Asset sale with financing

I sold an asset with financing. So the asset would now be the Note I hold, that goes down every month, as they make principal and interest payments (I think). My question is, if they go delinquent, and I repossess the asset, how would I record that in manager? Or am I doing that wrong? Should I keep the asset as an asset, and the note be an invoice that they are paying?

This is too complex for a simple answer.

Yes, you have substituted one asset—the note—for another—the fixed asset. But the note itself is not a fixed asset because it does not depreciate. It is a straightforward loan asset.

If they default on the loan, you will write it off as a bad debt. See Write off bad debts | Manager. Exactly how you do that will depend on what you do with the repossessed asset, which was security for the loan. Since you already sold it, you probably would not want to bring it back onto your books as a fixed asset. So you will sell it again or scrap it. The details would dictate what accounting records need to be created. Basically, though, anything you can realize out of its recovery would reduce the bad debt write off. You will not be able to determine the correct action until you see what, if anything, happens.

You should definitely not keep the asset as an asset. You have disposed of it. You cannot depreciate it further. You are not using it. You might have created a sales invoice to record the sale, but the sales invoice should be settled from the loan account, not kept around for some lengthy time into the future. Sales invoices are current assets in Accounts receivable. Your loan is a long term asset.