Accounts payable
The money a company owes to suppliers and vendors for goods or services already received but not yet paid for. For HR, this usually covers what is owed to agencies, benefits providers, background check vendors, and similar outside partners.
Accounts payable is effectively a running list of bills the company has agreed to pay but has not yet settled. Every invoice a recruitment agency or benefits provider sends sits in accounts payable from the moment it is approved until the moment it is actually paid.
For a people team, the accounts payable relationship that matters most day to day is usually with recurring people related vendors: the applicant tracking or background check service, the benefits broker, the training platform. Late payment to any of these can have very real consequences, from a paused service to a frustrated candidate stuck mid check.
A healthy accounts payable process keeps a clean trail from invoice to approval to payment, so nothing gets paid twice, nothing gets missed, and it is always possible to answer “what do we currently owe, and to whom” without digging through old messages to reconstruct it.
Accrual
Recognising a cost or entitlement as it builds up over time, rather than only when cash actually changes hands. In HR this shows up constantly, from leave building up gradually to wages owed for days already worked but not yet paid.
Accrual accounting records things when they are earned or owed, not only when money physically moves. Someone who has worked part of a period has already earned part of a period’s wages, whether or not payday has arrived yet, and that earned but unpaid amount is an accrual sitting on the books.
Leave is the clearest everyday example for HR. Annual leave usually accrues gradually as someone works, a little at a time, rather than arriving all at once, which is exactly why a leave balance needs recalculating whenever someone joins partway through a period, changes hours, or leaves before using what they have built up.
Payroll carries its own accruals beyond leave, such as a bonus provision building up ahead of payment, or an end of service entitlement accruing gradually across someone’s time with the company rather than appearing only on their last day. Getting these right matters because an understated accrual makes a company look more comfortable than it actually is, right up until the bill eventually comes due.
In HarmoniHRM: Payroll tracks end of service entitlements as they accrue period by period, rather than surfacing the full liability only on someone’s last day.
Budget
A plan for how much money is available to spend over a period, and what it is expected to be spent on. In HR and payroll, budgets usually centre on headcount cost: how many people a company can afford to employ and at what pay.
A budget turns a spending plan into a number that can be checked against reality. For people focused teams the biggest line is almost always payroll, so a workforce budget and a finance budget are really two views of the same underlying commitment.
Budgets work best as a living comparison, not a document filed away once a period and forgotten. The useful question is never just “what did we budget”, it is “how does what we are actually spending compare with what we planned”, asked often enough that drift gets noticed while it is still small.
For HR specifically, budgets are rarely just about total spend. They also constrain decisions such as how many open roles can be filled, whether a pay rise is affordable, and how much room exists for bonuses or benefits, which is why HR and finance need to be reading from the same number, rather than reconciling two different ones after the fact.
In HarmoniHRM: Settings can raise a headcount budget alert when projected payroll spend is on track to exceed the approved budget, so drift is flagged while there is still time to act on it.
Capital expenditure (CapEx)
Spending on something that will keep providing value over several years, such as equipment or a building, recorded as an asset and its cost spread out over time rather than counted all at once. It sits opposite operating expenditure, which covers the everyday running costs of the business.
Capital expenditure buys something that sticks around. A batch of laptops for new starters, office furniture, or a company vehicle are typical examples: the cash goes out at the point of purchase, but the value keeps being used for a long time afterwards, so the cost is spread across that useful life rather than hitting the books in one go.
The practical reason this distinction matters to HR is equipment. Every laptop, phone, or piece of kit issued to a new hire is very likely capital expenditure, which means it is tracked as an asset with its own value and useful life, not simply written off as a one off cost in the month it was bought.
Getting the capital versus operating distinction right affects how affordable something looks in a given period. A large batch of new equipment can look like a big hit to a single period’s spending when it is really an investment whose value is used up gradually, which is exactly the kind of nuance that keeps finance and operations talking to each other rather than past each other.
Chart of accounts
The structured list of categories a company uses to record every transaction, such as salaries, employer taxes, or benefits cost, each with its own reference code. It is the shared vocabulary that lets finance report on money consistently across the whole business.
A chart of accounts gives every kind of cost and income a defined home and a code, so that “salaries” always lands in the same place no matter who enters it or which system it comes from. Without that shared structure, the same kind of spend could be recorded several different ways by several different people.
For payroll, the chart of accounts matters because a single pay run actually touches several different account categories at once. Gross wages, employer contributions, and the liabilities owed to tax authorities or pension providers are all genuinely different things, even though they all originate from the same pay run.
This is exactly why payroll figures need mapping to the right accounts rather than landing as one unlabelled total. A finance team that receives payroll costs already coded to the correct accounts can close the books quickly; one that receives an unstructured lump sum has to reconstruct that mapping by hand every single period.
In HarmoniHRM: Payroll’s journal export tags every line with an account and an account code, so it lines up directly with the company’s chart of accounts instead of arriving as one unlabelled total.
Expense management
The process of employees spending money on the company’s behalf, such as travel or supplies, and being reimbursed for it correctly and on time. It covers submitting a claim, checking it against policy, approving it, and paying it back.
Expense management exists to answer a simple pair of questions honestly and quickly: did someone genuinely spend this for work, and does it fall within what the company allows. Handled badly, it becomes a slow, paper heavy process that quietly punishes honest employees for the sake of catching rare misuse.
A workable expense policy is specific about what is claimable, what evidence is needed, and how quickly claims get reviewed, because ambiguity is what causes both accidental policy breaches and unnecessary rejections of legitimate spend. People generally follow rules they understand; they push back on rules that feel arbitrary.
Reimbursement is the other half of the process: actually paying people back once a claim is approved. The cleanest approach folds a genuine reimbursement into the same payment run as regular pay, so someone is not left waiting on a separate transfer long after they already covered the cost out of their own pocket.
In HarmoniHRM: Payroll can pay an approved reimbursement through the same payslip as regular wages, kept as its own clearly labelled line rather than folded invisibly into pay.
Fully loaded cost
The true total cost of employing someone: salary plus every additional employer cost that comes with it, such as employer taxes, pension contributions, and benefits. It is often called headcount cost, and it is almost always higher than the salary figure alone suggests.
Salary is only the most visible part of what an employee actually costs a company. The fully loaded cost, sometimes called the fully burdened cost or simply headcount cost, adds in everything else the employer pays because that person is employed: statutory contributions, pension, benefits, and any other on cost tied to their employment.
This distinction matters most when comparing options that look similar on the surface. Candidates with identical salary expectations can have meaningfully different fully loaded costs depending on their benefits package, their country’s employer contributions, or entitlements like end of service benefits that accrue quietly in the background.
Workforce planning that only looks at salary consistently understates what growth actually costs. Budgeting, hiring decisions, and any serious discussion about affordability should use the fully loaded figure, because that is the number that actually leaves the business, not the smaller one printed on the offer letter.
In HarmoniHRM: Payroll and Analytics calculate each person’s full employer cost, salary plus every statutory and benefit on cost, not just the salary line, so hiring and budgeting decisions use the real number.
General ledger (GL)
The complete record of every financial transaction a company has made, organised by account, that everything else in finance ultimately rolls up into. It is the single source of truth finance reports are built from.
The general ledger is where every transaction ultimately lands, organised into the categories set out in the chart of accounts. Sales, payroll, supplier payments, and everything else eventually gets recorded here, which is what makes it possible to produce a single, coherent set of financial statements from so many different kinds of activity.
For HR and payroll, the connection to the general ledger is the payroll journal: rather than payroll existing as its own island of numbers, its costs are posted into the same ledger everything else uses, sitting alongside sales, supplier costs, and every other transaction the business records.
A ledger is only as trustworthy as the entries feeding into it. If payroll posts a rough estimate rather than the real, itemised cost, the general ledger, and therefore every report built from it, quietly inherits that imprecision, which is exactly why an accurate, properly coded payroll journal matters so much more than its size alone would suggest.
Gross to net
The full calculation that turns someone’s gross pay into their net, take home pay, showing every tax, contribution, and deduction applied along the way. It is the exact bridge between what payroll calculates and what finance and the employee both need to see.
Gross to net is not a single number but a trail: starting from gross pay, then showing income tax, social contributions, pension, and any other deduction one by one, until what is left is the net pay that actually reaches someone’s bank account. Every figure on a payslip exists somewhere on this trail.
For finance, the gross to net breakdown is what makes a pay run auditable rather than a single opaque total. Being able to see exactly how a gross figure became a net figure, and where every part of the difference went, whether to tax authorities, pension providers, or the employee themselves, is what lets anyone check the number rather than simply trust it.
The same trail also has to answer for the employer’s side, not just the employee’s. The full cost to the company adds employer contributions on top of gross pay, so a complete gross to net picture actually runs from what the employer pays in total down to what the employee finally receives, with every stop in between accounted for.
In HarmoniHRM: Payroll shows the complete gross to net breakdown on every payslip, and explains in plain language what changed on any line since the last cycle.
Month end close
The recurring process of finalising a period’s financial records, checking everything is accounted for, before the books for that period are locked and reported on. Payroll is almost always one of the last, and most important, pieces finance needs before it can close.
Month end close is the ritual that turns a period of ongoing transactions into a finished, trustworthy set of numbers. Every cost has to be accounted for somewhere, nothing double counted and nothing missing, before finance can confidently say what the period actually cost and earned.
Payroll is one of the biggest single inputs to any close, and often one of the last to land, because a pay run typically has to be fully processed and approved before its true cost is known. A close that is waiting on payroll is extremely common, which is exactly why a late or reopened pay run causes disproportionate stress on the finance calendar.
The practical discipline that makes close smoother every single period is consistency: the same categories, the same cut off point, and the same checks each time. A close that has to be reinvented from scratch every period is far more likely to miss something than one that simply repeats a well worn, reliable routine.
Operating expenditure (OpEx)
The everyday, recurring cost of running the business, such as salaries, rent, subscriptions, and utilities, consumed in the period it is paid rather than providing value for years afterwards. It sits opposite capital expenditure, which buys something longer lived.
Operating expenditure covers the ordinary, ongoing bills that keep the business running day to day. Payroll itself is the largest operating expense in almost every people focused organisation, alongside things like software subscriptions, office costs, and recurring services.
The distinction from capital expenditure is about how long the value lasts. A software subscription is consumed as it is used and renews on its own schedule, so it is treated as an ongoing operating cost, whereas a physical asset bought outright keeps delivering value long after the purchase and gets spread out as capital expenditure instead.
Many companies have deliberately shifted spend from capital to operating over time, leasing equipment or subscribing to software rather than buying it outright, precisely because operating costs are easier to flex up or down as the business changes than a large upfront capital purchase ever is.
Payroll journal
The structured record that translates a pay run into the debits and credits finance needs to post it to the company’s books. It is how “we paid everyone” becomes an accounting entry finance can actually work with.
A payroll journal takes everything that happened in a pay run, gross wages, tax withheld, pension contributions, any reimbursements, and restates it as a set of accounting lines: what the company owes as an expense, what it owes to tax and benefits authorities as a liability, and what has already left the bank as cash paid out.
The defining feature of a proper payroll journal is that it balances: total debits must equal total credits, every single time. If they do not, something in the pay run has been miscounted or a cost has been left out entirely, so a journal that fails to balance is a genuine warning sign, not a rounding curiosity.
Getting the payroll journal right matters because payroll is usually one of the largest and most frequent postings finance ever makes. A journal that already splits cost sensibly, by department, by cost centre, by account, saves finance from re deriving that structure by hand at the point the books need to close.
In HarmoniHRM: Payroll builds a balanced journal automatically from the pay run, split by department and cost centre, ready to export and post rather than reconstructed by hand.
Prepayment
Money paid out in advance for something that will be received or used over a later period, such as an annual insurance premium or a software renewal. Rather than counting the whole cost immediately, it is recognised gradually across the period it actually covers.
A prepayment happens whenever a company pays for something before it has actually received the full benefit of it. Annual insurance, a yearly software or licence renewal, and rent paid ahead of the period it covers are all common examples that HR and payroll teams routinely encounter.
The reason prepayments are not simply counted as an immediate cost is fairness to the numbers. If a whole period’s insurance premium hit the books entirely in the period it was paid, that single period would look artificially expensive and every following period covered by it would look artificially cheap, neither of which reflects reality.
For HR specifically, prepayments show up most often around benefits and renewal cycles, since insurance and many provider contracts are commonly billed upfront for a full period. Recognising the cost gradually, spread across the period it actually covers, gives a much truer picture of what running the business really costs.
In HarmoniHRM: Benefits keeps a renewal calendar for the policies it holds, exactly the kind of upfront payment finance needs to spread gradually rather than count all at once.
Purchase order (PO)
A formal document a buyer sends a supplier confirming exactly what is being ordered, at what price, and under what terms, before the supplier ships anything or starts work. For HR teams it typically appears when engaging agencies, buying equipment, or commissioning outside services.
A purchase order exists to get agreement in writing before money is committed, rather than after. Once a supplier accepts it, both sides have a shared, unambiguous reference for what was actually agreed, which matters enormously when an invoice arrives and someone has to check it matches what was actually ordered.
For people teams, a PO typically shows up around recruitment agency fees, background check services, training providers, or a batch of equipment for new starters. Raising a PO before committing to the spend, rather than after the invoice lands, is what gives finance genuine visibility into commitments that have not been paid yet but soon will be.
The habit that makes purchase orders actually useful is matching: checking the PO, the delivery or completed work, and the eventual invoice all agree before anything gets paid. Skipping that match is how duplicate payments, wrong amounts, and unauthorised spend slip through unnoticed.
Variance
The difference between what was budgeted or expected and what actually happened, usually expressed as an amount higher or lower than plan. In payroll, variance shows up whenever actual pay costs differ from what was forecast for the period.
Variance is simply the gap between the plan and reality, and it is one of the most useful numbers in finance precisely because it is comparative rather than absolute. A cost on its own tells you what happened; a variance tells you whether that was expected or a surprise.
In a payroll context, variance commonly comes from things that are hard to predict perfectly in advance: overtime running higher than planned, new joiners or leavers shifting the period’s cost, or a one off payment such as a bonus or settlement landing in a period that did not budget for it.
The value of tracking variance is not the number itself but the habit it creates: explaining it. A recurring variance nobody investigates is a budget quietly drifting out of date, while a variance that gets a real explanation each period, more overtime, a late leaver payment, a timing shift, keeps the next period’s plan honest.