🧭 Run monthly payroll end to end

Intermediate · 15 min · People & HR

The month-end routine from final attendance and leave, through incentives, to generating, reviewing and paying salaries and recording the outgo.

Why and when you use it

Payroll touches several screens, and a mistake early on (a missing attendance day, a wrong target) flows into the salary. Following the same order every month keeps payroll quick and accurate. This is for the owner or accountant who pays staff, usually in the first five days of the month.

Before you start

Employees added with basic salary (Employees)
Targets and Incentive Slabs set for salesmen
Bank account set up for payments (Bank Reconciliation or Banking)

Step by step

Close attendanceOpen HR Attendance and check every working day of the month is marked for every employee. Fix gaps now.
Close leaveOpen HR Leave and make sure every leave taken is recorded and approved, so it is not counted as absence.
Check salesmen's achievementOpen Performance, choose the month and press Load Performance. Note each salesman's Sales Ach%.
Check the incentive slabsOpen Incentive Slabs and confirm the active slabs are the ones you announced for this month.
Generate payrollOpen Payroll, choose the month and press Auto-Generate Payroll (or Generate for All Employees).
Review every lineCheck Basic Salary, Incentive, Allowance and Deductions for each person. Add allowances and deductions, and save as Draft.
Approve and processShow the draft to the owner, then move it to Processed.
Pay and mark PaidTransfer salaries from the bank, then mark each line Paid in Payroll.
Record the outgo and match the bankMake sure the total salary appears in your books once, as your accountant has set up (for example an Expenses entry in a Salaries category if it is not already booked), then match the bank debits in Bank Reconciliation.

Worked example

Sharma Traders pays November 2026 salaries in the first week of December. There are six staff with total basic salary of ₹96,000. Ravi earned ₹10,800 incentive and Imran ₹2,000.

1 Dec 2026: Pooja checks HR Attendance (one unpaid absence for Suresh) and HR Leave (Imran's 20 Nov leave approved).
Performance for November: Ravi 108%, Imran 95%.
Payroll: Auto-Generate Payroll for November; Incentive shows ₹10,800 for Ravi and ₹2,000 for Imran.
She adds ₹2,500 fuel Allowance each for Ravi and Imran, Deductions ₹2,000 advance for Ravi and ₹500 unpaid day for Suresh; saves as Draft.
Total payable: ₹96,000 + ₹12,800 + ₹5,000 - ₹2,500 = ₹1,11,300. The owner agrees; she moves it to Processed.
5 Dec 2026: transfers go out; she marks all lines Paid.
She checks the salary total is booked once (adding it with Add Expense under a Salaries category only if it is not already there) and matches six bank debits in Bank Reconciliation.

Result: November salaries of ₹1,11,300 are paid and recorded, every salesman's incentive follows the published slabs, the bank statement matches the books, and Profit & Loss for November shows the salary cost.

💡 Tips

Block a fixed day each month, for example the 2nd, for payroll and do the steps in this order.
Keep a one-line note of every allowance and deduction so you can answer staff questions later.
Turn on Include monthly salaries (from Payroll) in Cash Flow Forecast so upcoming salary days are in your forecast.

⚠️ Common mistakes

Generating payroll before attendance is final.
Recording salaries in Expenses when they are already booked elsewhere, which doubles the cost in Profit & Loss. Check with your accountant once and follow the same method every month.
Marking Paid before the bank transfer actually happens.

सवाल

Who should approve payroll?

The owner, or someone other than the person who prepared it. A second pair of eyes catches most mistakes.

🎬 Video walkthrough (script — recording coming soon)

Scene 1: Show the month-end checklist on screen.
Scene 2: Check HR Attendance and HR Leave.
Scene 3: Load Performance for the month.
Scene 4: Auto-Generate Payroll and walk through Ravi's line.
Scene 5: Add allowances and deductions, save Draft, move to Processed.
Scene 6: Mark Paid after the transfer.
Scene 7: Match the salary debits in Bank Reconciliation.