How a Payroll Run Hits the Books
Running payroll is not a single payment — it is an accrual, a disbursement and a set of remittances, each landing on the books at a different moment. When you approve a pay run, you have recognised the cost but not yet paid anyone; when you pay it, cash leaves; when you remit the deductions, you settle what you were holding on behalf of the tax authority and the pension fund. Veona posts every one of these to the general ledger — the single master record of every accounting entry — so the books always reflect exactly where payroll stands. This page explains each posting in plain language.
Who / when: the HR/payroll officer prepares and approves the pay run and triggers the disbursement and remittances on Veona HR → Pay Runs; the finance officer reads the result on the books and reconciles it. The payroll officer never enters debits and credits — Veona posts them from the pay run. We will follow Amaka, a payroll officer, and Tunde, the finance officer.
Terms, defined once. Every entry is double-entry: a debit (Dr) and an equal credit (Cr), always netting to zero. Salary & Wages Expense is the cost of employing staff, recorded by cost center (the department or unit the cost belongs to). Net pay is what a staff member actually receives after deductions. PAYE is Pay As You Earn — income tax withheld from salaries that you hold on behalf of the tax authority and later remit. Statutory deductions are amounts the law requires you to withhold (tax, pension and similar). A payable is money you owe but have not yet paid. Gratuity is an end-of-service benefit that accrues over time — a cost you recognise gradually, before it is ever paid.
Step 1 — Approving the pay run accrues the cost
Section titled “Step 1 — Approving the pay run accrues the cost”Approving a pay run records the whole cost of employment and splits out everything you are now holding on someone’s behalf. The expense is debited; the amounts you owe are credited:
Dr Salary & Wages Expense (per cost center) + Dr Employer Statutory Expense + Dr Reimbursements / Cr Net-Salary-Payable + Cr PAYE & Statutory Payable + Cr Pension Payable + Cr Staff-Loan Receivable (recovery)
Read it as a story. The full gross cost of the period becomes an expense, attributed to each department’s cost center so finance can see what each unit costs to staff. The hospital’s own employer-side statutory contributions are an additional expense. Against all that, Veona credits the amounts you will pay out or hold:
- Net-Salary-Payable — what staff will actually receive (a liability, not yet paid).
- PAYE & Statutory Payable — income tax and statutory deductions withheld, held until remitted.
- Pension Payable — pension contributions withheld, held until remitted.
- Staff-Loan Receivable (recovery) — where a staff loan is being repaid from salary, that recovery reduces the loan the staff owes you rather than being paid out, so it credits the receivable.
No cash has moved yet — approval is the accrual, the honest recognition of cost. See Run a Pay Run From Draft to Paid.
Step 2 — Paying the run disburses net pay
Section titled “Step 2 — Paying the run disburses net pay”Dr Net-Salary-Payable / Cr Bank — the liability to staff is cleared and cash leaves the bank.
When Amaka pays the approved run, the Net-Salary-Payable liability raised at approval is cleared and the Bank balance falls by the net amount disbursed. Notice that the tax and pension you withheld are not paid here — they remain as payables, because you have not remitted them yet.
Step 3 — Remitting statutory clears what you were holding
Section titled “Step 3 — Remitting statutory clears what you were holding”Dr PAYE & Statutory Payable + Dr Pension Payable / Cr Cash/Bank — the withheld amounts are paid over and the liabilities are cleared.
When Amaka remits the deductions to the tax authority and the pension fund, the payables raised at approval are settled and cash leaves. This is the final piece: the money you held on others’ behalf at approval is now actually in their hands, and your payables return to zero.
Staff advances and loans
Section titled “Staff advances and loans”Grant: Dr Staff-Loan Receivable / Cr Cash — you pay out an advance, and the staff member now owes you.
When you grant a staff advance or loan, cash leaves and a receivable is recorded — the staff member owes the money back. Repayment then happens through the pay run, where the recovery credit (Step 1) steadily reduces that receivable until the loan is cleared.
Gratuity accrues before it is paid
Section titled “Gratuity accrues before it is paid”Dr Gratuity Expense / Cr Gratuity Provision — the end-of-service cost is recognised gradually, building a liability.
Gratuity (an end-of-service benefit) is earned over a staff member’s tenure, so its cost is recognised a little at a time rather than as a shock at departure. Each accrual debits the expense and credits a provision — a liability that grows to reflect what you will eventually owe. When the gratuity is finally paid, the provision is what gets drawn down.
Employer benefits and HMO
Section titled “Employer benefits and HMO”Dr Benefit Expense / Cr Cash — employer-funded benefits (such as HMO cover) are recorded as a cost.
Where the employer funds a benefit directly — an HMO premium, for example — Veona books it as a Benefit Expense with cash out, so the true cost of employing staff includes the benefits, not just the salary line.
The payroll postings at a glance
Section titled “The payroll postings at a glance”| Payroll action | Posting |
|---|---|
| Approve pay run (accrual) | Dr Salary & Wages Expense (per cost center) + Dr Employer Statutory + Dr Reimbursements / Cr Net-Salary-Payable + Cr PAYE & Statutory Payable + Cr Pension Payable + Cr Staff-Loan Receivable (recovery) |
| Pay the run | Dr Net-Salary-Payable / Cr Bank |
| Remit statutory | Dr PAYE & Statutory Payable + Dr Pension Payable / Cr Cash/Bank |
| Grant a staff advance/loan | Dr Staff-Loan Receivable / Cr Cash |
| Accrue gratuity | Dr Gratuity Expense / Cr Gratuity Provision |
| Employer benefit / HMO | Dr Benefit Expense / Cr Cash |
What happens next
Section titled “What happens next”Because each stage posts as it happens, Tunde reads a live, honest payroll position: Salary & Wages Expense shows the cost per department, the payable accounts show exactly what is still held on staff, tax-authority and pension-fund behalf, and the Bank line shows what has actually been paid. He can drill any of these straight down to the pay run behind it — see Read the General Ledger and Drill Any Account. For the operational pay-run flow itself — draft, approval gate, payslips and the paid state — see Run a Pay Run From Draft to Paid.