What is a balance transfer?

In payroll, “balance transfers” is when a payroll system copies employee balances (accrued time off, bonuses, or other payroll-related data) from one employment record to another.

Why is a balance transfer for payroll necessary?

When an employee’s employment record changes (e.g., a global transfer, a change in legal employer, and so on), employers must carry forward balances like accrued vacation time, sick leave, or other relevant balances to the new payroll system to ensure they receive their entitled benefits.

When do you do a balance transfer for payroll?

Payroll or HR teams usually conduct balance transfers for a few reasons:

• Switching payroll providers – Employers transfer payroll balances from an old system to a new one.
• Adjusting employee payments – A balance transfer corrects the amount if an employee’s wages were miscalculated.
• Handling terminated employees – Final paychecks or remaining benefits may be transferred to another account.

Employers must copy the balances from the original record before the first payroll run on the new employment record. This ensures that the new payroll system uses the right starting balances.

Example of a balance transfer

Scenario: A company switches from one payroll provider (Provider A) to a new system (Provider B) during a pay cycle. Some employees already received partial payments through Provider A, but the remaining salaries must be processed. The finance team transfers the remaining wages for each employee into provider B for salary disbursements.

How does a balance transfer work?

1. Before transferring balances, the finance team calculates each employee’s remaining benefits or wages.
2. The remaining balance is transferred from the company’s payroll account to the other account or payroll system.
3. The new account or system processes the outstanding salaries or benefits and ensures employees receive full pay.
4. The company reconciles payroll records to confirm all funds were allocated correctly.

This helps ensure employees are paid correctly without delays, even during system transitions or errors.

How to perform the balance transfer?

• Automatic copy: Businesses can select an option to automatically copy balances after the global transfer is complete within the payroll details section of the transfer workflow.
• Manual transfer: If the balances aren’t ready on the source at the time of global transfer, businesses can submit a separate “Transfer Balances” flow to initiate the copy later.

Key considerations for balance transfers

• Source balance: The source balance should include the original balance and any balances from previous global transfers.
• Process information group: Businesses can pre-configure the list of balances using an object group, called Process Information Group.
• Readiness of the balance: Payroll teams can determine the readiness of the balance by two conditions: any further payroll activity on the source and the time left for the first payroll activity on the target.