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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)
Process posting run (PCP0)
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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3: Posting to Accounting (cont.)
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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3: Posting to Accounting (cont.)
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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3: Posting to Accounting (cont.)
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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3: Posting to Accounting (cont.)
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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3: Posting to Accounting (cont.)
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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3: Posting to Accounting (cont.)
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
24
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)
Process posting run (PCP0)
Menu Path:
HR > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Third-party remittance
25
4: Posting Third-Party Remittance (cont.)
How to post third-party remittance:
Evaluation remittance (New) (PC00_M99_URME)
Create posting run (PC00_M99_URMP)
Process posting run (PCP0)
Menu Path:
HR > Payroll > Americas > USA > Subsequent activities > Per payroll period > Evaluation > Third-party remittance
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4: Posting Third-Party Remittance (cont.)
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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4: Posting Third-Party Remittance (cont.)
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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4: Posting Third-Party Remittance (cont.)
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
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
30
Utilizing the Payment Program
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
31
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
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
34
Mapping Payroll Components to FI/CO
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
38
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
39
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
40
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
41
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
43
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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4: Mapping Symbolic Accounts to the G/L (cont.)
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
45
4: Mapping Symbolic Accounts to the G/L (cont.)
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
46
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
47
What 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
48
Defining Third-Party Remittance Components
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
49
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
50
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
51
What 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
52
Narrowing in on Tax Authorities
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
53
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
54
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
56
What 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
57
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
58
Payroll Reconciliation Report (cont.)
Wage types may be traced directly to G/L account postings
59
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
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
61
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
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