How to Handle Employee Loans Using Fingercheck
Managing employee loans can be a daunting task for any organization, especially when it comes to tracking multiple loans and ensuring repayment. Fortunately, with Fingercheck, you can easily handle employee loans with just a few simple steps. In this article, we'll guide you through the process of creating a loan deduction code, lending money to an employee, and setting up a repayment plan. We'll also provide tips on managing multiple loans. Read on to learn how to handle employee loans using Fingercheck.
For smaller loans:
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Creating a Loan Deduction Code
Creating a Loan Deduction Code
Before you can loan money to an employee, you need to create a deduction code for the loan in Fingercheck. Here's how to do it:
Log in to your Fingercheck account as an Administrator.
Go to the SETUP tab > Payroll > Payroll Deductions.
Click the Add button.
From the Add Deduction panel, click the Add button for Loan.
Click OK in the confirmation window.
Click the X in the top-right corner to close the Add Deduction panel.
Once you've added the deduction code, the system will automatically assign the next available number, such as "Loan12". If you want to modify the deduction code of the latest loan added, look for the deduction code named "Loan" followed by the highest number.
Lending Money to an Employee
Lending Money to an Employee
Now that you have the loan code created, you can use it to loan money to your employee. Here's how to do it:
Start a payroll run in Fingercheck.
Click on the triple bar icon next to the name of the employee you want to lend money to.
From the drop-down list of options, select Edit Check.
Click on the Deductions section of the check.
Click the Add button.
Select the loan code from the Deduction drop-down list.
Enter a "minus" sign followed by the cost of the loan in the Amount field. (e.g. "-1,000" without the quotes)
Click Save and then Continue to complete the process.
The employee will receive their money on their regular payment method
Setting Up a Loan Repayment Plan
Setting Up a Loan Repayment Plan
Loan repayment is an essential aspect of lending money to employees. It's important to set up a repayment plan to ensure that the loan is paid back, which can be done through a payroll deduction. The payroll deduction works by deducting a set amount from the employee's paycheck, and the money will never leave your business bank account. Here are the steps to set up a loan repayment plan:
Note that one option is to use the "Loan" deduction code both when lending money to the employee and when they repay the loan. However, if the loan is repaid with the same code, it will negate the loan on reports and indicate that the employee was never loaned any money. To avoid this, it's recommended to use a separate deduction code for loan repayments.
Step 1: Add a deduction code for Loan Repayments:
Log in to your Fingercheck account as an Administrator.
Go to the SETUP tab > Payroll > Payroll Deductions.
Click the Add button.
From the Add Deduction panel, click the Add button for Loan.
Click OK in the confirmation window.
Click the X in the top-right corner to close the Add Deduction panel.
Step 2: Add the new code as a recurring deduction to the employee's profile:
Log in to your Fingercheck account as an Administrator.
Click the EMPLOYEES tab.
Click the name or employee number of the employee.
Select Payroll > Deductions.
Click the Add button.
In the Add Employee Deduction window, from the Deduction Type drop-down list, select the loan repayment deduction code you created.
Enter an Amount or Rate.
Set a Start Date and End Date to tell the system when to start and stop applying the deduction automatically. For the End Date field, use 12/31/2099 or a similar value if you want to apply the deduction code indefinitely.
Set a Goal Amount if the deduction code should stop applying after a particular amount has been collected. This is useful for loan repayments.
Click Save.
Managing Multiple Loans
Managing Multiple Loans
In order to keep track of multiple loans for each employee accurately, it is necessary to generate distinct loan and loan repayment deduction codes for each loan. This is crucial because employing the same code for multiple loans will obstruct the monitoring of loan repayment, as all repayments will be attributed to the same loan.
It is recommended to label each loan with a unique identifier such as "Loan 2" or "Loan Repayment 2" to manage multiple loans effectively. Once a deduction code such as "Loan" has been added, the system will automatically assign the next available number, for instance, "Loan12".
If you wish to modify the deduction code of the latest loan added, search for the deduction code named "Loan" followed by the highest number.
Thank you for using Fingercheck. If you have any questions on this article's topic, you can reach out to our team at 1-800-610-9501, or use the chat option below.