Employee Cash Advances & Payroll Repayment

What an Advance Is

A cash advance (vale, salary advance, employee loan) is money you hand an employee ahead of payday that they pay back out of future salaries. It is not an expense — it is a receivable from the employee — so the books carry it as 1070 Advances to Employees until payroll collects it.

Releasing an Advance

1. Go to HR → Payroll, click Advances beside Compute Payroll, then New Advance.
2. Pick the employee, enter the amount, and the installment per cutoff (how much payroll should deduct each pay period). The page shows how many cutoffs it will take.
3. Set Deduct starting — the first payroll period whose end date is on or after this date will carry the first deduction. Leave it as today to start on the next payroll.
4. Choose the cash or bank account the money came from and the release date, add the reason, and save.

Saving posts one journal entry: debit Advances to Employees, credit the account you paid from. The advance gets a reference like ADV-2026-0001 and starts Active with the full amount as its balance. Only owners and users with Manage payroll can create advances.

How Payroll Collects It

• When you compute a payroll run, every employee with an Active advance whose start date is on or before the period end gets an Advance deduction — the installment, capped at the remaining balance, and capped again so the employee's net pay never goes below zero. The note on the line names the advance and the balance that will remain.
• If an employee has several advances, the oldest is collected first; what is left of the installment cap flows to the next one.
• The Advance line is separate from Other Deductions, so manual adjustments on the payslip never collide with it. To change what payroll takes, change the advance's installment (or put it on hold) and Recompute the draft.
• Approving the run records the repayment on each advance, reduces its balance, and marks it Paid once the balance reaches zero. The accrual journal entry credits Advances to Employees for the total collected.
• Reversing an approved run puts the repayments back and re-opens any advance it had closed.

Seeing What Payroll Will Collect

You do not have to remember who still owes an advance. The payroll page tells you in three places.

• Advances button — on HR → Payroll, beside Compute Payroll, the button shows a badge with the number of open advances (active or on hold).
• Compute Payroll dialog — once you pick a cutoff, a Cash advances box lists the employees whose installment will be deducted, the total, and any advances that will be skipped because they are on hold or their start date falls after the period. This preview counts every employee in the store and does not yet apply the net-pay cap; the computed run is the exact figure.
• Payroll run — every run with advances shows a Cash advances strip above the totals: how many employees and how much is collected (or will be, on a draft), with each name linking to that employee's advances.

Warnings on a draft run

While a run is still a draft, the strip also flags anything that needs a look. Each warning links to the advance.

• On hold — the advance exists but you paused it, so nothing is collected this cutoff. Resume it and Recompute if that was not intended.
• Starts after this period — the "Deduct starting" date is later than the period end, so it is skipped. Move the start date earlier and Recompute to collect it now.
• Not on this run — the employee owes a balance but was not included in the computation (a different payroll schedule, inactive, or no wage set up). The balance stays open until a run that includes them.
• Net pay only covered part of the installment — the employee's pay this cutoff was smaller than the installment, so only what was available was taken. The rest stays on the balance for the next cutoff. Nothing is ever deducted below zero net pay.

Warnings disappear once the run is approved; the strip then simply records what was collected.

Advance Given After Payroll Was Computed

Payroll only picks up advances whose Deduct starting date is on or before the period end, so an advance released after a run was computed — common when salaries are held or paid late — is not on that run. You do not need to reverse or recompute the run, and nothing changes for employees already paid.

• On the approved run, employees who still owe on an advance and have not been paid show an Apply advance button, in the Cash advances strip and beside their Unpaid or Partial badge.
• Click it, confirm the amount (never more than the balance due or the advance balance; the oldest advance is settled first), and Apply.
• This records a release against the payslip with Advances to Employees as the account, reduces the balance due, writes the repayment on each advance, and posts one journal entry dated the day you apply it: debit Wages Payable, credit Advances to Employees. The payroll accrual stays as it was.
• Release what is left to the employee as usual with Mark as Paid. The payslip's payment history shows both lines.
• Reversing the run later puts the repayments back on the advances and voids the entry, the same as for a cash release.

A draft run that still carries an Advance line for money the employee no longer owes (because it was applied here, collected by another run, or repaid in cash) is flagged recompute before approving in the Cash advances strip.

Managing an Advance

• Hold / Resume — an advance on hold is skipped by payroll until you resume it. Use it for an employee on unpaid leave or a disputed amount.
• Edit installment — raise or lower the per-cutoff deduction at any time; the next computed payroll uses the new figure.
• Record repayment — when an employee pays part of the balance in cash outside payroll, record it here with the account the cash went into. It posts a journal entry and reduces the balance.
• Cancel — only while nothing has been repaid. Cancelling voids the release journal entry. An advance with repayments cannot be cancelled; record a manual repayment to clear it instead.

What Employees See

On Workplace → My Pay, employees see each of their advances with the amount, what has been repaid, the balance, and the installment, and every payslip shows the Advance deduction with its note.

Reports and Exports

The payroll detail page has an Advance column in the Deductions group and a total in the footer; the CSV export has an Advance Deduction column. Outstanding balances across all employees are summarised at the top of the Advances page and sit in account 1070 on the balance sheet.

See also: Staff Sales Commissions

Advances are money paid ahead of salary and recovered by payroll; staff sales commissions are the opposite — money earned on referred sales, approved by a manager and paid with salary as a Performance Bonus.