How to track employee loans and deduct them from payroll

Your staff member took out an SSS salary loan and you've been deducting ₱1,200 from her payslip every month. You're doing this manually: remembering to include the deduction each payroll, tracking how many payments have been made, and calculating when she'll be paid off.

Then she gets a Pag-IBIG multi-purpose loan. Now you're tracking two loans for one employee. You have a spreadsheet for this somewhere. The cells are getting confusing. Last cutoff you forgot to deduct one of them.

Employee loans are a normal part of running a business with staff. The tracking doesn't have to be manual.

What loan tracking in Timekeep does

A loan in Timekeep is a record with a principal amount, a per-cutoff deduction amount, and a deduction schedule. Timekeep computes the amortization, deducts the right amount from each payslip, and tracks the remaining balance. When the balance hits zero, deductions stop. You don't have to watch a spreadsheet to know when it's done.

Step 1: Add a loan for an employee

Go to Loans in the dashboard and add a new loan. Select the employee, enter the loan amount, the deduction per cutoff, and the start date.

For an SSS loan, you'd enter the total loan amount and the monthly amortization as the deduction. For a cash advance, you'd set whatever repayment amount makes sense for your business.

Set the deduction schedule: every cutoff, first cutoff of the month, or last cutoff of the month. SSS loans are typically deducted once a month, so you'd set this to first cutoff. Pag-IBIG multi-purpose loans follow the same pattern.

Step 2: Timekeep handles the rest

Once the loan is set up, Timekeep includes the deduction automatically every time you run payroll for the applicable cutoff. The deduction appears on the payslip as a separate line item.

The remaining balance is updated after each payslip. You can check the loan record at any time to see how many payments have been made and how much is left.

Multiple loans, no confusion

If an employee has an SSS loan and a Pag-IBIG loan at the same time, add both loans. Each one deducts separately on the payslip with its own line. The balances are tracked independently.

When one loan is paid off, its deductions stop. The other continues until it's done.

Preventing over-deduction

One of the problems with tracking loans in a spreadsheet is over-deduction. You're subtracting the same amount every cutoff, and you have to remember to stop when it's paid off. If you forget, you deduct more than you should.

Timekeep tracks the remaining balance and stops deducting when it reaches zero. If the final payment would exceed the remaining balance, Timekeep only deducts what's left. Your staff aren't over-charged.

What employees see

Employees can see their loan deductions in the payslip breakdown in the portal. They can also see their loan balance in the portal, showing the original amount, how much has been paid, and what remains.

This matters especially for SSS and Pag-IBIG loans where the employee needs to know how much they still owe the agency. They can check it themselves instead of asking you.

Loans from the business

Beyond government loans, some businesses offer cash advances to their team. You can track these the same way. Add the advance as a loan, set the deduction per cutoff, and Timekeep deducts it from each payslip until it's recovered.

This is useful when a staff member needs help before payday and you agree to recover it over the next few cutoffs. You set it up once and don't have to remember to include the deduction.

Payroll accuracy when loans are involved

Loans add complexity to payroll. Multiple loans, varying deduction schedules, and the risk of forgetting when one is paid off are all places where manual tracking breaks down. When loans are in Timekeep, they're part of the same payroll process. You add the loan once, and it deducts correctly from that point forward until it's paid.

Try it free for 30 days at timekeep.ph.