How to record an asset bought on hire purchase

1 New bank account for the hire purchase agreement

Set up a new bank account by navigating to the 'Banking' tab at the top of the screen and selecting 'Bank Accounts' from the drop-down menu.

From the 'Bank Accounts Summary' page, select 'New' and choose 'Bank Account'.

Call it something like "Computer Hire Purchase" and don't tick either the 'This is a Personal Account' or 'Make this my Primary Account' boxes.

If you're buying several different assets on hire purchase, set up a new bank account for each one.

2 Enter the asset as a bill

Enter the asset as a bill to one of the capital asset categories, then mark that bill as paid from the new bank account you set up at step 1.

I've bought a computer on hire purchase that cost me £1,200 + VAT, so I would enter the computer as a bill, using the category Computer Equipment Purchase (preferably with a copy of the hire purchase agreement attached).

You can upload a scanned image of the agreement by choosing 'Select a file' from the 'File to attach' area. If you have a receipt, invoice or bill, saved as an image file (PNG or JPEG) or PDF on your mobile device or as an email attachment, you can import it into your 'Files' area using the FreeAgent mobile app. To upload an imported file, select 'Choose from saved files' instead and follow the instructions.

3 Enter bill payment in the Hire Purchase account

I would then set up a bill payment from the hire purchase bank account for that computer, and make the payment in full with a manual bank transaction dated the same day as the bill.

Remember not to use the 'Add a manual payment' button when you're entering the bill payment, as you won't be paying it from the primary bank account.

4 Paying off the hire purchase loan

Each month I'm paying £45.20 to the hire purchase company.

I'll explain this in my main bank account in FreeAgent as a Transfer to Another Account, the other account being the hire purchase account, like this.