Salary crediting is a banking service for companies to pay employee salaries. Large companies with thousands of employees use salary crediting. The company opens a Giro account at a bank. Employees open accounts at the same bank. The company sends the salary amount to be transferred to each employee. This transaction is done in real-time. Employees can withdraw their salaries from an ATM. Originally, payroll was done by providing salaries directly. Now banking services are used.
Benefits of Salary Crediting
Salary crediting allows employees timely access to salaries. Employees enjoy automatic bill payments and easy access to funds. The best salary crediting option depends on employee preferences and requirements.
Accounting for Salary Expenses
Salary expenses are amounts paid to employees. Since salaries are an expense, the salary expense account is debited. The salaries payable account is a liability account. It is credited for salaries owed but not yet paid.