HR Payroll Posting to FI

Configuration
How Payroll Updates FI/CO?
Most people misunderstand how Payroll updates FI/CO?

1. “Payroll updates FI/CO automatically just like MM and SD

automatically update FI/CO, right?”
2. WRONG!

Some Payroll-to-FI/CO data must be transferred manually

1. Payroll and FI/CO have defined integration points through

which data is passed, just like MM/SD
2. Unlike MM/SD, though, some integration points require
human intervention
3. This causes a lot of confusion between the Payroll and FI/CO
teams during both the implementation and after go-live

Payroll-FI/CO Integration Points

The integration points between Payroll and FI/CO are:

1. Creating the DME (payments)- automatic (check register only)

2. Posting to Accounting - manual
3. Posting third-party Remittance – automatic

Running the Payroll - Calculation Steps:

1. First, we’ll release the payroll: This sets a system

parameter that allows the payroll to be run. In this step you
select the payroll area and payroll dates you are processing.
2. Next, we’ll select “Start payroll”, enter screen
parameters and launch the payroll process: This will
generate wage types and assign cost centers. We’ll check the
results by viewing the Remuneration statement.
3. Finally, we’ll select the “Exit payroll” step: This sets
payroll process system parameter to “finalized”, so additional
processing may be completed.

Note: None of these steps will update FI/CO in any way

Creating DME - Payments
Next, we’ll create the Data Medium Exchange (DME). This
step prepares the payroll remuneration data for ACH & check
printing. You specify one of the following DME types:

 Payroll Check
 ACH Transfer (Direct Deposit)
 Wire Transfer

Payroll uses the A/P Payment Program for the ACH and
check printing processes.

 The check register will be updated.

 In contrast to A/P payments, the G/L (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.
How to Generate the DME?
 Create Pre-Program DME
 Create DME
 DME Management
 Run payment program to print/generate DME

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:

You can run payroll and generate checks without transferring to

FI/CO. In other words: you can successfully run the payroll, cut
the payroll checks, and distribute them to employees without
updating FI/CO at all!

Post To Accounting
To solve this Payroll-FI/CO discrepancy, we’ll “manually” execute
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 employee’s 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 later.

Note: 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).
Third-Party Remittances
R/3 allows you to automatically create payables to different
vendors as a result of HR/Payroll. Examples include:

 Garnishment Processors
 Taxing Authorities
 Benefit Providers

This is a separate step done after payroll and the update of

payroll results to FI/CO:

 Posting third-party Remittances isn’t required to run the next

payroll
 Employee withholdings such as garnishments can NOT be
passed to the A/P vendor if the third-party Remittance Posting
Run is not executed.
 In this step the Integration Is Automatic. Once you post your
third-party Remittances, the proper A/P vendors accounts are
updated so that you can process them like any other liability
through the A/P payment program.
Posting With CATS
CATS = Cross-Application Timesheet

 Time Capture and Data Transfer Tool

 Is an additional piece of functionality that can be used for
Payroll and FI/CO

CATS can be used as the time transfer tool to update

HR/Payroll with hours worked by employee

CATS can be used to enter one-time earnings/deductions for

employees
Using CATS you can capture an employee’s time across
different cost centers (projects, etc.)

 Update HR, CO or both with time worked by employee by

activity

CATS updates HR/Payroll

 CATS feeds the payroll system with the actual hours worked
and one-time earnings/deductions for a pay period
 CATS is very helpful for hourly paid employees

CATS updates CO

 Updates CO with the hours actually worked by cost center for

an employee
 The payroll expense posting for an employee is sent to the
employee’s home cost center in the Payroll to FI/CO Update
 Using CATS you can create an activity allocation to credit the
home cost center for hours not worked by the employee and
debit the cost centers where the employee actually worked

An Example

 Employee John works 80 hours over a two-week pay period

 John is an hourly employee who makes $15/hour and is
assigned to costcenter 123-A as his home cost center
 John’s company uses CATS as a time entry/capture tool
 Over the two-week period John worked 40 hours in cost-
center 345-B, 30 hours in cost-center 678-A, and 10 hours in
his home cost-center 123-A
 His gross pay for the period is 80hours*15/hr = $1200
 From the Payroll to FI/CO transfer – John’s home cost-center
123-A is debited $1200 (the entire 80 hours that he worked)
 The CATS interface will credit John’s home cost-center 123-A
70 hours -- (times a pre-defined activity rate - $15/hr) $1050
– via an internal activity allocation. This will leave a net debit
of $150 (10hrs * 15/hr) on John’s home center
 The other side of the CATS interface activity allocation will
debit cost-center 345-B 40 hours for a total of $600, and
debit cost-center 678-A 30 hours for a total of $450

Conclusions:

 CATS is a great tool to use when you have hourly employees,

especially when these employees can do work over several
projects or cost-centers. CATS even allows you to “charge”
 the worked cost-centers for different activity rates depending
on the type of work/project the employee is working on.
 CATS allows you to spread costs over the cost-centers
actually worked, instead of the employee’s home cost-center
which is the SAP default when posting from Payroll to FI/CO.

Configuring the Payment Program

As was shown in the previous section, Payroll uses the A/P
payment program to generate checks and ACH payments
(DME). You use the same configuration techniques that you
use for A/P.

 Create House Bank and Accounts

 Create Payment Methods
 Assign to Accounts
 Create RFFOUS_C and RFFOUS_T variants

Even if you don’t use different bank accounts for A/P

payments and payroll payments you should create a new
payment method for payroll check and ACH transfers:

 Enables easier reconciliation of checks, accounts, and check

register to G/L
 Allows you to have a greater degree of authorization to
view/create/change payroll checks

Mapping Payroll Components to FI/CO –

Integration Point Configuration
In this section we’ll show the configuration behind the
Payroll – FI/CO integration points:

1. Defining Wage Types (Gross to Net)

2. Defining Symbolic Accounts
3. Mapping Wage Types to Symbolic Accounts
4. Mapping Symbolic Accounts to the G/L
5. HR Payee Payees to Vendor Accounts (for Garnishments and
third-party Remittances)

Step 1 - Defining Wage Types

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
 Wage types are created or modified by the Payroll team

The payroll schema uses wage types to calculate Net Payroll

from Gross Payroll:

 Similar to SD condition types and pricing procedures

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

Step 2 - Defining Symbolic Accounts

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

 They’re 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

 Cost – Income Statement
 Vendor – Vendors
 Customer – Customers

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
 IMG Payroll>Payroll:USA>Posting to Financial
Accounting>Activities in the HR System>Employee Grouping
and Symbolic Accounts>Define Symbolic Accounts
Step 3 - Mapping Wage Types
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

Note: There are no debits and credits in the bizzaro world of

Payroll. Use a + like a debit and a – like a credit.

Important Tips:
 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. Often, when it comes time to
change how the wage type is posting in the G/L, people will
 take a short cut 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 bizzaro world of Payroll.
You have to choose between a “+” or a “-”

Step 4 - Mapping Symbolic Accounts to G/L Accts

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 (shown below)

Tips:
 Work closely with Payroll team to coordinate how the symbolic
accounts are being used
 Be careful about changing the mapping. Make sure that the
symbolic account you want to change isn’t assigned to
another wage type that needs to post where the symbolic
account is currently set to post!

Step 5 - Mapping HR Payees to a Vendor Acct

I described a “third-party remittances” feature earlier.
During payroll you can also accrue liabilities for and pay.
Garnishment Processors and the other types of vendors are
posted to AP during the third-party Remittance process.

 Benefit Providers
 Tax Authorities
 Garnishment Vendor Processors
 Other deduction vendors

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 mapping/linking the HR payee to

an A/P Vendor account.

Enhancing FI/CO Updates and Cash Management

Std. R/3 Lacks an Automatic Payroll-FICO Link
As was shown earlier there is no “automatic” integration link
between Payroll and FI/CO: The integration between the two is
manual and somewhat “forced”.

A vanilla implementation of Payroll with FI/CO (which SAP

assumes and allows for in standard functionality) is as
follows:

Step 1: Map net payroll results (outgoing cash) to your bank

clearing account or another clearing account. This is done when you
map symbolic accounts to G/L accounts.

Step 2: Manually journal from the clearing account to the bank

clearing account. Done via a manual journal entry, either FB01 or
FB50.

Going with this standard approach has disadvantages:

 It’s cumbersome:Especially for corporations that use one

company code to make payments for other company codes.
 It’s error prone – manual processing always allows more room
for error
 There is no financial link between the general ledger line
items in the bank clearing account and the check register

SAP Has Released a Solution!

Using the enhanced functionality provided in OSS 90320 you can
automate your clearing journal entries and link your G/L line items
to the check register! OSS 90320 allows you to create program
RFPYHR00 in your SAP system – available from Release 3.0a

Program RFPYHR00 requires the payroll result to be posted

to a clearing account:

 Pick a single clearing account for each company code and map
it to the proper symbolic accounts
 Automatically journals out of the clearing account and into the
proper bank clearing account and company code-based off of
the DME run in the payment program
 This program is a must-have in a cross-company code payroll
scenario
Important Steps When Using RFPYHR00
It’s important to do things in the following order or your
updates could get out of order or you could lose your linking
of checks in the check register to line items in the G/L:

1. Transfer payroll to FI/CO

2. Create DME
3. Print DME
4. Run RFPYHR00

Note: If you run RFPYHR00 after creating the DME but before you
print the DME your payroll checks in the check register won’t be
linked to an Warning accounting document.

Key Points:
 In standard R/3 you must manually transfer payroll results to
FI/CO. There is no automatic integration posting like in other
parts of SAP
 You can automate payroll-to-FI/CO payment postings,
however, by applying OSS 90320 this creates program
RFPYHR00 in your system and RFPYHR00 is a must-have for
cross-company code payroll payments
 The Payroll Payment Program doesn’t update FI/CO like it
does in A/P, it only updates the check register
 Payroll-to-FI/CO integration is supported by configuration
 Wage types are mapped to symbolic accounts
 Symbolic Accounts are mapped to G/L Accounts
 Mapping Payroll Payees to A/P Vendors is the key integration
step for third-party Remittances/Garnishments
 CATS can be used to spread labor costs over different cost
centers
 Create new payment types in the A/P payment program for
payroll payments