SAP FI-HR

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A Comprehensive Guide to HR/Payroll Integration with SAP ERP Financials

Mike TimmIntegrated Consulting Group

1In This Session

Well cover the key integration points between the HR payroll functions and Financials

Well get an understanding of the fundamentals for the transfer between payroll and financials

Well discuss the biggest integration challenges

Well cover some useful tips for configuration and processing

Well examine the process flow of SAP ERP Financials and A/P postings

Tips

2What Well Cover

Understanding How Payroll Updates FI/CO

Utilizing the Payment Program

Mapping Payroll Components to FI/CO

Defining Third-Party Remittance Components

Narrowing in on Tax Authorities

Reconciling Using the Payroll Reconciliation Report

Wrap-up

3How Payroll Updates FI/CO

Posting to accounting

Payroll and FI/CO have defined integration points through which data is passed, just like Materials Management/Sales and Distribution (MM/SD)

Unlike MM/SD, though, some integration points require human intervention

This may cause confusion between the payroll and FI/CO teams both on the implementation and after go-live

Third-party remittance

Creates payables to different vendors as a result of HR/Payroll

4Payroll Integration Points with FI/CO

The integration points between Payroll and FI/CO are: Creating the Data Medium Exchange (DME) for payments update check register only

Posting to Financial Accounting

Posting Third-Party Remittance

I will demonstrate each of the Payroll-FI/CO integration points by:

1. Running the Payroll (prepares the net results)

2. Creating the DME (generates the payments)

3. Posting to Accounting (updates FI/CO with data from the payroll run)

4. Posting Third-Party Remittance (generates payment information for vendors)

I will discuss and show screen prints in SAP R/3 4.6C and SAP ERP 6.0 when significant differences exist between versions

5Introduction of New General Ledger

SAP ERP 6.0 has an optional new General Ledger that posts liabilities according to expenses

The following accounting units are available with the new General Ledger: Company code

Business area

Segment

Profit center

Fund

Grant

If you are not using the new General Ledger: The expenses are posted with the relevant expense information within the posting transfer

Liabilities are posted with the company code and business area

61: Running the Payroll

First, select Release payroll

In this step the payroll area and payroll period to be processedare selected

The payroll control record is set to allow payroll processing

Employee master data records are locked

Next, select Start payroll, enter screen parameters, and launch the payroll process

Payroll processes generating wage types

Assignment to company and cost center are done

Check the results by viewing the Remuneration statement

71: Running the Payroll (cont.)

Finally, select Exit payroll

The payroll control record is set to finalized, allowing for additional processing such as posting to accounting and third-party remittance

Employee master data records are unlocked for current and past changed

81: Running the Payroll (cont.)

How to run payroll:

Release payroll

Start payroll

Exit payroll

Menu Path

HR > Payroll > Americas > USA > Payroll

None of these steps updates FI/CO

92: Creating the DME

Next, well create the DME

This step prepares the payroll remuneration data for ACH and check printing

You specify one of the following DME types:

Payroll Check

ACH Transfer (Direct Deposit)

Payroll uses the AP Payment Program for the ACH and check printing processes

The check register will be updated

FI/CO will not be updated

After doing this, your check register will be out of balance with your outgoing payments G/L account in FI/CO. FI/CO will also be out of balance with Payroll because no expense or liability postings will have been transferred yet.Warning

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2: Creating the DME (cont.)

How to generate the DME:

Pre-program DME

Create DME

DME management

Print check

Menu path

HR > Payroll > Americas > USA > Payroll > Bank transfer

Check register is updated

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2: Creating the DME (cont.)

The results

Payroll checks and ACH files for the direct deposit were generated

The check register has been updated and reflects the newly printed payroll checks, but FI/CO has no payroll information!

Conclusions

Checks and direct deposits may be generated without transferring to FI/CO

In other words: The payroll may be run successfully, with check and direct deposits for payroll cut and distributed, without updating FI/CO!

Issue

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3: Posting to Accounting

Prior to version SAP ERP 6.0, companies had one posting process Liabilities may only be posted with the company code and business area

Use RPCIPE00_old in SAP ERP 6.0

Beginning with version SAP ERP 6.0, companies have the option of using the new General Ledger, which requires a slightly different posting process Liabilities may be posted with the following accounting units:

Company code

Business area

Segment

Profit center

Fund

Grant

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3: Posting to Accounting (cont.)

The discrepancy caused while creating the DME is solved by executing transaction PCP0

This is an important, separate step after generating payroll and cutting checks (DME)

PCP0 updates FI/CO expenses, liabilities, and assets using any of these

The employees home cost center

Infotype 27

To determine the cost center to post to, it uses wage type cost center

It also uses the mapping of wage types to symbolic accounts to G/L accounts to determine the correct G/L account/cost element to use

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3: Posting to Accounting (without new G/L)

Execute posting run (RPCIPE00 or RPCIPE00_old in SAP ERP 6)

Process posting run (PCP0)

Menu Path

HR > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Posting to accounting

Tip

When viewing the FI/CO update document, use menu path Extras > Original Document to jump to the payroll remuneration statement (which lists the wage types/employees that make up the FI/CO posting)

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3: Posting to Accounting (with new G/L)

Execute posting run (RPCIPE00)

Execute posting run for payments (H99_POST_PAYMENT)


Menu Path HR > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Posting to accounting

Payments are distributed according to expenses

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3: Posting to Accounting

Process posting run is the same when using or not using the new General Ledger (transaction code PCP0)

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Retroactive postings with amount change

If only the amount changes, the difference is posted

In the original period starting 11/01, the employee was paid $1,000 in salary

A retroactive change is made effective 11/01 to make the salary $1,500

The period starting 11/01 will generate a difference posting of $500, and the 12/01 period will generate a posting of $1,500, for a total of $2,000 to the salary account

Payable 1,000 Payable 2,000

Salary 11/01 1,000 Salary 11/01 500

Salary 12/01 1,500

Period 11/01 Period 12/01

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Retroactive postings with accounting object change If an account assignment object changes, the amount in the old account assignment object is reversed and posted to the new one

In the original period starting 11/01, the company code 0010 employee was paid $1,000 in salary

A retroactive change is made effective 11/01 moving the employee to company code 0020

The period starting 11/01 will generate a reversal posting of $1,000 in company code 0010 and $1,000 posting in company code 0020 along with the 12/01 period generating a posting of $1,000 for company code 0020

Payable 1,000 Payable 0010 1,000

Salary 11/01 0010 1,000 Salary 11/01 0010 1,000

Payable 0020 2,000

Salary 11/01 0020 1,000

Salary 12/01 0020 1,000

Period 11/01 Period 12/01

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Month-end accrual postings

Additional configuration is required to trigger and perform the month-end accruals

Rule UAC0 will trigger the month-end processing

Posting and closing dates need to be configured

Wage type posting attributes need to be configured with accrual

Commonly, period wages (salary) accrued will contain all wages, absences, holidays, etc., and will not differentiate the type of wage

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Month-end accrual postings (cont.)

Future actions or changes to employee master data are not taken into account during the accrual calculation

Keep this in mind if the next period has significant pay raises since those increases are in the future and not automatically accrued

The accruals are based on results from past payroll periods

Also be aware of the accruals for taxes in a month when employee bonuses are paid, as the accrual will not be accurate

Accruals are reversed during the next payroll period posting process

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Reverse postings

Reversal documents are created with identical information as the original posting with the exception of the sign (+/-)

Reversal documents transfer and post to accounting, canceling the incorrect original posting

Payroll results are reset

Links to the reversed posting documents are found and available for viewing

Please keep in mind that you will need to run the process to post the payroll results

Program RPCIPR00

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Program RPCIPC00 is the check completeness report for FI posting

Human Resources > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Posting to accounting > Check completeness

The report is easy to use

Enter the date you want to search from and then enter the Run Type

Execute, and you will receive all the non-posted payroll results with enough detail to complete the posting

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4: Posting Third-Party Remittance

Payables may be generated for vendors as a result of HR/Payroll. Examples include: Garnishment processors

Taxing authorities

Benefit providers

This is an additional step done after payroll and the update of payroll results to FI/CO Posting third-party remittances isnt required to run the next payroll

Employee withholdings such as garnishments can NOT be passed to the AP vendor if the third-party remittance posting run is not executed

Once you post your third-party remittances, the proper AP vendors accounts are updated so that you can process them like any other liability through the AP payment program

Great

Feature

Good

Thing

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4: Posting Third-Party Remittance (cont.)

How to post third-party remittance:

Evaluation run (PC00_M10_U500)

Store evaluation run (PC00_M99_URMU)

Create posting run (PC00_M99_URMP)


Menu Path:

HR > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Third-party remittance

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How to post third-party remittance:

Evaluation remittance (New) (PC00_M99_URME)

Create posting run (PC00_M99_URMP)


Menu Path:

HR > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Third-party remittance

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Program RPURMC00 is the check completeness for third-party remittance

Human Resources > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Third-party remittance > Run remittance completeness check

The report is easy to use

Execute and you will receive output of third-party remittance processing that needs to be completed

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Program RPURMR00 is the third-party reconciliation report

Human Resources > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Third-party remittance > Reconcile postings

Unless you know you have few entries, narrow down the HR payee item selection to keep a controllable amount of output

ALV Layout determines how the data will be displayed

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The output is changeable with ALV Layout

Pertinent information is displayed along with the status so we know where the remittance stands

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What Well Cover







Wrap-up

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As was shown in the previous section, Payroll uses the AP payment program to generate checks and ACH payments (DME)

Configuration is essentially the same as is done for AP Create house banks and accounts

Create payment methods

Assign to accounts

Create RFFOUS_C and RFFOUS_T variants

Whether the same bank accounts are used for AP payments and payroll payments, new payment methods for payroll check and ACH transfers should be configured Enables easier reconciliation of checks, accounts, and check register to G/L

Allows for a greater degree of authorization to view/create/change payroll checks

Tip

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Utilizing the Payment Program (cont.)

As shown earlier, there is no automatic integration link between Payroll and FI/CO

This is an issue, especially when corporations use one company code to make payments for other company codes

Manual processing allows more room for error

There is no financial link between the G/L line items in the bank clearing account and the check register

You can automate clearing journal entries and link the G/L line items to the check register with program RFPYHR00 or H99_POST_PAYMENT The program requires that the payroll results be posted to a clearing account

Automatically journals out of the clearing account and into the proper bank clearing account and company code

Based off the DME run in the payment program

This program is a must-have in a cross-company scenario

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Utilizing the Payment Program (cont.)

Its important to do the steps in the exact order below because the updates could get out of order, or you could lose the links between the checks in the check register and line items in the G/L

Transfer payroll to FI/CO

Create DME

Print DME

Run RFPYHR00 or H99_POST_PAYMENT

If you run RFPYHR00 or H99_POST_PAYMENT after creating the DME, but before you print the DME, your payroll checks in the check register wont be linked to an accounting documentWarning

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What Well Cover







Wrap-up

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In this section, I will show the configuration behind the Payroll integration points with FI/CO:

1 Defining Symbolic Accounts

2 Defining Wage Types (Gross to Net)

3 Mapping Wage Types to Symbolic Accounts

4 Mapping Symbolic Accounts to the G/L

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1: Defining Symbolic Accounts

Symbolic accounts are names used in HR/Payroll instead of G/L account numbers

Theyre similar to account keys in SD

You can think of symbolic accounts as an intermediate step to determining the proper G/L account

The types of symbolic accounts are:

Financial Balance sheet

Expense Income statement

Technical Clearing account

Vendor Vendors

Customer Customers

Loans Employee loans

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1: Defining Symbolic Accounts (cont.)

Symbolic accounts have an employee grouping key, which allows the symbolic account to be associated with different G/L accounts Employee groupings are done with the feature PPMOD

PPMOD allows many employee organizational fields to be used for decisions, with the following being most common:

Company code

Personnel area, subarea

Employee group, subgroup (hourly, salaried, etc.)

How to add/maintain symbolic accounts Use IMG Payroll > Payroll:USA > Posting to Financial Accounting > Activities in the HR System > Employee Grouping and Symbolic Accounts > Define Symbolic Accounts

or

Table V_T52EK

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1: Defining Symbolic Accounts (cont.)

Selecting the EG-depend field will determine whether the feature PPMOD impacts the posting to accounting

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2: Defining Wage Types (Gross to Net)

Wage types are elements used in the payroll schema to represent different types of payroll activities (e.g., wages, deductions, taxes)

Wage types for gross wages, net wages, and taxes are delivered standard and ready to use

Employee deductions and earning codes are delivered as examples

The payroll schema uses wage types in the calculation of net payroll from gross payroll

The wage types used in payroll are what will ultimately drive G/L postings and accounts that are used in FI/CO

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3: Mapping Wage Types to Symbolic Accounts

Next, wage types need to be mapped to symbolic accounts so SAP R/3 can determine which G/L accounts to update

Value A in the Prc field means this is a month-end accrual posting attribute in SAP R/3 4.6C

In SAP ERP 6.0, the values are more easily discernable

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3: Tips for Mapping Wage Types to Symbolic Accounts

Know what each wage type is used for before maintaining them

Know how each wage type relates to financial transactions

Make sure your payroll and FI/CO teams communicate

When in doubt, create a new symbolic account

Sometimes the intended use of the wage type is not completely understood or may change over time

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3: Tips for Mapping Wage Types to SymbolicAccounts (cont.)

When in doubt, create a new symbolic account (cont.)

Often, when it is time to change how the wage type is posting inthe G/L, people take a shortcut and change the mapping of the symbolic account that is assigned to that wage type

If that symbolic account is assigned to other wage types that are posting correctly, you can break more than you are fixing

There are no debits and credits in the world of payroll you have to choose between a plus sign (+) or a minus sign ()

Warning

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4: Mapping Symbolic Accounts to the G/L

Next, you need to map symbolic accounts to G/L accounts

Technically, the task typically resides in the FI module based on the updated table

The mapping is an Automatic Account Assignment T030 just like any other FI automatic account assignment

Very straightforward

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4: Mapping Symbolic Accounts to the G/L (cont.)

How to map symbolic accounts to G/L accounts:

Enter symbolic account

Enter employee group

Enter the debit account

Enter the credit account

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How to create a clearing account: Enter the account key

Enter the G/L account

Use clearing accounts (key 1001) when: There are multiple company code assignments within a payroll period

Retroactive accounting changes occur prior to an employee changing company codes

Employee company code changes retroactively or within a period

Key 1002 is used when there are > 999 posting lines in a document

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Once you have your mappings completed, use the wage type to G/L mapping report RPDKON00 Human Resources > Payroll > Americas > USA > Tools > Customizing Tools Wage Type Assignment - Display G/L Accounts

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4: Tips for Mapping Symbolic Accounts to the G/L

Work closely with the finance team to coordinate how the symbolic accounts are being used

Be careful about changing the mapping. Make sure that the symbolic account needing change is not assigned to another wage type that needs to post where the symbolic account is currently set to post!

If upgrading to the new General Ledger, pay special attention to differences in configuration and process

Warning

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What Well Cover







Wrap-up

48


The third-party remittance process was described earlier

During payroll, liabilities may be accrued for:

Benefit providers

Tax authorities

Garnishment vendor processors

Other deduction vendors

Garnishment processors and the other types of vendors are posted to AP during the third-party remittance process

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Defining Third-Party Remittance Components (cont.)

Garnishment processors are directly connected to an AP vendor

When creating a garnishment document for an employee, the user selects an AP Vendor directly

All other types of vendors go through the third-party mapping process

If you are using the new General Ledger, you must also use the new third-party remittance process to handle tax wage type postings

The key integration point is linking an HR payee to an AP Vendor account

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Defining Third-Party Remittance Components (cont.)

Mapping a creditor to an AP vendor is done using drop-down selections

HR payee

Descriptive text

Company code if necessary

AP vendor

Wage types associated with HR payee

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What Well Cover







Wrap-up

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As shown in the third-party remittance section, taxes calculated during the payroll process may be configured to flow to AP

Four components must be considered when taxes are to be posted to AP: Depending on business requirements:

Tax wage types/creditors may be configured directly

Custom wage types for each tax authority and tax type must be generated and configured

Payroll rule UPTX must be modified to associate calculated taxes to the new wage types

Third-party remittance must link a Payroll Creditor with an AP vendor

AP vendors must be created

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Narrowing in on Tax Authorities (cont.)

When posting tax wage types directly, the configuration is straightforward

This method will allow a great deal of flexibility

First create the HR creditor type Tax Payee in table T5URC

Then, within the creditor, you identify the wage type, company code, andtax authority

Use table V_T7US3PRTXSYMKO in SAP ERP 6.0 when using the new third-party remittance program (RPURME00)

You must also enter the tax wage types in T52EZ

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Narrowing in on Tax Authorities (cont.)

Create a wage type for each tax authority and each tax type

Alaska Withholding

Alaska ER Unemployment

Alaska EE Unemployment

Modify payroll rule UPTX to associate taxes calculated to the appropriate wage type

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Tips for Narrowing in on Tax Authorities

Passing tax data to AP should be done at the lowest level, which is by tax authority and tax type

Passing tax data to the General Ledger does not need to be done at the same detailed level

All withholding taxes may be passed to one G/L account

Payroll and AP both need to be aware of new tax authorities and/or tax types by tax authority

Vendors need to be created for payroll to complete configuration

Extensively analyze how the new General Ledger will impact your tax authority posting requirements

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What Well Cover







Wrap-up

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Payroll Reconciliation Report

The standard delivered Payroll Reconciliation Report should be able to tie payroll to:

Tax filings

G/L postings

AP postings

When in doubt about other payroll reports, the Payroll Reconciliation Report should be used

The engine behind the Payroll Reconciliation Report is the same as the Tax Reporter

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Payroll Reconciliation Report (cont.)

Wage types may be traced directly to G/L account postings

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Tips for the Payroll Reconciliation Report

Narrow down the parameters as much as possible; otherwise, long run times may occur

Downloading the report to Excel can be done, but you should consider number of fields and level of detail due to formatting constraints

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What Well Cover







Wrap-up

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Resources

SAP Help topics about the new General Ledger impact on payroll posting to accounting

http://help.sap.com > ERP Central Component > Human Resources > Payroll > Payroll United States > Final Payroll Processing > Posting to Accounting > Special Business Requirements for Posting > New General Ledger

SAP Note 119865

Provides additional information about payroll postings that may not be found in documentation

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Resources (cont.)

SAP Help topics on third-party remittance

http://help.sap.com > ERP Central Component > Human Resources > Payroll > Payroll United States > Final Payroll Processing > Third-Party Remittance

SAP Note 532744

The master Note for third-party remittance that will redirect to other notes or resources

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7 Key Points to Take Home

The new General Ledger will impact many facets of design

Transferring payroll results must be manually posted to FI/CO

You can automate payroll-to-FI/CO payment postings using RFPYHR00

The Payroll Payment Program does not update FI/CO like it does in AP; it only updates the check register

Create new payment types in the AP payment program for payroll payments

Mapping payroll creditors to AP vendors is the key integration step for third-party remittances

Payroll reconciliation report ties everything together

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Your Turn!

How to contact me:Mike Timm

[email protected](866) 415-0072

SAP FI-HR

Documents

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