How ABA File Lodgement References Can Improve Payroll Efficiency and Reconciliation

Opinion
27 Jun 2025

Making ABA File Lodgement References More Powerful

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

Employee reviewing their payroll deposit in a bank statement

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:

"Details of the origin of the entry, e.g. Payroll Number, Invoice, Unique Customer Identifier."

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:

Our Approach: "SALARY EMP00001"

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

SALARY EMP00001

This 18-character field combines clarity with traceability:

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:

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 guide.

Disclaimer

seSQue does not provide accounting, tax, business or legal advice. This article is for informational purposes only. Before taking any action based on its content, you should seek professional advice tailored to your specific business or circumstances.

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