10 most critical factors of SAP payroll: Integration

IntegrationIn my last blog post, I identified Data Integrity as the first of 10 most critical factors of SAP Payroll. Continuing with this blog series, now we’ll cover how integration is critical to SAP Payroll.

Integration occurs throughout the SAP payroll process by way of table configuration, schemas and rules, HR master data and configuration, employee time entry, Finance and Controlling master data, Accounts Payable configuration and master data, and interfaces to partners both before and after. There are many other integration points that directly impact the payroll process as well.

The level of integration that SAP provides between modules is astounding and allows for a holistic view. It’s awesome when it works! However, each module needs to understand new or changing functionality or master data that others are putting in place. For example:

  • Controlling changing the cost center structure can cause significant issues for payroll when it comes time to post.
  • Accounting opening and closing periods can cause issues depending on when payroll is processed and the posting date.
  • Accounts payable needs to create and maintain vendors for assignment of garnishments, benefits, taxes, and miscellaneous vendors.
  • The list could continue for quite some time.

To illustrate the integration, we’ll touch on a few.

Finance and Controlling

The Finance and Controlling modules have defined objects that are assigned to employees in Human Resources master data. These objects are then processed through to payroll and used during the Posting to Accounting process allowing actual expenses and liabilities to be allocated according to requirements.

  • Company code
    • Personnel areas are assigned to a company code.
  • Cost center
    • Organizational units or Positions may be assigned to a cost center.
    • Assignment performed at the individual employee level or even within a specific info type record.
    • Cost centers can be assigned at many different points during data collection and passed through payroll.
      • Infotype 0001 and 0027 for home and automatic distribution.
      • With wage types in Infotypes 00014, 0015, 2010.
      • Time entry in CATS or directly in Infotype 2001 and Infotype 2002.
    • Cost centers can also be overridden during payroll processing in schemas and rules.
    • Posting to accounting configuration may dictate a substitute cost center.
      • IMG > Payroll > Payroll: USA > Posting to Financial Accounting > Activities in the AC-System > Set up substitute cost centers
  • WBS element
  • Orders

Finance and Controlling have many objects that are used by payroll.

Accounts Payable

The process to send data from SAP Payroll to Accounts Payable is known as Third-party remittance. Third-party remittance allows a method for wage types generated during payroll to post to an Accounts Payable vendor account.

  • Garnishment processors
  • Tax authorities
  • Benefit providers
  • Other vendors

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.

  • Vendors used for garnishments are selected directly in Infotype 0194
  • All other third-party remittance vendors go through a mapping process.

The mapping process requires the creation of an HR payee that is then tied to company code and AP vendor number. Keep in mind that since this is transportable configuration, the vendor number in production and development must be identical.

Third-party remittance

Proper review of how we’ll use third-party remittance and planning of the configuration is vital.

Time Management

Time Management is similar to payroll in that it is impacted by table configuration, time evaluation schemas and rules, employee master data, other SAP modules, and possibly external interfaces.

Time Management includes the collection of data in a raw or evaluated state.

  • SAP provides methods to capture data in a mostly raw manner through Infotypes and CATS (cross-application time sheets).
  • Using third-party data capture tools, data may be put in Infotypes or CATS in a mostly raw manner or put in a mostly evaluated manner in Infotype 2010.

The raw data is then processed through time evaluation to produce data ready for payroll processing.

The integration SAP has woven throughout their modules is wonderful when all the adjoining parts are working together. Proper planning,  coordination, and communication is essential to the integration working harmoniously. That is why Integration is one of the 10 most critical factors of SAP Payroll.

Please join us for our next blog post where we’ll discuss how Configuration and Customization is another critical factor and how it relates to SAP payroll.

Here at Integrated Consulting Group, we specialize in the design, development, and customization of SAP Human Capital Management business software for leading edge North American companies with global reach. Have any questions about SAP? Feel free to contact us via the contact page of our site, or on Twitter or LinkedIn.