Everything you need to know about using a payroll journal

For anyone working within the payroll industry a payroll journal is considered an essential part of the process, but we are often still met with new clients who have struggled to make use of an effective payroll journal with their previous provider.

We are commonly asked if we are able to provide a payroll journal. Since the payroll journal is an essential part of the process we believe that any managed payroll provider should be able to provide this as a part of their service.

What is a payroll journal?

Payroll journals are used by finance teams or accountants to check that all the company wage costs and outgoings from the company bank can be accurately reconciled and accounted for after each pay period.

Different elements within the journal are listed as credits and debits, and attributed to different nominal codes, which can then sometimes feed through to larger company financial reporting.

For example, at the most basic level, the gross wage that goes into the payroll should equal net pay plus deductions:

Gross Wage = Net Pay + Tax + Employees National Insurance + any other Net Deductions (such as employee net pensions, student loans and attachment of earnings).

The gross cost will be:

Gross Wage + Employers National Insurance + Employers Pension Contributions.

Journal example

Handling complex credits and debits

Journals, when formatted correctly, are a quick way to reconcile wages and costs, because the debits and credits will usually be equal if everything has been processed correctly.

Small companies might have a fairly simple journal with a handful of debits and credits to reconcile against each nominal code. For larger companies however, this can then become more complex as you add more pay elements and more departments or divisions.

Different businesses may have other complexities, for example charities will often need to match their payroll journals back to different funding streams as well as having the separate elements/departments/divisions.

Some finance teams might waste a lot of time creating these journals from scratch by entering data from the payroll reports. Others might go one level up and create a macros template within Microsoft Excel that can automatically create the journal from a CSV of the payroll report.

Support with your payroll journal

Here at Dataplan we have a long history of working with accountants and bookkeepers, having started within and accountancy firm ourselves before becoming independent in 2018.

This means we have plenty of expertise in creating journals with our technical team, which can then be sent to you after every payroll run and remove the need for your finance team to create journals.

If we have a good understanding of the nominal codes and information we can create you a payroll journal on the fly, this will be uploaded to our secure ePaysafe portal as a part of the payroll data for review and approval.

Once the payroll is approved the data is locked into our online journal that is built within our payroll portal ePaysafe. Clients can manage the journal themselves adding in any new nominal codes if they wish to move costs around from departments.

If you would like to know more about how we can provide a payroll journal as part of our managed payroll service please contact us.

Written by Katie Linstead
Published on October 22, 2021

Dataplan are one of the UK’s leading providers of specialist payroll and associated services.

From payroll outsourcing and pension service management to ePayslips and gender pay gap reporting; we have a solution for you and your business.