Interested in learning about debt schedules and what should be included? You’ve come to the right place. In this article, we will explain the importance of a debt schedule and hear from nine subject matter experts about what needs to be included in one.
What is a Debt Schedule?
A debt schedule is a financial tool used primarily in corporate finance and financial modeling to outline the details of a company’s debt obligations over a period of time. It typically includes information such as the timing and amounts of principal and interest payments due on outstanding debt.
Key components of a debt schedule include details about when the debt was issued, such as the type of debt instrument (e.g., bonds, loans), interest rate, maturity date, and any associated fees or costs. The schedule also outlines when principal repayments are due, which includes the repayment of the borrowed amount over the life of the debt instrument.
Moreover, it specifies the timing and amount of interest payments to be made on the outstanding debt, typically calculated based on the outstanding principal amount and the applicable interest rate. The schedule usually summarizes the total amount of debt outstanding at any given point in time, factoring in both principal repayments and any new debt issuances.
Some debt schedules may include an amortization table, which breaks down how much of each payment goes towards interest and how much goes towards reducing the principal balance. Additionally, if applicable, the schedule might track compliance with any debt covenants or conditions imposed by lenders.
By analyzing a debt schedule, stakeholders can gain insights into a company’s cash flow requirements, debt servicing capabilities, and overall financial health. It serves as an essential tool for financial planning, budgeting, and assessing a company’s ability to meet its debt obligations.
What Needs to Be Included in a Business Debt Schedule?
Confused about the factors you absolutely need to include in your business debt schedule? We spoke to founders and experts with answers for you so that you don’t panic!
Read on to see the 9 top factors people believe you need to include in your business debt schedule:
- Interest Rates
- Collateral
- Key Agreement Clauses
- Leases
- Notes Payable
- Due Dates and Maturity
- Bookkeeping and Forecasting
- Total Amount of the Debt
- Repayment Terms
Interest Rates
Paying off debt is never as simple as watching the amount owed decrease by the amount of each payment made. How much of each monthly payment goes towards the interest and how much goes towards the principal? You should know these amounts. This is why interest rates should be listed on debt schedules. They show the total amount of interest you’ve paid over time and the total amount that still needs to be paid off.
Henry Babichenko, European Denture Center
Include Collateral
To secure a business loan, one typically must put up some type of collateral –– generally property. Since collateral is an important component of debt as a way to minimize the risk to the lender, you should include it in your business debt schedule. The collateralized property can be seized by the lender and sold to recoup any outstanding losses if you are unable to repay your debt. Including collateral on a business debt schedule also helps you to stay on track, remember what’s at stake, and the reason for your loan.
Vicky Franko, Insura
Key Agreement Clauses
Debt schedules are usually developed with the sole focus on financial mathematics and the time value of money. This is a good start, but without presenting all agreement clauses, we fail to capture the full magnitude of business implications. Adding concise notes to the debt schedule spreadsheet allows managing scenarios and setting accurate risk controls. It can also shield the business against late payments penalties, loan termination, and many cash flow and bureaucratic hurdles.
Michael Sena, SENACEA
Leases
Every business debt schedule should include the business’s leases. That can be things like commercial leases to perform daily operations, company vehicles to get you from point a to point b, and more.
Jonathan Finegold, MedCline
Notes Payable
One thing that business owners must include in a business debt schedule is the notes payable. A note payable is a liability account in which a borrower’s written promise to pay a lender is recorded and these notes state the principal amount of the loan, the date due, and the interest. While notes payable can be very similar to loans or leases, the difference is that notes payable with have a fixed interest rate when written up while a loan or lease could have a variable interest rate. Notes payables are also generally used to purchase commercial buildings, industrial equipment, cars or trucks for your company, etc.
James Burati, 1-800-PackRat
Due Dates and Maturity
A due date is your reminder to pay off a certain amount of debt by a certain time, while maturity is when the total amount of money owed will be paid off completely. Including these dates on a business debt schedule is essential. Including due dates ensures payments are made on time, while maturity inclusion ensures you know when you will finally finish making payments. This combined information helps us keep a strict budget and plan for the future.
Ryan Shallenberger, SEKISUI
Bookkeeping and Forecasting
When you start to create a business debt schedule, your list should include all the applicable details of each debt, including accurate bookkeeping and forecasting. A business debt schedule details how much money will be going out of your business every month to help you set sales goals and forecast projections.
Stewart McGrenary, Freedom Mobiles
Total Amount of the Debt
One thing to include in a business debt schedule is the total amount of the debt. This should include the principal, any accrued interest, and any penalties or late fees that may have been incurred. It’s also important to list the creditor who is owed the money and to provide contact information such as a mailing address or email address.
Claire Westbrook, LSAT Prep Hero
Repayment Terms
Your loan’s term is the time limit that you can use your credit facility with specific monthly installment commitments without incurring penalties. Depending on the type of repayment plan (simple or compound interest), each month’s installment will either cover all accrued interest or additional principal payment over the previous month’s payment. So knowing what the loan term is will help you determine how much more you need to pay off your debt wholly.
Marc De Diego Ferrer, MCA Assessors
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