Employee loans and expense claims

Loans and expense claims both run through payroll. A loan is paid out from your bank and recovered one instalment a month, from the employee's salary or by repayments the employee makes. An expense claim is approved into your books and repaid to the employee, normally with the next salary. Both live under Payroll & HR › Pay: Loans and Reimbursements.

Employee loans#

Open Pay › Loans. The cards show the Active Loans, the Total Disbursed, what is Outstanding and what has been Recovered so far.

1 New Loan gives a loan; 2 View Details opens a loan with its Instalment Schedule: each instalment's due date, principal, interest and status. 3 Instalment calculator works out the monthly instalment, the last instalment and the totals for an amount, a rate and a number of months before you enter a loan, exactly as the loan's schedule would be.

Give a loan#

1. Click New Loan.
2. Choose the employee and the 1 Loan Type: Salary Advance, Personal Loan, Vehicle Loan, Housing Loan, Education Loan or Emergency Loan. Each type suggests a tenure, which you can change.
3. Enter the 2 Loan Date (today or earlier: the day the money is paid out) and choose the bank account it is paid out from.
4. Enter the 3 Loan Amount (AED), the 4 Interest Rate (% per annum), the 5 Tenure (Months) and the 6 First Instalment Date (after the loan date, usually the next payroll). The panel shows the 7 Monthly Instalment, the Total Interest and the Total Repayment.
5. Leave 8 Deduct the instalments from the salary ticked when payroll is to recover the loan. Untick it when the employee repays directly.
6. Add the purpose and a supporting document. The screen reminds you that salary deductions for a loan need the employee's written consent: attach the signed consent as the supporting document. Click Approve & Disburse Loan.

A loan repaid by salary deduction is interest-free: while the deduction is ticked, the interest rate must be 0. Interest is possible only on a loan the employee repays directly. Verasol also checks the salary. The loan's monthly instalment, the instalments of the employee's other loans deducted from the salary and the salary's own monthly deductions (the employee's pension share and other deductions) must together stay within half of the monthly wage (basic salary and allowances), under Federal Decree-Law 33 of 2021. When they do not, Verasol refuses the loan and says what the deductions would come to: spread the loan over more months, or untick the salary deduction.

The loan is now Active and the money is booked out of the bank. Verasol numbers it by the year of the loan date (for example LOAN-2026-1000) and works out the schedule: equal monthly instalments, each paying the interest on the balance still owed and the rest off the principal; the last one repays whatever is left. An interest-free loan is the amount divided by the months. The screen asks for a guarantor for loans above AED 50,000 or longer than 12 months.

For a loan that was already outstanding when you started with Verasol, tick Opening balance: outstanding when payroll started here (go-live), date the loan on your opening date and enter what was still owed then, with the remaining instalments. Choose Book against Opening Balance Equity, or Already in Employee Loans & Advances (register, no entry) when your opening balances already include it.

How a loan is repaid#

• Through payroll, while Deduct the instalments from the salary is ticked: each month's payroll deducts the instalments due by the month-end, oldest first, and whole instalments only. All deductions together (the employee's pension share, other deductions and loan instalments) stay within half the wage, under Federal Decree-Law 33 of 2021, and within the pay left. An instalment that does not fit stays due and is carried to the next month; the payroll warns you about it. See Run payroll and WPS.
• Directly: a loan the employee repays directly shows Repaid directly in the list. When the employee pays, open the loan and use Record Payment: choose the instalment, the amount (at most what is left on it), the date and the bank account the money came into. A part payment pays the interest first. A payment recorded by mistake can be cancelled from its row in the schedule: its entry is reversed and the instalment is due again.
• The salary deduction can be ticked or unticked on an active loan's details at any time; nothing is booked. Ticking it checks the interest and the half-the-wage limit again.
• Early, in full: close the loan from its details: Repaid by employee records the outstanding balance received into a bank account; Write off books it as an expense. A closed or written-off loan can be reopened, which reverses the closing entry.
• At the end of service: the end-of-service settlement recovers what is still outstanding.

A loan that nothing has been repaid on can be deleted: its disbursement entry is reversed.

What Verasol books#

When a loan of AED 15,000.00 was paid out from the bank, Verasol posted:

An instalment deducted in payroll is part of the month's payroll entry: it credits Employee Loans & Advances and reduces the employee's net salary. A direct repayment debits the bank and credits Employee Loans & Advances, and Interest Income for any interest. A write-off debits Salaries & Wages and credits Employee Loans & Advances.

Expense claims#

Open Pay › Reimbursements. The cards show the Total Claims, how many are Pending and Approved, and the Total Approved.

Record a claim#

1. Click 1 New Claim.
2. Choose the employee and the Reimbursement Type: Travel, Food, Medical, Accommodation, Internet, Mobile, Fuel or Other.
3. Enter the Claim Date (not in the future), the Claimed Amount (AED) including VAT, and a Description.
4. Attach the receipt with Upload Receipt (PDF, JPG or PNG, up to 5 MB) and click Submit Claim.

The claim gets a number (RMB-202610-0001) and the status Pending. Nothing is booked yet.

Approve or reject a claim#

3 Reject turns a pending claim down: Verasol asks for the reason. Rejecting a claim that was already approved, and not yet paid, reverses its approval entry.

To approve a claim, click 2 Approve on it.

1. Check the approved amount: it can be less than claimed, never more.
2. Check the 1 Expense account. It starts with the account suggested when the claim was recorded (Vera suggests one when she records a claim), otherwise with Miscellaneous Expenses (default). Change it if another expense account fits.
3. If the receipt is a valid UAE tax invoice, enter or check the 2 Recoverable input VAT (AED), at most 5% of the net, with the Supplier (on the receipt) and the Supplier TRN. A claim Vera recorded comes with her suggestion filled in. The VAT is booked to VAT Input when your company is VAT-registered on the approval date and the supplier's TRN is given; otherwise it stays part of the expense and Verasol tells you why.
4. The 3 Approval date is the date the claim is booked on: not before the claim date and not in the future.
5. Click Approve.

Pay the claim#

• With the salaries: the next payroll pays every approved claim of the employee approved by the month-end. The claim becomes Paid when that payroll is marked as paid. See Run payroll and WPS.
• Straight away: Pay now (not through payroll) on an approved claim opens a window for the bank account and the payment date (not before the approval). A payment recorded by mistake can be cancelled from the same row: its entry is reversed and the claim is approved and unpaid again.

What Verasol books#

When a travel claim of AED 493.00 with a valid tax invoice was approved, Verasol posted:

Paid straight away, the payment debits Employee Reimbursements Payable and credits the bank. Paid with the salaries, the payroll entry debits Employee Reimbursements Payable and the amount is part of the net salary.

Related#

• Run payroll and WPS
• End of service and gratuity
• Payroll opening balances
• Awaiting your approval
• How VAT works in Verasol