HR Connections – Mike Timm on Year-End Payroll and FI/CO Integration

Mike Timm, founder and managing partner of Integrated Consulting Group, joins SAPinsider for an HR Connections HR Connections – Mike Timm on Year-End Payroll and FI/CO Integration. Topics of this conversation include:

  • The Tax Factory BSI 10.0 upgrade and end-of-support for 9.0
  • Streamlining of payroll processes by creating a process model
  • Custom area menu use
  • Considerations for integrating SAP Payroll with FICO

For more EOY payroll tips, follow Mike’s Q&A with readers here.

Below is an edited transcript of the conversation:

Ken Murphy,SAPinsider: Hi, this is Ken Murphy with SAPinsider, and welcome to another installment of HR Connections, which is an SAPinsider podcast series which focuses on current developments and trends in the HR space. Today, I’m pleased to be joined by Mike Timm, the founder and managing partner of Integrated Consulting Group, and an SAP Certified consultant. Mike, thanks for joining us today.

Mike Timm, Integrated Consulting Group: Ken, thank you, I appreciate it.

Ken: So as we head into October, we’re catching up with you at a pretty busy time, you’re one of the featured speakers at the upcoming SAPinsider Optimize Payroll in SAP seminar, which is kicking off October 6 in Philadelphia, and you’ll also be taking part in a live Q&A with SAPinsider on November 5, with questions from readers about end-of-year payroll. So, a lot of things on the horizon.

Mike: Yeah, that’s right. I’m really looking forward to all of it; I think the seminars that are coming up, starting in Philadelphia and then Chicago and Las Vegas this fall will be very helpful, lots of information from the speakers that are going to be giving out very helpful stuff. The Q&A I’m looking forward to, because I know by November 5 we should all be looking at the year-end support pack and some other items that we need to put in place for our tax reporting going into January, 2015.

Ken: So, let’s start with the payroll seminars, you’re going to be leading and moderating several sessions, one of which is focusing on the process and technical questions concerning integrating SAP Payroll with financial accounting and controlling. Can you address some of the key process alignment considerations, when integrating SAP Payroll with FICO?

Mike: Payroll and FICO, there’s some very tight integration there. If you’re new to SAP, or if you’ve been working with it and you’re going to be implementing payroll, you’ll find that there’s a lot of dependencies there that finance has to set up or costing has to set up to make sure that those are available and open for payroll to use and to process properly and without errors. I find that a lot of times this integration is very new to folks, the discussions that need to be had and the deep understanding on both sides of what’s going on, what wage types are in SAP, which they actually mean, what they’re used for, and how that’s going to flow over to finance can sometimes be a little bit difficult to grasp. We do always want to make sure that both groups are involved, that there’s a good line of communication between the two, and that we can make sure that our end products, so on payroll, we send that data over to finance, we want to make sure finance knows what the data is and what it’s, what it should be used for.

We also have some other areas like accounts payable, which a lot of times is underutilized or not utilized by companies that I think would be very beneficial, it’s very powerful, very flexible, and the configuration isn’t all that difficult, and with the third-party remittance, that would allow us to take deductions, to United Way or something similar, and pass that over to accounts payable, and then get it paid out very easily. Things like garnishments and deductions for benefits and those types of things are also included in accounts payable, and allows for a lot of auditing and a very streamlined process when we put it in place.

And then the other, the third area I guess that doesn’t get utilized probably as much as it should is month-end accrual, with SAP, there are several settings that you can put in SAP that would allow you to automatically create a month-end accrual, and it can be based on estimates or actual, and a lot of times that’s not fully understood, and a scenario that I think would be very helpful to most companies.

Ken: Circle back to the accounts payable and third-party remittance, why is that under-utilized, and maybe you could just touch on one or two of the key benefits for organizations that do decide to use that functionality?

Mike: Yeah, the third-party remittance I think isn’t always fully understood, what exactly is happening there and how that can be used to help streamline or automate the process to go over to accounts payable. I think one of the other things too, especially if you’re, if a company is coming from a non-SAP payroll and the accounts payable systems, that integration was never in place, and so payroll always had their paper forms or their electronic extracts that they would go through, they would audit those, and then they would send that over to accounts payable using either paper forms or interfaces, and I think that once the integration is understood and seeing how it can work, and it can be a very simple thing to put in place overall, compared to a lot of areas in the payroll area, module area. And that understanding of how that works, and hey, now when we push the button we’re going to create a posting document and that posting document would get sent over to third-party rents or accounts payable, there are steps in there where you can stop the process and audit it at that point in time so, before payroll sends anything over to accounts payable, they can still look at it and audit it, accounts payable can look at it and then say ok, we’re good, we can release it. Or you can automate that so it just goes right on over to accounts payable and works really well.

Ken: Of course, you’ll also be focusing on end-of-year payroll in your live Q&A with us, which again is on November 5, since we’re now already—hard to believe—turning the calendar into October here, but I’m just wondering what changes or concerns are you advising companies to pay attention to as they head into year-end?

Mike: Well the, there’s a couple things that are good to look out for, and hopefully most companies if they haven’t started are starting very soon to look at their year-end process, what they need to put in place, what types of activities need to occur, such as clearing of claims, those types of items, that need to happen and have a schedule for the remainder of the year and then also into January when they need to start generating their tax forms.

One of the big changes that is coming through is that BSI 9 will no longer be supported after November 30 of this year. So all the companies need to move over to BSI 10, and that process, I’ve worked with a couple companies through it now, has not been without its bumps, and so it’s one of those things where you don’t want to wait until the last minute, you have a lot of different areas involved with your Basis team, maybe technical team, depending on how—landscaping team, depending on how you have all this set up. And so you want to get an early start on that to allow everyone to go through the GUI, or the front-end that BSI uses to interact with updating things like unemployment, insurance rates, or any overrides that you’re doing, and BSI has changed and it’s no longer a Windows install, it’s Web-based, which is a lot nicer, especially if you’re not using a Windows machine but you still have to get used to it and understand how it changes, their functionality has changed slightly, I know on some of the testing tools it’s not quite as, or it took me a few times to get it quite right, it’s not the way it’s been since BSI 5 or 6, when I started, all the way to BSI 9. So that’s the big thing I think, is with BSI, needing to change over to version 10.

The other area for year-end 2014 is going to be, make sure that you’ve gone out to the SAP Support Portal, looked at the newsletter, are following through the year-end reference materials, there’s a lot of information out there and guidelines on hey, here are some of the activities you should be doing, make sure you get the schedule, there’s also the support package and the legal change pack schedule sitting out there, and so, depending on how companies want to update their systems, they might want to do a support pack up through June or July of this year, and then just do legal change packs based on countries, that way there’s less impact to the rest of HR. And so that schedule is sitting out there and should be followed.

And then SAP also will, has a section for important notes, so as things come up, as support packs or the country legal change packs need tweaking themselves, SAP will be releasing SAP Notes, and those Notes will be put out there under this important section and so they’re very visible, you can easily see what’s needed, what’s going on, what the schedule is, if there’s any type of legislation that comes in towards year-end that might impact us, SAP is putting that out there and giving estimates on when things might be available, or when things should be available from them, so we can schedule our activities to make sure we get those put in in a timely manner, but at the same time we’ve gone through the testing process, we’ve, our Basis team understands that these things are coming through, other areas that might be impacted as well.

Ken: And Mike, you also focus separately on streamlining payroll processes in your payroll sessions, can you share a tip or two with us today that you’ll be sharing at the seminar?

Mike:  There’s actually a couple to streamline, the payroll process, as anyone that’s been running it—can be, it’s a very manual process, and there’s several steps, and in those steps you have break points where you want to go do things so you might run payroll and then we want to audit payroll, once we’re done, make a few adjustments to some employees, we re-run payroll and we go in and we post to accounting and we run third-party remittance and interfaces in these types of things and to do all that, you know, everybody, or typically everybody will have their business process script and be able to follow that through. One way to help automate that is to use process models, so for our regular payroll, we can actually tell, like kick off payroll, we can go in and start that process model, we have a lot of employees, might be something we do late in the evening and then it runs overnight, and then we can have it stop. And so the process model stops, that allows us to go in and do our audits, once everyone’s happy with the audits and the adjustments that are made, we can start the process model back up, and so it will actually take care of all the steps along the line.

And one of the other things with the process that’s nice is we can run things in simulation mode or production mode, so we can run a simulation payroll after, or I’m sorry, a simulation posting to accounting, or a simulation third-party remittance, after our payroll is done so we can go in and audit that, and then we can say ok, this looks good, now let’s go ahead and do the production run. And so that helps automate, there are still some places in there where you can step through and put break points and help your process.

The second area that I think is very useful, especially if we don’t want to use process models, is using a custom area menu, and custom area menus are something that’s done through configuration, you can use custom area menus to call programs, so the same programs that you use, so there’s no customization from a program standpoint. And it would, you can outline exactly here, step-by-step, here’s where we go, you can give it different descriptions so you can say step one, step two, step three, in there and that makes it very, very simple for an end user to go through and they no longer have to go through the SAP menus.

One of the other nice things with their menus is if you create a custom transaction code, so for payroll, we don’t use the standard transaction code, we use a custom one, we can tell it to call a specific variant. And so the area menu, we’d go in the area menu, we’d see the line we want or the transaction we want, we hit on that, and then it would open up like rp-calc, which is in the payroll program, and it would have a specific variant that we want to use. And then the user doesn’t even have to go in and select variants or incorrectly select one, and you can set this up to be done you know, across and even outside of payroll, but I found it very useful, especially if you had situations where you have high turnover in your payroll department, or you just need the consistency, the employees or the users that you have, you don’t want to have to go through and think about which transaction is which, which variant it is, and so those can be very helpful.

Ken: Well, we’ll look forward to what I’m sure will be an educational seminar coming up next week; again, the SAPinsider Optimize Payroll in SAP seminar will be on October 6 in Philadelphia. We’ve been speaking with Mike Timm, the founder and managing partner of Integrate Consulting Group and an SAP Certified consultant. And for our listeners, make sure to get your questions in for Mike with questions about year-end payroll for our live Q&A with SAPinsider, which is going to be on November 5. Mike, thank you for your time today.

Mike: Ken, thank you, I really appreciate the opportunity.