Handling Employee Receivables through Financials

This method works well if you using a payroll service and your employee receivables consist mostly of tool purchases or loans. While this method does allow for a markup of items purchased by the company for the employee or entry of a sales invoice, there are extra steps involved.

Your accounting flow will be as follows: Each employee will have their own GL account number. When an AP bill is entered for a personal purchase made, that amount will be coded directly to their account, crediting Accounts Payable and debiting their receivables account. If a check is written to loan them money, that check would be coded directly to their receivables account. When the journal entry is done to record your payroll the deductions are coded to each individual’s account.

To begin, set up a separate general ledger account in your Chart of Accounts for each employee. To do this, go to Company → Enter Chart of Accounts and click Add New. Enter the account number you wish to use, the category should be Accounts Receivable, and then enter the description (usually the employee’s name). If you wish, you can enter a parent account - as shown below - to total Employee Receivables on reports.



When an AP bill is entered that includes an employee purchase code that portion to the employee’s account number to record the debt.

If the employee gives you a check, when that check is deposited the employee’s account would be the credit account.

When the journal entry is done to record your payroll, the deductions are coded to each individual’s account.



There are several different ways to see account activity, so they won’t all be covered here. The three most widely used are General Journal List, General Ledger Report and the Transaction Detail by Account.

  • General Journal List – This is a good option if you just want to take a quick look at the transactions and are not looking for a balance. Go to Company → General Journal List
  • General Ledger Report – This report, as well as the Transaction Detail by Account report, will show the balance and can be run by date range and filtered many different ways so they offer more flexibility. To run a basic General Ledger report, go to Company → Reports → Financial Reports → General Ledger.



    The Fiscal Year will default to your current fiscal year, but can be changed. Enter the date range you wish to view and the employee’s GL account number.





  • Transaction Detail by Account – This report, as well as the General Ledger report, will show the balance and can be run by date range and filtered many different ways so they offer more flexibility. To run a basic Transaction Detail by Account report go to Company → Reports → Financial Reports → Transaction Detail by Account.



    The Fiscal Year will default to your current fiscal year but can be changed if desired. Enter the date range you wish to view and the employee’s GL account number.

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