Setting up an account for a PC illiterate friend with cash flow problems

I have a friend who has ready cash flow problem that I am more than happy to front knowing I will get it back, I tried to set him as a customer but ended up a little problems with issueing Sales invoices

Is there a way that I purchase his goods and send him an email with a running account so that when he pays whatever it will take off and leave owing as a physical statement so if he visited me with cash I could look him up and get an accurate amount he owes

How you account for this depends on how you are furnishing the money, which you did not make clear. You said he has the cash flow problem, but mentioned your purchasing goods from him. Are you advancing him money as a loan? Is any loan business or personal? If money is actually being advanced, where does the advance come from? Are you just extending credit to him for purchases from you? Or are you possibly buying goods from someone else for him? Whatever the circumstances, it can be accounted for in Manager, but we have to know what those are.

We are just friends but due to life circumstance he lives on a very small inheritance so sometimes bills come in so he needs to attend to these but he also needs small items to e.g. do up his 17th Century farm building etc. I am more than happy to loan him the money personally as a loan without interest but would like to at his request to account for it transparently, so he knows where he is up to so if this info count be sent by email then that would be great . Thanks for your reply

If you are just making personal loans to a friend, they should not appear in any records of a business you own.

Personally, I would keep track of your advances and his payments on a spreadsheet. You can email him the spreadsheet from time to time. Setting up an entire business in Manager just for this hardly seems worth the effort. Just five columns: date, description, advances, payments, running balance.

Nevertheless, if you want to do this in Manager with minimal fuss, don’t issue sales invoices. You are not selling anything to him. You apparently already have him set up as a customer. You could rename Retained earnings as Advances to friend. The balance of that account will be the net of advances and repayments.

If you buy something for him or give him money directly, create a journal entry in which you debit Accounts receivable for the friend’s subaccount and credit Advances to friend by the same amount.

If he makes a repayment, create a journal entry in which you debit Advances to friend and credit Accounts receivable.

Let’s say you buy some materials for your friend for 1,500. Later, he pays you back 375. After making those journal entries, you can print a Transactions type customer statement that would look like this:

It took me longer to set up this example than it would have to build a spreadsheet doing the same thing, and longer to make the entries. The only advantage I see is a preformatted statement. But a spreadsheet would have been just as informative. And there would be no risk of your friend being confused by debits and credits.

@canal92, it would appear from your commentary that every transaction is a “cash” transaction therefore it is really complicating things by trying to convey cash transactions as Customer “credit” transactions or even as suggested Customer “Journal Entry” transactions - just to messy. While a spreadsheet could be an option, Manager itself can provide a much simpler solution.

On the assumption that you managing this friends “loan” within a standalone Manager business then the simplicity is:

1 - Create under the Bank Account tab an account called “Friends Funding “Bank””.
2 - At Chart of Accounts > rename Cash at Bank to “Friends Funding “Bank”” and change group to Liabilities.
3 - Chart of accounts > create an Assets account called “Friends Advances”.

Now the BS will look like this:

Now whenever you purchase / advance on their behalf just do a Spend Money.
Whenever the Friend provides a repayment just do a Receive Money.

To get an accurate amount on what he owes just look at either Friends Advances or Friends Funding “Bank” account balance. To provide a Statement of the running account click on the BS > > Assets > Friends Advances balance and either print the screen or export.

However, if you are advancing from within an existing Manager Business then the process would be slightly different in that you would be using an existing business bank account instead of the Friends Funding “Bank”, otherwise everything else remains the same.

I don’t understand your logic in saying your solution is simpler. You still have 2 accounts involved, whether you use the existing Accounts receivable or a newly created asset account, and whether you post the credit to the existing Retained earnings or a renamed, reassigned Cash at bank.

Moreover, you have miscategorized the money advanced to the friend as a liability. It is not, because @canal92 would not owe it to anyone. Money advanced to the friend is really @canal92’s investment in the “project” of supporting the friend; therefore, it belongs in equity. You could set up new equity account, or move the renamed Friends funding bank control account there. But that just means extra work.

Additionally, one of @canal92’s main desires was to have a physical statement. Using an already-available customer statement, as opposed to drilling down through a “bank” account balance and exporting a transactions list to a spreadsheet would be much simpler.

This all boils down to needing to identify and use two accounts, however you restructure the chart of accounts. If you are going to go through the headache of setting up Manager, you might as well use Accounts receivable (which could be renamed) and have the benefit of the customer statement.

@Tut, I don’t think that I have ever seen a post with so many fake allegations.

It’s noted that you have already edited out your fake claim that 3 instead of 2 accounts were used.
The deleted text “You have 3 accounts involved (Retained earnings will reflect entries, too) instead of 2.”

I never stated or even implied that “my” solution is simpler, so another fake allegation.
If you re-read your own sub-extract quote it clearly states “Manger itself can provide a much simpler solution”, or if you re-read the full statement “While a spreadsheet could be an option, Manager itself can provide a much simpler solution” where it is clearly being put that Manager itself compared to a spreadsheet would be a simpler solution i.e. one computer programme v’s another computer programme.

Not at all, but lets add it to the fake allegations.
When they make the very first advance to the friend, then the payment transaction is “credit” a funding source and “debit” the friend’s Advance account. That “credit” creates a liability balance in the absence of any debit balance to contra it against.

But would owe it to their funding source. When they are make an advance to the friend they are in effect “borrowing” from one of their funding sources, any repayments from the friend would reimburse those “borrowings”.

But not when this directly conflicts with expressly made statement:

  1. I am more than happy to front knowing I will get it back
  2. I am more than happy to loan him the money personally as a loan

Since when have you started advocating that setting up Manager, regardless of the need, is a headache.

As an aside which I will be addressing more seriously in another topic’s response, but some of your recent responses to Users have been increasingly aggressive in tone and are also lowering the standard of the Forum.

When any User provides a topic with the option of a solution, then it’s up to the creator of the topic to accept or reject that offered solution, IT IS NOT your role to negatively nit pick that solution or openly belittle the User for putting the solution forward - especially, as in the case above, when a User has to waste their time defending themselves from your unwarranted misinterpretations and fake allegations.