A Netsuite Amortization schedule is consisted of the loan repayment installments under a complete timely payment to a lending agency. The amortization schedule runs unless the loan is not completely paid off. An amortization schedule clearly mentions amount of principal as well as interest compounded under the schedule.
Understanding NetSuite Amortization Schedule and Its Importance!
The process of Amortization is mostly used by the lender and borrowers for the systematic payment of the loan installments. It is useful and instrumental in cases where the payoff dates are already known and are been agreed between a borrower and lender. It is mostly implemented and used for paying off mortgage and car loans.
The benefits offered by amortization schedule an easy way to calculate a payment of the loan without depending upon an online amortization schedule or calculator. A normal brief of an amortization schedule is consisted of scheduled payments, interest expenses and principal repayment.
Some Important Characteristics of NetSuite Amortization Schedule
The biggest benefit offered by an Amortization Schedule is saving on the interest over the life of the loan and own the asset for which loan has been taken. A borrower can easily achieve this task by choosing the shorter amortization periods over the longer one. More over the shorter-term loans comparatively are offered at discounted price over the longer term loans and are quite a good option for the borrower that can handle higher monthly payments without any inconvenience, however, a borrower should be in situation to accomplish that goal easily and in a convenient manner.
Netsuite Amortization Schedule enables these features by and through following means and measures.
- Enabling of the Amortization Features:
Step2: Enable Accounting Period Feature
- After the enabling of the Amortization features it enables a NetSuite buyer to record the overall general ledger impact over the item purchase and expenses charged during the different future periods. However, for the proper functioning of the system the accounting features period should be activated before the enabling of the Amortization features. Further the process of amortizing expenses is as similar as to deferred revenue recognition methods. For a detailed study of it a seller should go through revenue recognition and advanced revenue management in NetSuite Amortization features.
- Creation of Amortization Templates:
The next important process to the Amortization enabling is adding of a default account. It is added into the chart of account as required by the system. After the enabling of Amortization the next important step after setting up the Amortization features is creation of Amortization templates. The template helps to post expenses from related items and expenses. The each template offers an extensive set of features to choose from the different standards including a lenders specific terms, the time period and initial amount to be recognized. An amortization template can be set based upon an item record. The other important accounting based terms associated with Amortization Template include expense line on the transaction record and a deferral account.
- Amortization Schedules:
This feature is enabled for vendor bills and credits related to the associated amortization templates. Amortization schedules offers for creating of journal entries and see their impact over the amortized items and expenses.
- Amortization Journal Entries:
- They are derived in NetSuite through a user interface where a seller can generate all the journal entries for the amortization during a selected posting period and duration. A seller can further connect am amortization template to a manual journal entry to develop an amortization schedule. With the project management feature enabled a seller can use amortization schedule to recognize expenses as much as a project get completed.
Benefits of NetSuite Amortization Schedule
No, doubt NetSuite Amortization Schedule accomplishes a simplified loan payment process for a lender as well as borrower. The overall benefits offered by it includes
- An easier and simplified Tax deduction for the current tax year without paying cash for the asset.
- Present opportunity to increase one’s wealth by increasing income and assets on the balance sheet.
- Decreases the ratio of the taxable income during an asset’s lifespan.
Thus, it is clear that NetSuite Amortization Schedule is quite effective in as easier loan repayment including different accounting features of NetSuite template.