Directors Current Account / Directors Loan Account

Guidance:

A directors loan account (or directors current account) is usually more straightforward when the balance is due to the director from the company (a credit balance).

We should keep a closer eye on directors loan accounts when they are a loan from the company to the director (a debit balance).  Interest should be charged if the loan is not repaid quickly, as HMRC would view this as a benefit for the director (as they are effectively receiving an interest-free loan otherwise).  We should also keep a close eye on the volume of transactions going through this account, as a director should not routinely be spending the company's money on personal items and may require advice from the partner or tax teams on better planning for their spending.

For all DLA nominal reconciliations, you should use the DLA with transaction detail template and not the Directors Current account template (which does not feed the Document "DLA transactional detail (text document)"). 

Step-by-Step:

The help guide from Silverfin on how to use the template itself is here

Explanation:

A directors loan account (or directors current account, both are the same) is when a director has either loaned money to or borrowed money from the company, without express repayment terms like a traditional loan would attract.

Example:

A director loaned the company money to buy a piece of equipment to start with, then due to tight cashflow she also adds more money to the company.  In due course, she will take repayment as and when the cashflow of the company allows.