Wafaq Payroll Cycle: A Complete Guide

The payroll cycle in Wafeq starts with setting up a "payroll" template for each employee, which you’ll only need to create once. and it serves as your reference whenever you need to update an employee’s salary details.

 

Once that’s done, if you want to generate the "payslip" for any time period, convert the payroll template into a "pay run".

In this stage, you’ll define the time period, and the system will automatically use the data from your payroll template.

• You can issue the payslip for one employee or multiple employees.
• send it to them
• It also generates the related accounting journal entries.

After posting the pay run, we move to the payment stage.

Enter the payment details for the pay run you need, and once you’ve finished. This action will automatically create a journal entry that reflects the payment, keeping everything aligned and updated.

This is the overall payroll cycle in Wafeq, and in this tutorial, we’ll dive into each step in detail! 

Step 1: Create Your Payroll Sheet!

You will need the payroll sheet to add salary details for new employees or updating existing payroll data.

To access the payroll page, simply:
Click on "Payroll & Employees" from the main menu, then click on "Payroll".

You’ll see a spreadsheet-style interface that looks and feels like Excel. You can now start entering payroll data directly into this sheet.

Here’s a breakdown of each field you’ll find in the sheet:

Employee: Choose an employee from the dropdown menu.

• 💡 Note: To see an employee in the dropdown, make sure the employee has been added to your employee database in Wafeq. For more on how to add a new employee, check this guide.

Line item description: Enter a description for salary amount, it will appear in both the payroll sheet and the payrun (payslip) just as you write it.

• 💡 Note: You can either enter the full salary as one line item with a general description like “Salary”, or break it down into multiple lines. for example: “Base salary”, “Bonus”, “Deduction”.

• If you want to track bonuses separately from base salary, use multiple lines (e.g., “Base Salary”, “Bonus”, “Deduction”).

• If a single line is enough, simply enter the total salary amount under one description like “Salary”.

The system will automatically calculate the total by summing and subtracting these items.

• ➕📝 How to add multiple lines salary?

• To add another line for the same employee payroll click on "Add line" button in the "Line item description" field.

• 💡 Note: Clicking “Add line” allows you to add multiple salary components for the same employee all under the same Payroll ID. Wafeq will automatically fill in shared details like cost center, currency, project, and branch into each new line, so you only need to fill in a clear description, assigning the correct account, and entering the amount.
• The total salary will be calculated for you automatically, no manual math needed.

Account: Choose the appropriate account for each salary item from the dropdown. Each line can have a different account based on the type of salary component.

• 💡 Note: When choosing an account for positive salary components (like base salary or bonus), the selected account (e.g., Salaries and Wages, or any relevant expense account) will be used as a debit, because these are company expenses. But for deductions, the selected account will be used as a credit, since they reduce the total salary cost, and it may also be Salaries and Wages or any relevant expense account.

  Examples:

  Base salary or bonus:
  Dr. Salaries and Wages
Cr. Payroll Payable

  Deduction:
  Dr. Payroll Payable
Cr. Salaries and Wages

Amount: Enter the amount for each salary item.

• 💡 Note: Enter positive amounts for items like base salary, bonuses, or allowances (e.g., 500). For deductions or any amounts to be subtracted, use a negative value (e.g., -500) to ensure correct calculations and accounting.

Cost Center: Enter the relevant cost center, this helps with classification, filtering, and generating accurate reports.

• 💡 Note: To add a new cost center from the same screen, just type its name in the field, you'll see “Save as new option” in the dropdown. Press Enter to add and select it.

Total: This is calculated automatically based on the amounts you entered for each salary item.

Currency: Select the currency for this payroll. It’s usually set to your company’s default, but you can change it if needed.

Project: Enter the relevant project, this helps with classification, filtering, and generating accurate reports.

• 💡 Note: To add a new project from the same screen, just type its name in the field — you'll see “Save as new project” in the dropdown. Press Enter to add and select it.

Branch: Enter the relevant branch, this helps with classification, filtering, and generating accurate reports.

• 💡 Note: To add a new branch from the same screen, click "+ Add Branch" from the dropdown menu, fill in the name and related details, then press "Save", it will be added and automatically so you can select it.

Include in pay run: 
 

• Yes:
  Select "Yes" to include this payroll record in the pay run. so you can generate a payslip (monthly, quarterly, or yearly), post it, create journal entries and send the payslip to the employee 📤.

• No:
  If you choose "No", the record won’t be included, meaning no payslip can be generated, no journal entries will be created, and you won’t be able to send it to the employee.

Payroll ID: A unique identifier automatically assigned to each payroll record, used to group all related line items for the same employee.

Search, Sort, and Filter:
At the top of the payroll sheet, you'll find tools to help you quickly work with your data:

• Search: You can search payrolls through employee name.

• Sort: Sort allows you to organize payrolls by employee names or pay run reference, either in ascending or descending order.

• Filter gives you more control, you can filter records by fields like Account, Currency, Project, Branch, or Cost Center.

These tools make it easy to manage large payroll records and focus on exactly what you need.

After entering the payroll data, you're now ready to generate the pay runs for the selected employees, whether it’s for monthly salaries or any other period you choose. 

Step 2: Generate the Pay Run from Payroll!

Once your payroll setup is complete, the next step is to generate a pay run — this what enables you to pay salaries and to send the document to the employee.

From the payroll screen, select the records you want to convert into pay runs, then click the "Create Pay Run" button.

When you click "Create Pay Run", Wafeq copies the selected payroll records into the Pay Runs page as draft payslips.

Each payslip is grouped by employee and includes all related line items. From there, you can set the period, make few adjustments if needed, and proceed to posting and payment.

• Once the payslip is reviewed, choose the date
• Check the box next to it
• Click "Post" to confirm it.

This will lock the payslip, create the accounting journal entry, and make it eligible for payment.

• 💡 Note: Posting a payrun locks it to prevent any accidental changes.

Explore the Payroll Journal Entry After Posting! 

After you’ve posted the pay run, hover over the book icon to quickly preview the journal entry on the same page.

you will find that the journal entry reflects the correct accounting treatment based on the nature of each salary item, whether it increases or reduces the company’s salary expenses.

As shown in the image:

• Base salary and bonus are recorded as debits to the Salaries and Wages account since they’re additional expenses.

• The deduction is posted as a credit to the same account, because it reduces the overall salary cost.

• The total net amount is credited to Payroll Payable, representing the amount the company still owes the employee.

If you want to view the full journal entry details in the General Ledger, click on the same green book icon in the pay run page, this will take you to the Ledger, filtered automatically to show only that specific entry.

Step 3: Record Employee Salary Payments from the Pay Run!

To record a salary payment, go back to the "Pay runs" page from the main menu. Click the plus icon (+) under the "Payments" column next to the posted payslip. This opens the Employee Payment form, where you can complete the payment.

When you record a salary payment in Wafeq, the system automatically creates a journal entry that reflects the payment in accounting terms.

As shown in the image:

• The Payroll Payable account is debited, because the company is settling its liability, this means the amount owed to the employee is now cleared.

• The selected Bank Account is credited, because this is the actual source of payment, it reflects that the money has been paid out.

This entry ensures the company’s liabilities are reduced correctly, and the payment is recorded through the appropriate account.

• 💡 Note: The credited account shown in the journal entry is the one you selected during the payment process, it represents the actual account the salary was paid from. In most cases, this is a bank account, but it can be any account that fits your accounting setup.

If you want to view the full journal entry details in the General Ledger, click on the same green book icon in the pay run page.