In business practice, loans between legal entities are widely used, the issuance of loans by enterprises to their employees, founders or third-party citizens. The loan can be provided both free of charge and with payment of interest for the use of funds.
Instructions
Step 1
When concluding a loan agreement, provide for the procedure for calculating and paying interest: at the end of the term, monthly, as the principal is repaid, etc. In addition, discuss the possibility of using the so-called compound interest - adding the amount of interest for a certain period to the original amount of the loan and charging the total amount. This method is more profitable for the lender, but not profitable for the borrower.
Step 2
If the loan agreement establishes the payment of principal and interest in a lump sum at the end of the term, accrue interest monthly using the formula: interest = (loan amount) x (annual interest rate) x (number of days in a month) / 365 (366) days in a year. When calculating, take into account the actual number of days in the year, as well as in each of the months. The starting point for calculating interest is the day following the day of the loan.
Step 3
In the event that the contract establishes a schedule for the repayment of the principal debt, accrue interest as it is paid. In doing so, use the following calculation formula: interest = (loan balance) x (annual interest rate) x (number of days in the period) / 365 (366) days per year.
Step 4
The loan agreement may also provide for a partial refund of funds as the borrower has free reserves for the settlement of loans. In practice, there are cases when a loan is repaid in tranches several times a month or a week. In such cases, it is convenient to charge interest on the balance of the debt daily electronically.
Step 5
Create an Excel spreadsheet with columns: date, amount owed, interest rate, number of days in a month, number of days in a year. Add a summary column "Interest Accrued", write the calculation formula in it, and then copy it for each day. Record the balance of the debt in the table on a daily basis, and at the end of the month add up the automatically calculated interest.
