Payroll - Employee Loans

Employers may choose to make available loans to employees for a variety of reasons. Often the loan agreement asks for repayments to be made through deductions in the payroll system. An employer is responsible for:

The payroll provides a system to deal with the administration of loans through the payroll.

Setting up a Loan

Take details from the loan agreement between the employer and employee. Loans are entered in the Payroll/Tax details for an employee, accessed via the Payroll menu.

Payroll - Manage Employees - Action Box - Loans

Enter a unique name and description for the Loan in the Element Name field From the Account dropdown select the nominal ledger account in which the loan in recorded.

Enter the Amount that is to be deducted at each payroll run. Enter a Starting Balance. Enter any amount that has already been paid to date by the employee. As deductions are made at each payroll run, this figure will be updated and display the total amounts deducted to-date. Enter the balance to pay as the amount still to be paid off the loan. Usually this is starting balance less paid to date. As deductions are made at each payroll run, this figure will be updated and display the balance still to pay.

Calculation of the amount of the deduction

The system automatically records the correct amount of deduction, from the next payroll run after the start date. All reports reflect the deduction appropriately. The system automatically stops deductions when the Balance to Pay reaches zero.


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