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Pay salaries - without touching the HR module


#1

I want to start using ERPNext shortly with the Accounting as my main (and till further notice) only functionality.

So one thing still have to be doing (and which touches the HR module) is payments of salaries.

I definitely do not want to open the Pandora’s box of HR Module (Salary Structure, Salary Slip, Holiday List ,… ) in this first phase of usage and I was thinking to simply make a payment entry for a Salary payment.

  1. New Payment Entry
  2. Payment Type: Pay, Party Type: Employee

Now what I would expect is that an Asset Account (our bank account, i.e.) and an Expense account (Salaries) would be needed to satisfy the requirements of a double entry accounting transaction.

But the System (v11) mocks me with an Account Type for "Salaries" must be Payable error message upon saving the PE. Somehow this would make sense to me whether there was some sort of liability (something in the line of a Salary Invoice or such) posted to a Payable account beforehand. But this does not exist in my case and for now I’d prefer to avoid it in order to not having to deal with all the dependencies of the Payroll cycle.

Can anyone point me towards the right direction in this regards?


Salary Slip Payment
#2

Hi @vrms,

The error message comes from the fact that the selected account for your employee must have the account type “Payable” (you can change it in the account tree).

The payment entry will make an accounting entry from the bank account to the payable account (in your case).
It means that you needs to have a creditor payable account to pay to, corresponding to the result of an accounting entry of your payable account against an expense for the company.

Example

You can make a journal entry (or even a purchase invoice if you want to simplify the process) to generate an entry like:

Debit: Expense account
Credit: Employee account

(You will certainly have additional creditor lines for social security and other state organizations).

And then a payment entry linked to that journal entry that will generate the following entries :

Debit: Employee account
Credit: Bank account

By doing this, you will be able to account your payroll on your profit and loss statement.
Else your payment will just stay unlinked but you will only be able to track salaries on your balance sheet.


#3

thanks for the feedback

So that Employee Account would be my Payable Account then, right? It does not seem to be created with creating an Employee in the CoA.


#4

In ERPNext, you neer only one payable account for employees salaries, for example “Salaries” (the name depends on you country).
It is then linked automatically by the system to an employee (auxiliary account) by selecting the employee in your payment entry/journal entry/purchase invoice. It works exactly like for Customers and Suppliers with the payable and receivable accounts.
Therefore ERPNext doesn’t create one account per employee. I’m referring to an “Employee account” above as it is a general example, but in ERPNext that would be:

Debit: Expense Account
Credit: Salaries Account (configured as payable)
Party type: Employee
Party: John Doe


#5

I am starting to ‘get’ it. thx thus far

btw. which of the HR documents plays the role of the Supplier Invoice creating the liability in a salary payment scenario as intended by the HR module?


#6

In HR it would be the Salary Slip doctype.