Repositioning interest expense and income

By default, Castaway reports interest expense below the EBIT line of the Profit & Loss report. We took this approach so that the difference between EBITDA and EBIT is clear to readers.

However, some users may prefer to show Interest higher up the Profit & Loss report, often as a part of Direct Costs.

We can achieve this in Castaway by setting up an Interest transfer (similar to a journal entry) from within the loan element. Note that the Interest transfer method can only be applied to Loan elements, and not Bank Accounts or Trade Finances. 

Steps tp reposition the interest expense of a Loan element

1. Create a Cost element to model the Interest Expense in the desired position. Rename it to 'Loan Interest' if you wish.
2. Click on the specific Loan element(s) for which you wish to transfer the Interest from
3. Under the Loan Settings, choose an option from the Expense Transfer Method (many users prefer ‘% of Monthly Expense’ as its more automated)
   
   
4. Click the Transfers tab (Next to Notes and properties), then click on Add Transfers > ‘TRANSFERS (REPORT CURRENCY) - Transfer Expense to Costs’
   
   
   
   
5. From the Select Transfer Destination dialogue, choose the Cost element you want to move the Interest expense to, then click OK. In this case, we're transferring to the Loan Interest Cost element we created in Step 1.
   
   
   
   
6. Enter the amount of monthly Interest expense to be transferred to the destination Costs element. The data required depends on the Transfer Method chosen in Step 3 above. Note that it is possible to create multiple transfers out of a single Loan element.
   
   
   
   
7. The Profit & Loss report will now show the Interest expense being transferred out of the Interest expenses area and up to the Costs element
   
   

To reposition Interest Income the same way as the Interest Expense, repeat the above steps but instead of adding a Cost element in Step 1, add a Sales element to transfer the Interest Income from the loan asset. 

Download a sample file for repositioning the Interest Expense via Transfers here: