How to set up a note receivable?

To set up a note receivable, first, create a formal written agreement detailing the terms, including the amount, interest rate, payment schedule, and maturity date. Record the note in your accounting system by debiting the note receivable account and crediting the cash or sales account, depending on the nature of the transaction. Ensure to monitor the note for payments and interest accrual, adjusting your records as payments are received. Finally, maintain proper documentation for future reference and audit purposes.