General ledger integration and other updates to Australian payroll

As usage continues to grow rapidly we’ve released updates to Australian payroll today. We hope you’ll find them helpful.

Seamless accounting and Australian payroll

Since Australian payroll was released you’ve had to deal with the manual process of creating a draft bill to update the general ledger with payroll information. This introduces costly mistakes and makes the process confusing and overly manual. So we’ve fixed it!

From today, transactions from payroll will seamlessly flow through to and impact the general ledger immediately – the way it should be with payroll transactions represented as journals. This impacts the Profit & Loss and Balance Sheet, reflecting the impact of the approved payroll immediately.

We’ve added a new Wages Payable Account field within payroll settings to record the net wages payable amount of each pay run within the journal. This provides you the benefit of keeping your wages payable transactions separate from accounts payable.

Another frequently requested feature is the payroll expense journal. It contains the same transaction information you’re used to seeing within the draft bill. The net wages are not recorded against Accounts Payable but the new Wages Payable account. Reconciling your net wages will now require you to allocate the spent transaction to your wages payable account, instead of a payroll bill.

To assist you in learning the new process, we’ve created a short video demonstrating the change.

Employee notes

A frequent request in Community has been a place to store comments or information for employees. We give you ‘Notes’.

Australian payroll – Notes

Notes could include information like emergency details, to record important conversations or literally whatever you need.  All notes are time and date stamped and only accessible to payroll administrators. We’ll be connecting this area to Files in the future so you can store important documents as well.

Refresh of Australian payroll

You’ll notice a new ‘Payroll Overview’ screen that shows items that need your attention. This is for leave requests or timesheets that need approval or a draft pay runs that need processing. The payroll info bar provides quick links to common tasks like adding a new employee and other useful payroll information.

Australian payroll – Overview

The first time you use Australian payroll for a new business you’ll notice a setup guide with three steps. These are the minimum tasks that need to be completed before you can process a pay run. Once completed, it disappears. This is the first step on improving the user experience for those who are getting started with Australian payroll. Depending on the complexity and needs of your business you may need to do further setup. To assess your payroll needs we recommend working with one of our Certified Advisors.

The ‘Employees’ screen has also been revamped, with previous employees now being displayed in the ‘History’ section and the introduction of employee search. You can search for employees based on their name, employee group and calendar.

Australian Payroll – employee list

Over the coming months you’ll notice more screens being updated to a newer look and feel. As we update these screens we take the opportunity to make the experience better and iron out as many annoying itches as possible.

Changes to Australian payroll pay runs

In this release we’ve made it easier to manage adjustments to previously processed pay runs by introducing the ability to process a negative unscheduled pay run. This could help you avoid having to revert previous pay runs.

Based on feedback from our July release we’ve delayed changes to prevent the reverting of previous pay runs. We totally understand the need to process adjustments to historical pay runs but there is a balance with this and the need to maintain historical information. Our plan is still to introduce some changes later in the year. There are numerous issues and consequences with the current process that we need to address, whilst still allowing for adjustments to be made. The future changes will make it easier for the vast majority of business who use payroll but still allows for adjustments to be made when required – in different ways, based on the situation. We will be communicating any changes well in advance.

Coming soon

You’ll see future updates to all areas of Australian payroll including the leave application and approval process, employee and organisation setup and the employee view of payroll.

Check out the Australian payroll area on Community to discuss with peers and accounting partners everything Australian payroll related – questions, advice, tips and tricks. If you have suggestions on how to make Australian payroll better then share it as a feature request. You vote on ideas, and we listen. Whether it’s a big idea or a small tweak, we want to hear about it.

Please let us know what you think of the changes released today – we love getting feedback. The good, the bad and the hopefully not so ugly.

For more detailed information about this release please see the release notes.

 

59 Comments

Dan Fairbairn
August 18, 2014 at 12:39 pm

Lots of very nice simple updates here, but those which will save valuable time (and more importantly mistakes). Love it.

Matthew
August 18, 2014 at 1:28 pm

How will we reconcile the bank account where individual net pays (cheques, transfers) appear as bank statement line items instead of the lump net pay shown in the video? With the old system of pay run invoices I could either process a part split payment or use a suspense transfer account.

Adam Fitzgerald
August 18, 2014 at 2:15 pm

Looking good. One query though, I can see two leave items on my Payroll overview for 2012. They are Scheduled, not Requested, so have already occurred back in 2012. Any reason why those particular ones would show up and not others?

James
August 18, 2014 at 2:26 pm

Awesome. Only an accountant would be as excited about this as I am.

Kim
August 18, 2014 at 2:28 pm

Hi,
Loving the new features.
Would be great to see the ability to add files to the employees notes tab. Say for sick certificate or NOK details forms etc.

Dean
August 18, 2014 at 2:43 pm

Great to see this development. But going to say it again – there HAS to be a way to be able amend past pay runs from time to time.

Oliver Furniss
August 18, 2014 at 2:50 pm

@Matthew – For all pay runs you post after today, you are going to reconcile the wage payments directly to the Wages Payable – Payroll account. It is the same process for a batch payment including all employees, or where you have multiple individual payments on your bank statement. No more splitting bills or using a clearing account.

@Adam – It should only show Scheduled requests that have yet to be processed in pay run. Once they are part of a pay run they changes to Completed and should disappear. If you can check that they have been processed and contact support if they have. Thanks

@Kim, James and Dan – thanks for the feedback.

Dean
August 18, 2014 at 2:52 pm

…historical information is meaningless if it is wrong. Better to be able to change it if need be to make sure it is right! Having to make adjustments in later periods makes it harder to audit and retrace the processes.

Jason
August 18, 2014 at 3:13 pm

I know its early but its payday here already :)
1.) We use the tracking options and I cant see where the option is to post the wages costs to any of the tracking options. I checked a P&L and at the moment it comes up un-assigned. When I click on the cost in the P&L it takes me to the pay run. Is it possible to open up the payroll journal to add the tracking information ?
2.) If the payroll needs to be removed and re-done, ie: revert to draft – will this auto remove the payroll journal and re-do with the updated posted payrun ?
Thanks for all the great work

Anthony Wardley
August 18, 2014 at 3:15 pm

I have definitely been looking forward to this. Thanks Xero.

Will miss being able to see payments allocated against a bill (as it made it easy to see if and when clients had gone wrong). However with brief testing, the journals do auto reverse if reverting to a draft pay run, and only the final journal shows in the ledger (so that the ledger isn’t clogged with incorrect entries and reversals).

I agree with Dean, our clients regularly seem to revert to draft (forgetting leave, bonuses, adjusted hours etc) and by preventing reverting to draft it will complicate it for them, rather than help them. It also makes it a lot easier for us being able to look at a final correct pay, rather than an original and a negative adjustment (or two). Will wait to see how this is handled down the track.

Elizabeth Salter
August 18, 2014 at 3:37 pm

Quite a number of phone calls this morning from clients wondering what they were doing wrong in payroll today because “it wasn’t working”. 😉 But I’m liking the changes. Thanks, Team Xero.

Marilyn
August 18, 2014 at 4:02 pm

The journal which you open from the Payrun shows that the net wages has been allocated to the bank account but of course it wasn’t. I was really worried until I saw the video explaining the changes. The benefit of having the clearing account is that you can pay the wages in a variety of wages and still easily allocate the payment. I must admit that I found the bill handy in that if the net wages were incorrect (some of my clients still pay each employee by a separate bank transfer) it was immediately apparent – now I’ll have to keep an eye on the Wages Payable account to ensure it always returns to zero. Overall it is a great improvement and we will just adjust our procedures slightly.

Sophie Ding
August 18, 2014 at 4:15 pm

Finally the payroll bill is gone!!

Love this update, thanks xero.

Douglas
August 18, 2014 at 4:37 pm

Excellent, now I won’t run out of Bills in the months where there are 5 pays weeks + the Xero monthly bill.

Tom
August 18, 2014 at 5:11 pm

It’s working well for me. The only thing I miss is the ability to mark the pay runs as paid – for instance I’ve done a pay run this morning for payment on Thursday – I’d like to mark it today as being paid on Thursday so that it sits on the bank rec as I regularly run the bank rec report to monitor cash balances and transfer money into our main account to cover expenses. It would be good to be able to select a bank account the wages come out of, and then the system automatically posts the journal Dr Wages Clearing Cr Bank, so it’s there waiting for you to reconcile. I could do this manually but now have to make a note of the amount and enter a manual payment – it’s not as easy as it was.

@Jason – Tracking works fine for me. Have you set the employees up with the right tracking code on the Employee Group field on the Employment tab of their record? When you view the journal from payroll it is one lump sum, but when you look at the journal that was posted (Reports->Journals) it is split into the right tracking codes.

Oliver Furniss
August 18, 2014 at 5:20 pm

Thanks everyone for your feedback.

If the pay run is reverted the journals do revert correct so its accurate with your payroll information.

Janet Aitken
August 18, 2014 at 5:34 pm

Love the update ! And love that I can now put notes against an employee’s record. And for feedback, not sure I like a journal recap that doesn’t accurately reflect what the jnl transactions are. I don’t want to see that the net pay has been posted to the cheque account when in fact its been posted to the Wages Payable account. Compounding this misinformation, opening the transaction in the Wages Payable account takes you straight back to the payroll screen. There’s no jnl recap.

Oliver Furniss
August 18, 2014 at 5:41 pm

@Janet – good comment. We should have removed the Journal Report, from within the pay run itself. We are going to update this report so that it is true reflection of the information in the new journals.

Janet Aitken
August 18, 2014 at 6:34 pm

Hey Oliver, thanks for posting back so quickly. Are you saying that I will no longer see the journal option in the Payroll screen but when clicking onto the transaction in Wages Payable I will see the correct journal in future?

Or are you saying the journal recap from the pay run will accurately reflect the journal?

Sharon Brown
August 18, 2014 at 7:06 pm

Great! So excited by all these as it will make life so much easier. Thank you!!!!!!!

Carl
August 18, 2014 at 7:25 pm

I’m glad journalising payroll entries is automatic. Xero is it possible we could get a demo video for clients to show them how to amend payruns and how the journals work to account for those changes?

Sarah Woodruffe
August 18, 2014 at 7:37 pm

I’ve just had a look to see how this payroll update will work and I’m concerned this is now adding time to our payroll process.

At the moment we have a handful of staff whom salary sacrifice car leases, laptops, etc. and because there is no option to choose a wage expense account within the Deduction category (in payroll settings) I have to manually edit each line in the draft bill to come off the different wage accounts (we have more than one). We also have staff who pay for car parking from their wage, which is a post-tax transaction we code to Rent expense. We also have a number of staff whom salary sacrifice super, which doesn’t get coded correctly in the draft bill. This is another frustration because Xero gave the option of salary sacrificing super so it records on the Group cert correctly, but not in the GL?

The fact that the payrun is now automatically posting a journal that I can’t edit is going to be a headache for our payroll process because of the above items I usually have to change.

Are you able to provide a possible solution for this please? – One that doesn’t involve posting a journal to correct a journal. Thanks

Oliver Furniss
August 18, 2014 at 8:27 pm

@ Sarah – We try and allow for flexibility where we can but there’s still room for improvement. Allowing for any account type to be selected within a deduction is on our agenda but don’t have a timeframe on this. With regards to salary sacrifice, I think you may be referring to the expense being coded against the wages expense account? There are no current plans to change this treatment. Although we can appreciate that some customers may need to do manual journals for certain transactions, that is the only option to edit details included within the payroll journal that can’t be modified from the pay run itself.

Joe-Anne
August 19, 2014 at 12:47 pm

How do I allocate the pay run to a particular charter, we run a big Cruise Ship and on a weekly basis we allocate the pays as a cost to the cruise?

Charles Klvana
August 19, 2014 at 2:44 pm

@xero team. Well done on finally getting this out. On first glance it all seems to be working great, however some of the points raised above (such as editing the coding and coding with GST) will be an issue in the future. Previously if a reimbursement was coded to a GST account, the GST was reported incorrectly on the BAS. Any idea Oli how this will now be reported with the journal? Will GST be reported on the journal or not?
Great to see you listed to our feedback in relation to reverting to a draft. Some careful thought will need to be applied before putting this back in. Problem is I understand both sides of the coin! :)

Kirsty
August 19, 2014 at 5:09 pm

Really need the option to amend a past payroll once it has been posted. I have clients that regularly stuff up the pays and it is easier to change the original information and adjust the amount paid than to fix up in a later pay.

Sarah Woodruffe
August 19, 2014 at 6:22 pm

Thanks Oliver. That’s great that the deductions item is on the agenda as this will fix the treatment for all salary sacrifice items, apart from Superannuation salary sacrifice. Because it’s an option within an employee’s card file, it should come off the wage expense account and code the expense to the super salary sacrifice exp account; instead it just goes to the super payable/liability account. Is this definitely not on the cards for development?

Donna Short
August 19, 2014 at 6:33 pm

Great improvement!! Would love to have seen an attachment icon in the employee profiles to attach resume, letters of offer – now that would be fantastic for us being in the recruitment game.

Peta Wallace
August 19, 2014 at 8:49 pm

Hi all, Oliver has handed the keyboard over to me whilst he heads up to Sydney in preparation for Xerocon. Go say hi to him if you’re there ?

@Charles, the automated payroll journal applies the tax rate of BAS Excluded to all transactions. As payroll was never designed to take into account GST related transactions it made sense to apply BAS Excluded. This will ensure no further issues arise out of pay items being coded to an account with alternative tax settings, which may then lead to incorrectly reporting GST.

@Sarah, we’re not saying we won’t ever change the treatment of super salary sacrifice expense, it’s just that it’s not on the agenda at the moment.

@Donna, this is version one of employee notes only. We fully intend on adding Files to this at a later stage.

Vanessa R
August 20, 2014 at 1:10 pm

Hi, Can someone please advise where you allocate the transaction that has come through the bank to now? As our client previously would generate a bill from the pay run and allocate the paid wages to this invoice, now with this function updated our client wants to know where she allocates payment.

Thankyou!

Peta Wallace
August 20, 2014 at 2:50 pm

Hi @Vanessa – the wage payment is to be allocated to the Wages Payable liability account by creating a spend money transaction. Once you do this for the first time, Xero will auto suggest the same transaction each time thereafter. If you take a look at the short video included in this blog, you’ll see the process in action.

Maria Troumboukis
August 20, 2014 at 3:45 pm

Wondering if I am able to ‘edit’ the payroll journal to reflect annual leave and sick leave paid to employees for the fortnight. With the old ‘bill’ method I was able to edit the bill to reflect leave paid. However with the new method all paid leave is being automatically lumped in together with all other salary payments.

Paul Cordeiro
August 20, 2014 at 4:44 pm

So let me get this straight .. I now have to either a) manually enter another transaction to which XERO will then ‘reconcile’ in the bank reconciliation or b) I have manually allocate a bank transfer transaction to the wages account randomly, and then manually reconcile that account to check that each week .. Sorry, I must be missing something, because appears to involve MORE manual work rather than less .. If you could help me understand what I am seeing wrong here, that woudl be appreciated .. I want more automation, not more manual input / reconciliation .. Thank You ..

Carol
August 20, 2014 at 5:35 pm

I use the tracking option as well, when I am reconciling do I use “Wages” as shown in the video in Create Name or the employees names as I have had previously?

Alice O'Loughlin
August 20, 2014 at 8:15 pm

Hi Xero,
If you unpost a pay run to make a change, will this update the automatic journals too?

Stephanie
August 21, 2014 at 11:11 am

Hi,
We have always been creating bills out of the payrun.
I wish to proceed with this method.
How do I make this happen now? I cant reconcile without a bill!

Jenny
August 21, 2014 at 1:05 pm

I now have tool allowances, leave / RDOs, stuck in Unassigned and unable to allocate to departments. I used to be able to enter allocations on the BILL so I could track costs to various departments, especially tax and super. Now I cannot allocate anything that isn’t on the timesheet (as I said leave, allowances, tax and super are just sitting around unallocated. Hard to believe that these important expenses cannot be allocated to relevant departments of your business. A P&L by department is not a true reflection when you have thousands of dollars unassigned! Our employees switch daily between departments so I cannot use the Employee Grouping for tracking.

Sandy Ford
August 21, 2014 at 1:42 pm

This doesn’t seem like an improvement for those companies like ours. We receive multiple debits to our bank account for individuals employee’s pays. To reconcile these we previously had to create splits in the bill payable and now it seems that we will have to create spend money transactions ofr indivisuals which is at least as time consuming. Employee pays vary each week.

Peta Wallace
August 21, 2014 at 2:07 pm

@Carol – we used Wages as the name in the video as this reduces the likelihood of displaying confidential employee wage details to other users in the organisation, who may not have payroll admin permissions. It’s totally up to you what you would like to enter.

@Alice – if you unpost a pay run, the associated journal is automatically reversed. A new journal will then be created when you post it again.

Amanda
August 21, 2014 at 3:34 pm

I have just paid our wages today. As I can’t make a payment against any form of invoice these transaction do not appear in our bank rec today. The transactions will not appear until the statement automatically updates into Xero tomorrow. So my question is, how do I get the bank rec in Xero to reflect the current bank balance by including these wages payments?

Peta Wallace
August 22, 2014 at 2:47 pm

@Stephanie – the creation of a draft bill was quite a disjointed process leading to many mistakes. There is no longer the option to do this from the pay run, and instead the payroll transactions are automatically included within a journal. This now prevents duplications or forgetting to create a bill. When you reconcile going forward, you need to allocate the wage payment/s to the Wages Payable account.

@Jenny – if timesheet tracking suit your business needs for tracking in payroll, you will need to do manual journals to re-allocate any expenses to applicable tracking categories. You may like to consider using the import journal option for these transactions and could perhaps create a template you can use each time.

@Sandy – after the first time you create the spend money transaction, Xero will auto suggest going forward so you’ll just have to click ok if the suggestion is correct. You could also look at setting up a bank rule for your wage payments to save some time.

Luana Groves
August 22, 2014 at 3:46 pm

I too didn’t mind the draft bill. I have posted the pay run for our pays yesterday but cannot find it to reconcile it? What have I done wrong? Thanks!

Luke
August 27, 2014 at 11:48 am

1. We use both tracking codes in Xero for payroll purposes.
As we are a National Company we are required to submit payroll tax for each state, this is why we use both tracking codes provided by Xero. One tracking code linking to State of Employment and the other the specific project. This allows us to report easily. Reporting is so basic in Xero we are unable select multiple projects in reporting so this is the only way to achieve this. Please prove me wrong.

2. Unable to edit Journal data
Now, an auto journal is recorded once pay run is entered. In theory this sounds great, however, XERO is there wisdom have decided that this data is also not editable. Meaning I have no access to our OWN data and unable to simply assign a second tracking code. I can do this once I entered a bill and reconciled it, realising I haven’t assigned it to a tracking code I can edit and although I can’t change figures I can assigned to a different account or tracking code

PLEASE RETURN MY PAYROLL BACK TO DRAFT SYSTEM UNTIL YOU HAVE PROPERLY THOUGHT ABOUT THIS FEATURE

Oliver Furniss
August 27, 2014 at 11:55 am

@Luke in the previous flow you would have to create the draft bill, locate the draft bill, edit the draft bill and then approve it. With the journals being created automatically you can create a manual journal to update your general ledger with required changes including splitting or assigning differently to multiple tracking categories. If you need any help with this please contact Support.

Feedback we have received has been positive to this change. We understand this is a change to the flow and process but we will not be re-introducing the draft bill feature and we have found that once our customers and payroll administrators understand the change they see it as positive.

Luke
August 27, 2014 at 12:10 pm

@ Peta Wallace – You advise Stephanie that creation of a draft bill was disjointed and leading to many mistakes. What mistakes are you talking about? Atleast if mistakes were made you could changed them and fix!

Duplication is easily fixed by deleting the transaction.

If a person forgets to click draft bill they are quickly reminded a couple or next day when a reconciliation of accounts occurs.
————————————————-

This update I have LOST more functionality than gains… Keep up the Good work

Nez
August 27, 2014 at 2:08 pm

Is there any way to edit the journal that gets posted?

Luke
August 27, 2014 at 7:42 pm

@Oliver – Thanks for advising me to contact support, who simply have advised me that you CANNOT assign a single payroll item to two tracking codes. This was achievable with the Draft system. Its proof to me that this upgrade was not thoroughly considered.

I understand that in order for the auto update to work properly that we as a user cannot make any changes to data entered into auto journal, otherwise sync would not occur correctly. Surely we should be able to add and use the second tracking option provided, as we can when a invoice is entered and reconciled.

Its a must for us to be able to use second tracking option

Oliver Furniss
August 27, 2014 at 8:02 pm

@Luke you can create a manual journal to apply multiple tracking categories that were not allocated from the pay run.

If you’re already using timesheet tracking, I’m assuming you’re referring to Superannuation and possibly PAYG amounts that are not split? The automatic splitting of superannuation with timesheet tracking is something we will improve in the future, but there are no plans to do the same for PAYG as there would be no reason to track it because its simply a liability.

If you’re not using timesheet tracking, perhaps this is an option for you? At the very least this will mean that the wages will be tracked across multiple categories. You would still need to manually journal any superannuation amounts you want split across multiple categories though.

Trish
September 1, 2014 at 6:08 pm

I am confused…. Where is the Payrun journal Transaction in Xero?
I have just completed the August payrun today and I need to adjust the Journal as the payments come out of two separate Chq accounts. not the single account as specified in the journal
Why cannot the Draft Bill remain an option as well
Journal or Draft Bill…surely its not that hard to develop?
Also… it was working fine with just the Draft Bill… I have been doing payroll for ever and never had a problem till today!

Jason
September 3, 2014 at 10:10 pm

The how-to video says to allocate the full pay run to 804-wages (or what ever account we use). Does this mean I need to go through and allocate net pay, super, deductions, etc to each of their respective accounts or does the new process do this automatically, like the draft bill did?

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