Pay an invoice by way of a deduction from the employee's pay

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  • Updated 3 years ago
Using: Reckon Accounts Premier Ed 2015

An employee has purchased from the business and an invoice has been paid. 

I want to pay this invoice on behalf the employee by making a deduction from their net wage and have this payment reflected in the business bank account. 

I have a payroll item set up as 'Deduction -Personal' this is fine for making the actual deduction because it shows on the payslip. However I am unsure how to take the amount deducted and pay this against the invoice. 

Because the deduction code is a payroll item and not a ledger item I have no way of directly applying this amount from one account to another. 

There may be a different process to use I am just not sure what is it. I need to show the deduction on the payslip as well as the payment against the invoice.  

The only other thing I can think of is not doing the payroll deduction but making a direct deposit for the invoice because the amount paid to the employee minus the amount of the invoice will be exactly what the employee has been paid. In which case it is as if they have paid and then they paid the invoice amount back to us. 

Any thoughts on this would be appreciated. 

Thank you
J
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Posted 3 years ago

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Kevin Russell, Accredited Partner

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You have a small problem because a employee cannot be a customer in Reckon Accounts. You will probably need to setup some kind of contra account.
Thanks for the reply Kevin. You can you just need to put a '.' or number or something after their name/entity. There is the same problem with vendors also being customers you just have to distinguish between the two accounts for Reckon. 

There is no accounting reason why you cannot have an employee, customer and Vendor all with the same name this is just a Reckon thing.

Regardless the invoice has already been raised, and obviously the employee account is already created so this is not an issue at all.
(Edited)
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Kevin Russell, Accredited Partner

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Graham yes but they cant be one and the same. Sorry if you misunderstood.
Thanks Kevin, I didn't misunderstand.

That particular point is a non issue in this instance, I just thought I would clarify for you in case you weren't aware yourself since you pointed it out as concern.

I'd really just like answers to my question. Thank you for your input perhaps it will be handy information for someone else :)
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Kevin Russell, Accredited Partner

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The simple answer is you cant do what you want.
Thank you Kevin. I had a feeling that was going to be answer :)  There's something to be said for doing book work manually because what I want to do is entirely possible. Perhaps just not on this system.  

Thank you for your assistance. 
J
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Kevin Russell, Accredited Partner

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Graeme this is what I do. Spread the word
I don't understand that comment Kevin. BTW my name is not Graeme. 

Good day Kevin.

J
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Kevin Russell, Accredited Partner

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Sorry Graham. My mistake
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Natalie

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We have ours set up so that when we deduct the amount from their pay it will show as the funds being paid from the bank account (which obviously they haven't).  Then we do a contra entry, also to the bank account, as a payment against their debtor account.  When you do your bank reconciliation you will tick off both entries.
Natalie, this sounds like what I want to do.

The pay roll is already set to show the funds coming out of the bank account once they have been completed. Its the part where you do the contra entry as if they are a debtor i'm interested in.

Can you explain how you do this? 

Thanks!
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Natalie

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Have you created an invoice to the employee for the amount they owe?  If so, then you just enter a "receive payments" against that invoice.  
I have. The part where I am unsure is between making the wage payment and applying the amount owed to us. 

Are you doing a deduction in your payroll for the owed amount or are you just doing it as the full wage (no deductions) and then paying the invoice amount back to the business?

So when you make the actual payment in your bank account you are doing the amount of the wage minus the invoice. (But this doesn't really look like that in Reckon)

Thanks
Jayne
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Natalie

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Jayne, do you want to give me a call and I can talk you through it.  It might make it a bit easier.  0407038203
Thanks a lot Natalie.

I really appreciate your time. I had a think about what you said and I found the account the deductions was going to had been set up as an expense account so the money way going here but there was no way to apply it to anything.

So I changed it to an account like a bank account so the money can be applied to invoices where the employee is also a debtor. 

This is exactly what I wanted to do.
In case this is handy for some one else looking for this answer. 

Payroll - set up the employees wage as you would normally and enter an after tax deduction - Go to Receive payments - enter payment and select the account where the deduction sits and save. Pay employee their wage. 

Set up a payroll item - I called it 'Deductions - Personal'
When you set up this Item you need to allocate an account where this will be tracked. 

I called this account 'Staff Deductions' This is set up like a bank account and if you like you can link it as a sub account of the your running account.

When you apply the staff deduction on your payslip this is be an after tax deduction. The wage amount would only be less the exact amount that you will be paying off the invoice you have already raised. If you haven't done this, you need to raise the invoice first. 

Once you have processed your payslip you will still have to deal with the amount deducted for your invoice. 

Go to your payments screen as if you are making a customer payment and set this up like any other payment. In your account drop down change this to your deduction account and save the payment. 

You can check this has worked by going to the 'Chart of Accounts' and open the deduction account. You should see the payroll deduction payment as a 'Payment' and the payment off the invoice as a 'Deposit' both amounts should equal each other out and the account total should be zero. 

For this to work you need to have your employee set up as both an employee and as a debtor. Reckon won't let you enter the same name under different accounts (Payroll, Debtor, Creditor). The easiest fix is to put a full stop as the end of the employees name when you set them up as a debtor. There is no accounting reason why you cannot have the same in fact we have several customers with the same names and many of our creditors are also debtors. 

I suggest making sure you manually work out all of your amounts as you go through this process and don't just trust Reckon to be right. Its the fastest way to identify any potential errors.

There may be other ways to set this up within Reckon and I am always open to suggestions and constructive feedback.

Thank you to those who commented and offered their assistance. 

Jayne