loan Amount, Interest Rate, Loan Term, Start Date, and Payment. Additionally, select the Compounding Method to preview the amortization schedule based on the chosen method.
The preview displays the Date, Principal Amount, Interest, Payment, and Balance. Click the Apply button to add this data to the Amortization Schedule. The Interest, Duration, and Outstanding Balance are then automatically updated based on the selected computation method.
Once the Amortization Schedule is calculated and the loan is confirmed (by using the Confirm button), the stage will change from Draft to Running.
After the loan is confirmed, Odoo automatically generates the necessary journal entries, providing a comprehensive and forecasted view of upcoming due dates. The process is fully automated, including the reclassification of principal amounts into long-term and short-term categories.
For each line of the amortization schedule, Odoo generates the following entries:
A payment entry on the same date, which:
Debits the principal amount to the long-term account.
Debits the interest amount to the expense account.
Credits the payment amount to the short-term account, representing the amount to be withdrawn by the bank.
A reclassification entry on the same date, which:
Debits the total of the principal amounts due in the next 12 months to the long-term account.
Credits the same amount to the short-term account.
A reversed entry the following day, which simply reverses the previous reclassification entry.
This process ensures that the short-term account is consistently updated with the current due amounts each month.
The generated journal entries can be viewed in the Posted Entries smart button.
Once all payment entries are posted, the loan's state automatically changes to Closed.
It can also be manually closed by clicking the Close button. A wizard will appear, prompting you to select the date from which the loan should be closed, and all draft entries after this date will be deleted.
Loans Analysis Report
The report on ongoing loans can be accessed by navigating to Accounting ➔ Reporting ➔ Loans Analysis. By default, it shows the principal, interest, and total payment for each year over the loan duration.
Conclusion
Odoo 18's loan management feature provides a streamlined and automated approach to handling loans. It simplifies the process of generating journal entries, reclassifying principal amounts, and delivering accurate financial insights. With its flexibility in loan configuration and reporting, businesses can efficiently manage loans, ensuring financial transparency and control.