When a company draws on an overdraft facility linked to a bank account without setting up a separate loan account, the bank account will show a negative balance at the end of the period. The company therefore records the use of the overdraft facility in an account within account group 22 – Cash in Bank Accounts (e.g., 221 – Bank Accounts).
However, it may happen that this account shows a credit (passive) balance on the balance sheet date — i.e., the last day of the accounting period — which means the company is using short-term external financing, reported under the line "C.II.2. Liabilities to credit institutions" on the liabilities side. Below, we will show you how to handle this in Flexi.
First of all, account 221 must not be defined as an asset account in the chart of accounts. If you have it defined that way, right-click on the "Account type" field and select "Clear field".
The Account type field will therefore be empty in this case.
This ensures that the account will be offered when generating the balance sheet, where you will be able to choose whether it should appear on the assets or liabilities side.
You can now proceed to generate the balance sheet via Accounting – Accounting Outputs – Balance Sheet, where you click Recalculate:
Account 221 will now be presented, where you can select the liability line P C.II.2. Liabilities to credit institutions.
The account will now be reflected on the liabilities side of the balance sheet, preventing the entity's assets from being understated.
