How to Manage Employee Loans in Your Payroll System

Loan

Payroll → Loan

This feature allows payroll administrators to record, manage, and recover employee loans through payroll.Loans can be given for personal, medical,or any other organization-approved purposes. Common loan types are Emergency Loan, Personal Loan, Medical Loan etc.

  • Navigate to Payroll → Advance Salary

  • Click the Add button.

  • A window pop-up will appear, choose the Employee name and the Loan Name from the dropdown

  • Enter the Requested Amount and Loan Tenure. The system will automatically calculate the Annual Interest Rate and EMI and prefill the values in the respective fields.

  • Fill all mandatory fields in the form. Click Submit to save.

  • The loan will be processed in payroll based on the specified Consideration Date and Loan Type. 

  • If it is an Immediate Loan, the amount will be disbursed directly to the employee’s account before the payroll run and will appear as an Intermediate Loan in the payslip. 

  • If it is a Salary Pay-Cycle Loan, the amount will be paid along with the regular salary on payday and will be shown under the Earnings section in the payslip.

  • To edit an existing record, select the desired entry and click Edit. Make the necessary changes and click Submit. If the payslip has already been generated, the application will not allow any edits.

  • To delete an existing record, select the desired entry and click the Delete button. Make the necessary changes and click Submit. If the payslip has already been generated, the application will not allow any delete.

  • To approve a loan record, select the entry and click the Status button, then choose either Approve or Reject. The Requested Loan Amount and Approved Loan Amount will be prefilled. If you need to update the approved amount, enter the new amount and click Submit.




Fig: Add Loan

Fig: Loan Status Update

Fields Description

Title

Description

Loan Name

Select the Loan Name from the dropdown, which is pre-configured in the Loan Types module. The dropdown will display only the loan types for which the employee is eligible, based on the organization's predefined loan eligibility criteria.

Requested Amount

The exact sum of money that the employee requests or applies for as a loan from the organization

Loan Tenure

Loan Tenure refers to the duration or period over which a loan must be repaid (e.g., 12 months, 24 months, or 2 years). The system restricts employees from selecting a tenure that exceeds the maximum tenure pre-defined in the Loan Type configuration, ensuring compliance with organizational loan policies.

Annual Interest Rate

Automatically calculates the interest rate based on the loan requested amount and the pre-defined interest rate configured in the loan type for that particular loan.

EMI(Equated Monthly Installment)

The EMI amount is automatically calculated and prefilled for the employee based on the selected Tenure and the Requested Loan Amount.

Consideration Date

Specify the month in which the loan is requested and the month when the loan is to be disbursed.


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