An amortisation schedule is a table showing each periodic payment on a loan, broken down into principal and interest components, with the remaining balance after each payment.
An amortisation schedule details how each loan repayment is split between principal reduction and interest charges over the life of the loan. In the early years of a loan, a larger proportion of each payment goes toward interest. As the loan progresses, more of each payment reduces the principal. Understanding your amortisation schedule is important for cash flow planning, interest expense projections and balance sheet management. The principal portion reduces your liability on the balance sheet, while the interest portion is an expense on the P&L. For bookkeeping purposes, each loan repayment must be split into its principal and interest components. SortBooks can suggest the right accounts for loan repayment transactions, but splitting principal and interest against the amortisation schedule is still done in Xero.
SortBooks helps with the bookkeeping behind amortisation schedule by connecting to your Xero account and using AI to suggest the right account for transactions sitting in catch-all accounts, learning from your own past coding. Instead of fixing amortisation schedule by hand, you review each suggestion, approve it, and SortBooks updates Xero, GST code included. Then ask the AI CFO about your numbers, using live Xero data.
Interest expense is the cost of borrowing money. It includes interest on business loans, overdrafts, credit cards and any other form of debt used to finance business operations.
A liability is a financial obligation your business owes to another party. Liabilities are listed on the balance sheet and include loans, accounts payable, tax payable and accrued expenses.
Cash flow is the movement of money in and out of your business. Positive cash flow means more money coming in than going out. It is often considered more important than profit for business survival.
The balance sheet is a financial statement that shows your business's assets, liabilities and equity at a specific point in time. It follows the equation: Assets = Liabilities + Equity.
Connect Xero, check the AI's suggestions and approve the changes. SortBooks updates Xero for you.