All businesses guide
Employee Advance and Salary Records: A Guide for Pakistani Businesses
In most shops staff money lives in a register or in the owner’s memory: an advance before Eid, a salary paid in two parts, a fine one week and a bonus the next. By the end of the month nobody agrees on what is still owed. A few simple rules keep every employee’s account clear.
By Rana Yasir Ali, Founder & CEO6 min read
1. An advance is money he owes, not salary
An advance (peshgi) is money given before it is earned. Until it is recovered, the employee owes it to the business — it is like money lent, not a cost. Count it as an expense and your profit for the month looks smaller than it is; forget it and the money is simply lost.
Record every advance on the day it is given: the date, the amount, which cash drawer or bank account it came from, and how much will be recovered from each salary.
2. Keep two balances for every employee
Keeping the two apart is what stops disputes. A salary paid in two parts and an advance recovered over three months both stay visible, line by line.
- Advance — what he owes the business: advances given, less what he returned or what was recovered from his salary
- Salary due — what the business owes him: salary, commission and bonus earned, less fines, deductions, recovery and what he was paid
- Net due — salary due minus advance: the amount that settles everything today
3. Recover advances from salary in agreed amounts
Agree the monthly recovery when the advance is given and write it down. On salary day, take that amount (never more than he still owes, and never more than the salary left after fines), and show it on the salary slip as its own line.
4. Salary is earned when the month is closed, and paid when it is paid
Work the salary out at the end of the period — salary, allowances, overtime, commission, less absences, fines and deductions — and record it as owed to him. Paying is a separate step: pay it all at once or in parts, from the account the money really leaves.
This is also how the books stay true: the salary is the month’s expense, the payment only moves cash, and the advance never touches profit.
5. A simple example
| Advance given (cash out, not an expense) | Rs 10,000 |
|---|---|
| Salary: Rs 30,000 − 2 × Rs 1,000 | Rs 28,000 |
| Advance recovered from salary | −Rs 5,000 |
| Net salary to pay | Rs 23,000 |
| Paid now / paid next week | Rs 15,000 / Rs 8,000 |
| Advance still owed after this salary | Rs 5,000 |
6. One ledger per employee, and a slip every month
Every advance, return, fine, bonus, salary and payment goes on the employee’s own ledger, in date order, with both balances after each line. Give him a salary slip every month that shows how the figure was reached. When both sides hold the same paper, there is little left to argue about.
If staff already owe advances or are owed salary when you start, enter those as opening balances with the date, so the first month starts from the truth.
HisabMate
Staff advances and salary in HisabMate
HisabMate’s HR & Payroll module keeps every employee’s account the way this guide describes, connected with Cash & Bank and the Profit & Loss:
- Two balances per employee — the advance he owes and the salary due — and the net due
- Advances given from a Cash & Bank account, with an amount to recover on each payroll
- Advance returns, part payments, bonus, fine, named deduction and adjustment on a numbered ledger
- Payroll proposes the advance recovery; you can change it before posting
- Advances never counted as an expense; posted payroll shown as salaries in the Profit & Loss
- Salary slips and employee ledgers in English or Urdu, on A4, A5, 80 mm or 58 mm
- Opening advance and opening salary due when you start
Questions
Is a staff advance an expense?
No. Until it is recovered, an advance is money the employee owes the business. Only the salary he earns is an expense; recovering the advance from his salary settles what he owes.
How much of an advance should be recovered each month?
Whatever you agree when you give it, written down — for example Rs 5,000 a month. Never take more than he still owes or more than the salary left after fines and deductions.
Can I pay a salary in two parts?
Yes. Record the full salary as owed when the month is closed, then record each payment as it is made. The rest stays as salary due on his ledger.
What if an employee returns part of his advance in cash?
Record it as an advance return into the account the cash went to. His advance balance goes down; his salary is not touched.
How do I start if staff already owe advances?
Enter what each person owes, and any salary already due to him, as opening balances on the day you start. Everything after that is recorded as it happens.
Is there software for staff advances and salary in Pakistan?
Yes. HisabMate’s HR & Payroll module keeps advances, recovery, salary, part payments and salary slips for each employee, in English or Urdu.
Roman Urdu
Staff ka advance (peshgi) kaise likhein?
Advance wale din tareekh, raqam, kis account se diya aur har tankhwah se kitna katega — sab likhein. Advance kharcha nahi, mulazim ke zimme qarz hai.
Tankhwah do hisson mein kaise dein?
Mahine ke aakhir mein poori tankhwah uske khaate mein wajib-ul-ada likhein, phir jitni raqam dein woh payment likhein. Baqi khaate mein rehti hai.
Employee advance ka hisaab rakhne wala software?
HisabMate ka HR & Payroll: har mulazim ka advance aur tankhwah ka alag balance, payroll mein advance ki katauti, aur Urdu salary slip.