An advance may be an amount that is given to an employee in one payroll period and recovered in a future period. The advance it may also be paid from funds outside the payroll, which is now being fully recovered through the payroll as a deduction.
Unlike loans, the system does not calculate the tax benefit of thean advance, nor does it calculate interest. Advances should, therefore be used with caution.
If the amount advanced is processed through the payroll, then use a Transaction Code that has been created using the Category 'Earnings - Amount (Non Taxable)'. See this link for more information on how to setup 'Earnings - Amount (non Taxable)'.
To process the Advance Recovery use a Transaction Code using the Category 'Deduction - Amount'. Use this link and go to the heading 'Other Deductions' for more information on how to process the advance using 'Deduction - Amount'.
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