Employee, Salary Advances / Loans, Advance/ Loans Recovery

Hi Everyone,
I am using the Desktop Version of Manager to try the application and want to upgrade to the cloud version if it best suits my accounting needs. I am struggling with Employee Salary Advances / Loans treatment in the manager. If anyone can help me with it, I would be really grateful.

Before explaining my issues, let me clarify, I have read a fair amount of topics regarding this issue and none of them seems to resolve it.

I have multiple employees, for convenience let’s assume it’s 2. Name, Mark & John.

  1. Mark’s Salary - USD 2000 pm
  2. John’s Salary - USD 3000 pm
  3. Salary payable on the 30th of each month.
  4. Mark Took a Salary Advance of USD 1000 on the 5th of April to be adjusted on his next payday (30 April).
    5 John Took a loan from the company of USD 5000 on 1st April to be deducted from his salary in installments of USD 500 pm until it is adjusted. His first deduction will be on 30th April.

My Questions?
How to treat these transactions while maintaining an employee account. So that, at any point in time, we could see, Mark took this Advance and how it was adjusted, and John Took this Loan at what date, how much he repaid with salary deduction, and how much is left under their name on the Employee List.

My Issues:
I have tried several methods but found issues with all of them. Please have a look on them:
Method 1:

  1. I Have Created Employees: Mark & John.
  2. Created an Expense A/C called ‘Salaries & Wages’
  3. Created a Payslip Earnings Item “Regular Salary” and Attached it with Expense A/C called ‘Salaries & Wages’
  4. Created a Current Asset Account called ‘Salary Advances/loans’ (As they are assets for the business)
  5. Created a Payslip Deduction Item "Deduction for Salary Advances/loans’ and attached it to the Current Asset Account called ‘Salary Advances/loans’.

In this method, There is no way to record the advances / Loans under a particular Employee. Because in payment when you choose the Current Asset Account called ‘Salary Advances/loans’ it doesn’t give you the employee list. However, It gives you the employee list if it’s an Employee Control A/C. Again if it’s a Control A/C, then it cant be attached to a Payslip deduction Item. Hence the recovery cannot be directly deducted from the asset A/C through a payslip.

I assume, If we could attach an Asset Employee Control A/C to a payslip deduction item, it would work. but since we can’t, please advise me if there is any other option that I am missing.


Why aren’t you just using the built-in Employee clearing account (and each employee’s subaccount within it)?

Hi @Tut,
I have already tried using the built-in Employee Clearing A/C. We can issue the Advance/Loan payment through the Employee Clearing A/C with particular employee sub-accounts. it records the advance/Loan as an asset to the business. no problem. However, We cannot attach this Employee Clearing A/C with the Payslip Deduction Items so that when we deduct from the payslip for these advances/loans, it reduces the amount of advance/loans remaining from that employee.

Moreover, Even though we create a separate expense A/C named “Recovery for Advance/Loans” and attach it to the Payslip Deduction Item (As suggested by some of the earlier discussions on related topics). After payment of the payslip, The Asset Amount i.e Employee Clearing A/C amount which is the advance remains the same.

Hope I was able to explain my difficulties.

You are misusing payslip deductions. Those items are not for repayment of advances. Deductions are for funds set aside to be paid to an outside entity, such as income tax withholding. For repayment of advances, you should be using negative earnings items.

@Tut are you sure this is the correct way of handling employee advance repayment. If deducted from his earnings on the payslip(as a negative earning line), his total earning is going to be less and already paid advance too will be in the employee account as debit balance.


  1. Create an ordinary account and put it under assets. You can name it Employee loans and Advances.

  2. When recording loans.

Dr: The Asset account
Cr: The Cash/Bank account

  1. When collecting the loan back (you do that on payslips). Create a payslip deduction item and link it to the employee loans and advances account. You can call it Repayment of Loans and advances.

Now the account will keep all the transactions to all your staff who come for loans and advances. You can create 2 accounts. One for loans and the other for salary advance. You will then create two payslip deduction items as well.

  1. You can easily use Custom Reports to show the debit and credit entries in the asset account(s) for every specific employee. I don’t have my computer with me at the moment, I would have created an example custom report for you. The report can show you the payment to the specific staff (debit on the account) and the collection from the staff (credits on the account).

The important thing is that the Custom Report allows you to generate transactions history for every staff. And the asset account(s) helps you to know the amount receivable from the staff.


Thank you @Abeiku ,
This is what I’m currently doing for my business.
But when I looked at this one

I thought I’m doing something wrong. And I tried to put all the transactions from “Employee Advances” assets account to “Employee clearing account”. But it gave me negative impact. Now I’m going to move it back to the previous state (not yet)

I hope this idea from you may solve this problems;

Can you please explain the transactions? what would be the entries for paying the Advance/Loans and what would be for recovering/dedutions from payslips? Thanks.

Hi @Abeiku ,
Thanks for your informative response. I have a couple of doubts though.
In Step 2 of your method, How do we record that this loan is taken by this employee for say, Mark, and the Next day another Loan is taken by John? How do we record their Names? Is it in the description or there is any other field to that?

In Step 3 as well, the same question, as the Employee loans and Advances. A/C will be an ordinary account, all the loan amounts will be added as one merged amount. how to mention this employee deducted this much amount from his loan?

I assume It will be down to Custom Reports as you mentioned in Step 4. I would be really grateful if you can give me some screenshots or step-by-step methods of doing that.

Again, Thank you very much.

I think exactly the same!

this may not yield the correct result. You will be reducing your Expense Amount while what’s needed is to reduce the advances/loans which is an asset account.

Earning = Revenue/Expense Account.
Deductions = Asset/Liabilities/Revenue/Expense Accounts.

We use payslip deduction item because it’s the only option. How it’s going to be misusing?

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It works.

See Section of Example Custom report:


The Report is grouped by contact so Journal affecting these accounts will not show under their contact (employee).

The highlighted transaction is an example where a journal entry was used to write off the balance for Eunice Golightly The difference between her debit and credit is the journal entry highlighted (271.66). I haven’t figured out a Grouped By choice that will resolve this. So you can decide not to use journal entries for staff loan accounting. You can move the balance around with a special cash account for that purpose if there is a need.

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Finally, you can also set up a report that shows transactions for only one staff.

The filter will be

"Where/Employee/Name is/John Doe.

Also, make sure you use the employee names as recorded on the system in the Contact field when making payment or receipt transactions for them.

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The above is better.

It lists the transactions chronologically.


@Abeiku .
Thank you so much for your kind support. This method works fine. I will use it from now.
However, Having able to attach the Employee Control accounts / Employee Clearing Accounts to the payslip deduction item might be an easier solution if Manager Developers consider implementing it.
Thanks to everyone as well to participate in this topic.

Do a journal entry for each employee with a debit for the loan and a credit when it is repaid. That way you will have a record of all the transactions.

Hi @Abeiku my question is, when recording the transaction for the loan or advance do you use payments and if you do how do u link it to the specific employee account. Or do you use a payslip to record the payment of the advance

Before posting on the forum you are advised to first look into the guides. The solution is at Pay employees | Manager

I just read this post and there is a related discussion here, should I exit go and scroll through the forum? If there is a related query why cant it be made here

I did not say scroll through the forum but read through the guides first as per rules at FAQ - Manager Forum because it answers your question.

From the rules:

How can I get help quickly?

Remember that other Forum members, moderators, as well as Manager’s developers, are scattered around the world. The person who can answer your question may be in a different time zone. Help yourself by following two simple pieces of advice:

  • Read the Guides first. They explain many features and functions of Manager. They include helpful illustrations and examples. We are always adding new ones and updating existing ones as capabilities of the program improve.

So rather than browsing and posting on the forum you should first solicit the guides.
[ Added: to follow the guides was also advised to you in another topic Adding Customers with outstanding debts to manager.io - #2 by Abeiku and also Login for new restricted users - #2 by lubos ]

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