Recording staff loans and advances

When a staff member borrows from the institution, record it as a loan so the repayments come off their salary automatically and you always know what is outstanding. A loan is split into monthly instalments, and each month's instalment is deducted on that month's salary slip.

Before you start

• The staff member must have an active staff record.
• Agree the amount, number of months and start month with the staff member in writing, under your own policy.
• You need payroll permissions to issue and manage loans.

If you do not see this option, it may not be included in your plan or your role may not have permission; ask your administrator.

Steps

Issue a loan

1. Go to Payroll > Staff Loans.
2. Click Issue Loan / Advance.
3. Choose the Staff Member and enter a Title, for example "Medical loan, March".
4. Enter the Amount and the Tenure (months).
5. Leave EMI (auto if blank) empty to split the amount evenly, or enter a fixed monthly instalment.
6. Set the Start Date, which decides the first month of recovery, and save.

Manage the schedule

1. In the loans list, open Schedule for the loan. You see each month, the amount and, once deducted, the slip it was recovered on.
2. Use the actions on a pending instalment as needed:
   • Mark Paid if the staff member repaid that instalment in cash.
   • Postpone to move the instalment to after the loan's last month.
   • Waive to forgive that instalment. It is written off.
3. Use Pay Off Remaining when the staff member settles the whole balance at once.

Good to know

• Recovery is automatic. When you create monthly payroll, instalments due that month are added to the slip as one loan recovery deduction. You do not need to add them by hand.
• Create payroll after loan changes. Postpone or waive an instalment before you create that month's payroll, so the slip is correct first time.
• Reversing a loan. A loan that has already been recovered on salary slips cannot be reversed until the loan recovery lines are removed from those slips. This keeps the loan balance and the payroll in step.
• Salary advance or loan? To pay part of next month's salary early, you can instead create an Advance Salary slip under Payroll > Create Salary. Use a loan when repayment spreads over several months.
• Staff can see it. The staff member sees the loan, recovered and outstanding amounts, and the instalment schedule under My Loans in the staff portal.
• Accounts. If you use the accounting module, loan issues and recoveries are posted to your books. Check with your accountant how they should appear.

Common questions

What happens if a staff member leaves with a balance outstanding?

The balance stays on the loan. Settle it with Pay Off Remaining, mark instalments paid if they are repaid in cash, or waive them, according to your policy.

For an overview, see Payroll.