HR/Payroll

Integration with
FI/CO

Michael Timm
Integrated Consulting Group LLC
2004 Wellesley Information Services. All rights reserved.
 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

2
 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

3
 How 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

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

Third-Party Remittance
Creates payables to different vendors as a result of HR/Payroll

4
 Payroll Integration Points with FI/CO

The integration points between Payroll and FI/CO are:

Creating the DME (payments)check register only
Posting to 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 demo these in R/3 4.6C; the process is similar in other versions
5
 1: Running the Payroll
First, Release payroll
In this step the payroll area and payroll period to be processed are 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
Finally, select Exit payroll
The payroll control record is set to finalized, allowing for additional
processing
Employee master data records are unlocked

Note
None of these steps updates FI/CO
6
1: Running the Payroll (cont.)

How to run payroll

Release payroll
Start payroll
Exit payroll

7
 2: 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
8
2: Creating the DME (cont.)

How to Generate the

DME
Pre-Program DME
Create DME
DME Management
Print check

9
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, check
and direct deposits for payroll cut and distributed, without
updating FI/CO!

Issue
10
3: Posting to Accounting

The discrepancy created during 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
It uses the employees home cost center to determine the
cost center to post to
It uses the mapping of wage types to symbolic accounts to
G/L accounts to determine the correct G/L account/cost
element to use
I'll explain these elements and relationships in detail late

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
Hint FI/CO posting) 11
3: Posting to Accounting (cont.)

How to post to FI/CO

Execute posting run
Process posting run

12
3: Posting to Accounting (cont.)

13
 4: Posting Third-Party Remittance

Payables may be generated for vendors as a result of

HR/Payroll. Examples include:
Great
Garnishment Processors
Taxing Authorities
Benefit Providers Feature

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
Good payroll
Employee withholdings such as garnishments can NOT be
Thing
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 14
4: Posting Third-Party Remittance (cont.)

How to post third-

party remittance
Evaluation run
Store evaluation
Create posting run
Process posting run

15
 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

16
 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 done for AP
Create House Bank 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
Tip 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

17
 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

18
 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

19
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

20
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 payroll schema
during payroll processing
Hourly employees may post to a different G/L account
than Salaried
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

21
1: Defining Symbolic Accounts (cont.)

22
 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
Note G/L postings and accounts that are used in FI/CO

23
3: Mapping Wage Types to Symbolic Accounts

Next, wage types need to be mapped to symbolic

accounts so R/3 can determine which G/L accounts to
update
Use IMG path: Payroll>Payroll:USA>Posting to Financial
Accounting>Activities in the HR System>Wage Type Maintenance>Define
Wage Type Posting Attributes

24
3: Mapping Wage Types to Symbolic Accounts (cont.)

Important Tips and Gotchas!

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
Warning Sometimes the intended use of the wage type is not completely
understood or may change over time. Often, when it comes time to
change how the wage type is posting in the G/L, people will 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 + or a -

25
 4: Mapping Symbolic Accounts to the G/L

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

accounts
Technically, the task resides in the FI module
The mapping is an Automatic Account Assignment T030 just
like any other FI automatic account assignment
Very Straightforward
Use Transaction code OG00 (see next slide)
Where
to
FIND it

26
4: Mapping Symbolic Accounts to the G/L (cont.)

How to map symbolic

accounts to G/L
accounts
Enter symbolic
account
Enter Employee Group
Debit Account
Credit Account

27
4: Mapping Symbolic Accounts to the G/L (cont.)

How to create a
clearing account
Enter symbolic
account
Enter Employee Group
Debit Account
Credit Account

28
4: Mapping Symbolic Accouts to the G/L (cont.)

Tips and Gotchas

Work closely with the payroll team to coordinate how the
symbolic accounts are being used
Be careful about changing the mapping. Make sure that the
symbolic account needing changed is not assigned to another
Warning wage type that needs to post where the symbolic account is
currently set to post!

29
 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

30
 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
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
The key integration point is linking an HR payee to an AP Vendor
account Don't
Forget
31
Defining Third-Party Remittance Components (cont.)

How to map a tax

authority to an AP
vendor
HR creditor
Descriptive text
AP vendor
Tax wage types
Tax company
Tax authority

32
 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

33
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:
Wage types for each tax authority and tax type must be
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

34
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 UPTX to
associate taxes
calculated to the
appropriate wage type

35
Narrowing in on Tax Authorities (cont.)

Tips and Gotchas

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

36
 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

37
 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 with other payroll reports, the Payroll
Reconciliation Report should be utilized
The engine behind the Payroll Reconciliation Report is
the same as the Tax Reporter

38
Payroll Reconciliation Report (cont.)

Wage types may be

traced directly to G/L
account postings
39
Payroll Reconciliation Report (cont.)

Tips and Gotchas

Narrow down the parameters as much as possible; otherwise,
long run times may occur
Payroll typically does not like the report due to the output
format
Downloading the report to Excel or another format is not easily
accomplished

40
 Resources

http://help.sap.com/ SAP help Web site accessible via the Internet

OSS Note 119865 Provides additional information about payroll

postings that may not be found in documentation

OSS Note 532744 The master note for third-party remittance that
will redirect to other notes or resources

41
 7 Key Points to Take Home

In standard R/3, transfer payroll results must be manually

transferred to FI/CO
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
Payroll-to-FI/CO integration is supported by configuration
Wage types mapped to symbolic accounts mapped to G/L accounts
Mapping Payroll Creditors to AP vendors is the key integration
step for Third-Party Remittances
Tax postings to AP should be done by tax authority and tax type
The Payroll Reconciliation Report should tie everything together
42
Your Turn!

Questions?

How to Contact Me:

mtimm@icgllc.net
43