Labour cost by department from payroll

How a manufacturer sees labour cost, headcount and staff movements by department each month from Achekam payroll, and how to use them in costing.

By Achekam · 11 October 2026 · 4 min read · For Manufacturing businesses in South Africa, Nigeria, Kenya

In most factories the argument about labour goes the same way. The production manager says the line is short-staffed. Finance says wages are up on last year. The managing director asks which department is driving it, and nobody can answer without a week of pulling payslips into a spreadsheet. By the time the answer arrives, the next month's payroll has already run.

The information needed to settle that argument already exists in every pay run. The trick is to have payroll report it by department, every month, in a form managers can actually use. This article shows how Achekam's payroll does that, and how to turn the reports into better costing conversations.

What the payroll reports give you

Achekam's payroll reports show three things by month and by department:

• Cost, what the department's people cost the business in that month;
• Headcount, how many people the department had; and
• Staff movements, the people joining and leaving.

Read together, they answer most of the questions a production meeting asks. Cost rising with flat headcount points to overtime or pay increases. Headcount rising with flat output points to a staffing or productivity question. A department with many movements may have a retention problem that no amount of overtime will fix.

The reports are only as good as the department on each employee's record. Before you rely on them, check that every employee sits in the department they actually work in, and agree who updates it when someone is transferred from, say, the assembly line to dispatch.

Overtime and allowances as variable inputs

Factory pay is rarely the same two months running. Achekam pay runs can be monthly, fortnightly or weekly, and each period's overtime, commission, allowances, reimbursements and unpaid leave are entered as variable inputs on the run.

Bonuses, corrections and final settlements for leavers do not have separate run types; they also go in as variable inputs on the regular run. That keeps everything in the same reports, so a big bonus month shows in the department that earned it.

Unpaid leave deserves a word of its own. In Achekam it does not cut pay automatically: payroll is warned and decides. A department with a lot of unpaid leave in a month may therefore show its labour cost falling only once payroll has acted on those warnings, so check them before reading too much into a dip.

Two practical habits help:

1. Have each supervisor approve their department's overtime before it reaches payroll, so payroll is not the first place anyone questions it.
2. Use the same allowance names every period, so month-on-month comparisons are like with like.

From the pay run to the ledger

A pay run is approved by someone other than the person who prepared it, nobody can approve a run that pays themselves, and an approved run is never recalculated. In a small factory office that means at least two people need payroll roles.

Once approved, the run is posted to the business's own ledger as a wages journal, with the amounts owed to the tax authority and to funds recorded as liabilities. Management accounts, which are added up from the business's own journals, then include payroll cost without anyone re-keying a payroll summary.

Each approved run also has a payment schedule you can download as CSV. Marking it paid only records that payment was made; Achekam moves no money.

The rules the calculation follows depend on where you employ people. A business sets itself up as an employer and runs payroll under South African, Nigerian or Kenyan rules, chosen when the employer is created.

Staff loans and advances

Factories often lend money to staff, for school fees, a funeral or an emergency repair. In Achekam, salary advances and staff loans are recorded and then recovered from each pay run until they are repaid.

For the department reports, remember that a loan recovery reduces what the employee takes home; it is not a saving in labour cost. If a department's net pay looks low in a month, check whether loan recoveries explain it before drawing conclusions.

Using the figures in costing conversations

Payroll reports become useful when they are read beside what each department produced. A monthly review can be short:

On budgets: Achekam lets a business set a budget per account and period and compare it with actual figures from its ledger. Because the wages journal posts to the ledger, the comparison uses real payroll figures. Where output swings from month to month, ACCA's first article in its series on budgeting explains flexible budgeting, using fixed and variable costs to budget across different activity levels.

Bring production volumes from your own records to the meeting, and you can talk about labour cost per unit, or per shift, for each department. That is a far better basis for a pricing discussion, or for deciding whether a second shift is worth it, than a single wages line for the whole factory.

A monthly rhythm

After each month's final run is approved, download the department reports, put them beside output and budget, and sit down with the production and finance heads going through the table above. Over a few months, patterns show that no single payslip would reveal. Materials are the other large cost in most factories; matching supplier invoices to orders and deliveries covers how to keep that side honest, and trade price lists and dealer credit covers the selling side the costs must support.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.