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Accounting of Interest payment

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Nagarjun

Chartered Accountant - Job

37 Points Posted on 24 July 2021

Hi all,
01 query.

My company is arranging buy now pay later financing to customers through online platforms.

Financier will pay transaction amount to retailer on date of sale.

My Comlany have to repay loan and interest to financier on due date. It is a zero rate interest to customer, wherein we will be collecting only sale amount from customer if honored by customer on due date.

Please advice nature of accounting for interest payment to financier in our books (loan will be in the name of customer). And Financier will not issue any invoice as the same is GST exempted.

Thanks in advance.

Replies (2)

Quick Summary

This discussion explores the accounting treatment for interest payments when a company facilitates 'Buy Now, Pay Later' (BNPL) financing for customers. The financier pays the retailer upfront, and the company repays the financier, including interest, on the due date. Customers pay only the sale amount, with the interest being zero-rate for them. Advice is sought on how to record these interest payments in the company's books, especially as the financier does not issue GST-exempt invoices.