Overview:
If your business is approved for financing by Settle, you’ll be able to finance qualifying bills. Through the Amortized Loan product, Settle will pay your vendor upfront, and you’ll repay Settle the financed amount in 30-180 days plus a financing fee.
The Amortized Loan differs from our traditional Extended Payment Term (EPT) product in that you will make monthly installment payments comprised of principal and interest.
Accepting an amortized loan shifts your financial liability from your vendor to Settle. In order to ensure your connected accounting software stays up to date, we adjust your accounting ledger to reflect this shift in liability.
The Sync Process:
Configuration
New Account:
When you connect with NetSuite (see Getting started with NetSuite), Settle will automatically add a Settle Loans Payable account to your NetSuite Chart of Accounts. This is a Current Liability account, used to represent your balance owed to Settle due to financing and subsequent principal repayments.
Settings:
Once NetSuite has been connected, map the following two accounts (Settings > Accounting):
Settle finance fees - We sync all financing-related fees paid to Settle to this account. You should map to an account like Interest Expense.
Settle loan principal - We sync all transactions that increase or decrease your financing-related liability to Settle (minus fees) to this account. We automatically map it to the Settle Loans Payable account that we create, but you can change this if you wish.
How it Works:
This section shows how each step in the process will be synced to your NetSuite account, using an example.
(For a high-level summary of the events involved, see this help doc.)
Step 1:
A Bill from The North Face due on 9/1/2022 is uploaded to Settle. The Bill is synced to NetSuite.
Date | Account | Vendor | Amount | Object Synced to NetSuite |
9/1/2022 | Debit (Dr.) Office Supplies Expense | The North Face | $1,000 | Bill |
| Credit (Cr.) Accounts Payable | The North Face | ($1,000) | Bill |
Step 2:
You decide to finance this Bill on 1/1/2022.
Since Settle paid the original bill on your behalf, you now owe Settle the principal amount [plus financing fees]. We mark the original Bill as paid and create a new liability to Settle.
We create a new Journal Entry to transfer the liability balance that you are financing from Accounts Payable to the Settle Loans Payable liability account (or whichever account you mapped for Settle loan principal).
Date | Account | Vendor | Amount | Object Synced to NetSuite |
1/1/2022 | Debit (Dr.) Accounts Payable | The North Face | $1,000 | Journal Entry |
| Credit (Cr.) Settle Loans Payable | Settle | ($1,000) | Journal Entry |
We link this Journal Entry to the original Bill, reducing the Bill’s balance by the amount being financed
⚠️ If you need to edit this journal entry after it has been linked, NetSuite will unlink it from the original Bill. You will have to manually apply it again (Make Payment > Select the Journal Entry)
Step 3:
Example:
Once you've made your first installment payment, we record the repayment made to Settle. We split the payment into the principal and interest portions based on the payment schedule.
Settle does not create a liability for the owed interest. We only record it as an expense at the time the installment is paid.
Date | Account | Vendor | Amount | Object Synced to NetSuite |
2/15/2022 | Debit (Dr.) Settle Loans Payable | Settle | $500 | Journal Entry |
| Debit (Dr.) Interest Expense | Settle | $25 | Journal Entry |
| Credit (Cr.) Checking | Settle | ($525) | Journal Entry |
You’ll see a repayment journal entry, similar to the one above, for each installment payment. The breakdown of principal versus interest will correspond to your loan schedule.
