Improved Salary in V7.1

I have reviewed the great work that is being done in ERP Version 7.1 particularly the improvement in payroll.
I want to request that in the payslip of each staff an option should be made for each salary component to have account to link it to enable the management of Staff Loan and other deduction that may not peculiar to all the staff.(the present method of loan management will not make the chart of account to be tidy if you have say 50 staff that have loan)
If the default account is generalised in Salary component and the option is not made available in each staff payslip,management of deductions in accounts would be made impossible.
Kindly consider it in 7.1 so that the payroll in ERP will meet minimum payroll requirement

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CC @KanchanChauhan

@Fred1 Can you please explain it with an example.
Each salary component have a Default Account, I am not sure if I am following correctly.

Thanks for immediate response.
A company has 5 staff.Income tax is deducted for each of the 5 staff.So having default account in the salary component call Income tax will not be a problem(if the management does not care to know what is deducted from each staff in the account) because all the income tax deductions will be credited to the account specified in the Income tax salary component.
But if 3 out of the 5 took loan and you have only one default account in the Loan Deduction salary component,it means all the loan deducted from the 3 staff will be credited to this account.With this each staff loan balance cannot be determine {Note i have read how you want loan repayment should be treated.The method will make your chart of account look untidy where you have many staff who took loan}
But if there is option to define account for each salary component in each staff payslip,you can specify the loan account of the staff and by the time salary is paid,the loan deduction from the staff will be credited to the loan account of the staff thereby reducing the loan balance
Here is the example in table form.

For any payroll software to meet a basic payroll feature,the two stages of payroll must be captured.
Once again i appreciate the great work done so far

I just finished reading the blog on the issue after posting the above reply.You can see the whole loan deduction for the entire staff is going to be domiciled in one account which is out-rightly wrong.
See how loan will be managed or any other deduction that is to be tracked if at the level of each staff pay slip option of selecting account {account receivable ) is made possible:

  1. I create another account receivable group in my chart of account and renamed it Staff Loan and Advances.So i can create each staff that has loan even if they are 500 staff (which will make my chart of account neater).
    2.When loan is given,the staff is debited
    3.At point of deduction in his salary slip,the deduction is linked to this account.
  2. When salary is paid,automatically the balance of loan is reduced by the deduction.

So you are saying each employee should have separate Loan Account which can be selected on Salary Slip?

Yes.Each staff will be created as a party and in his pay slip you can select the account.
In the same vein if a staff has a contribution,his contribution can also be tracked by creating another Account Payable Group in the chart of account,re name it to Staff Contribution Scheme then only one account (just like Creditor) is created in the chart of account (let called it Staff Contribution Account)and then all the staff in the company regardless of their number (even if they are 1000) are created as Parties-This makes the ERPNEXT chart of accounts look professional rather than creating individual staff account in the chart of accounts which can be very clumsy when tracking loan or contribution of many staff
In the payroll ,a deduction salary component of the contribution of each staff is linked to the account and the party i.e the staff is selected.
When salary is processed,the staff (as a party) is automatically credited.With this at any time you know what the staff has contributed rather than lumping all the staff contibution together in one account if the default account is domiciled in the Salary Component as it currently proposed in 7.1.
Once again i appreciate effort made so far

Hi @Fred1 ,

I agree that this will help further improve Payroll in ERPNext. ‘Employee’ really should be available as a Party Type just like we have Customer and Supplier. I’m however wondering if it will be necessary to create a separate account head for each employee; won’t it be easier to have a single account head each for Staff Receivables/Payables and then view the status per employee via a report or GL (just like it currently works for Customers and Suppliers)?


That is exactly what i am saying.But provision must be made in the individual pay slip to select the account (which is general for all staff) and the party which is the staff.

Exactly! Great input… I look forward to this being implemented


@KanchanChauhan can you see my further posts on this issue.Kindly let me know your opinion .Thanks

@rmehta i have shown a comprehensive example and illustration to Kanch on this modification on payroll to make our erpnext a great payroll tool.
Kindly follow up to make the modification in 7.1

Can you please also raise an issue for the same on

@KanchanChauhan @rmehta @wale
I have raised the issue as advised .But as i practised my proposition on the improvement of management of deductions like staff loan,contribution,income tax through the making available option to select an account receivable/payable created for management of any of the deduction and then select the staff as party,i discovered that ERPNEXT does not allow customer who does not having credit balance to be paid .
Since the staff are going to be created as customer, booking the loan for example become a problem i.e When staff collect loan you can debit his account and credit bank.Erpnext does not allow it but in other software i have used this is possible
1.Erpnext team should make it possible to pay a customer if my proposition is to be worked upon or
2.The team should develop a feature to tract individual staff loan,or deduction generally .The present method of tracking loan is not very tidy when the staff that have loans are many