How do I apply payments to our hire purchase invoice?

Hi Barbara, you'll first need to set up a Fixed Asset and a Loan account to track everything correctly. It is advisable to consult with your accountant before proceeding to ensure these accounts are categorized exactly as they want.

Once you have set everything up, make a Journal entry to record the total value of the equipment and select your loan balance. Next, create an Expense for your first payment, which should include the deposit, administrative fees, and the full VAT amount. This way, it will account for the initial costs. Moving forward, ensure to record your future monthly payments against the loan account to help reduce your debt.

You can visit this article for detailed guidance when applying payments to your hire purchase invoice: Record a Hire Purchase agreement in QuickBooks.

Please let us know if you have any additional questions or concerns by leaving a reply below. We'd be glad to provide further help.