How Lodgement References In ABA File Downloads Can Improve Payroll Efficiency and Reconciliation

Making ABA File Lodgement References More Powerful

Why fixed or generic descriptions in ABA file downloads fall short and how employee numbers make each transaction identifiable.

Many payroll platforms use generic descriptions like “Salary”, but they're missing the point

Most Australian payroll platforms like Xero, MYOB and QuickBooks use a fixed or globally customisable transaction description in ABA files, such as simply "Salary" or "Payroll". This description appears on your employee's bank statement and is drawn from the Lodgement Reference field (record type '1', positions 63–80). While this is technically valid, we believe it strays from the intended purpose of the field.

A Spec That Encourages Uniqueness

The ABA file format specification describes the Lodgement Reference as a place for:

In other words, it's designed to help identify individual transactions, not the entire batch. Yet many payroll systems use either a hardcoded word (like "Salary") or a single global value that applies to all employees. This breaks away from the spec's intent and undermines the potential of the field to support traceability and reconciliation.

Some might wonder: can't the employee be identified using the "Title of account to be credited" field (positions 31–62), which usually contains their name?

While that field does exist, it's not reliable for identification or reconciliation. Here's why:

• Not always displayed - Many banks don't show this field on the employee's statement
• Rarely visible to the sender - This field often isn’t included in your bank’s transaction exports, whereas the Lodgement Reference usually is
• May be modified - Banks may truncate or replace it with the remitter's name
• Not intended for traceability - The ABA spec doesn't define this field as a transaction reference, that's what the Lodgement Reference field is for

Our Approach: "SALARY EMP00001"

In seSQue Payroll, each employee payment includes their Payee Number in the Lodgement Reference. For example:

This 18-character field combines clarity with traceability:

• Human-friendly - Employees still see the familiar "SALARY" text
• Unique - The payee number ties the transaction back to a specific employee
• Audit-friendly - Makes it easy to trace payments from bank statements back into your payroll records

Why Other Platforms Don't Do This

Many platforms offer only a single Lodgement Reference field for the entire pay run or lock it to a hardcoded string. We believe this is due to a few trade-offs:

• Simplicity - "Salary" looks cleaner and avoids questions from employees
• Perceived professionalism - A standard label can seem more polished to non-technical users
• Bank statement constraints - Some mobile banking apps truncate transaction details
• Support overhead - Simpler messages mean fewer queries

While these are understandable choices, they come at the cost of transparency. Most importantly, they ignore the ABA spec's intention of using this field to uniquely identify entries.

Better for Accountants, Better for Business

Including the employee number in the Lodgement Reference is particularly useful for accountants, bookkeepers and growing businesses. It reduces guesswork, simplifies audits and strengthens data integrity.

It's a small change with a big impact.

Want to learn more about ABA file generation in seSQue Payroll? Read the full ABA File Downloads guide.