A Comprehensive

Guide to HR/Payroll
Integration with SAP
ERP Financials
Mike Timm
Integrated Consulting Group
© 2008 Wellesley Information Services. All rights reserved.
In This Session …

• We’ll cover the key integration points between the HR

payroll functions and Financials
• We’ll get an understanding of the fundamentals for the
transfer between payroll and financials
• We’ll discuss the biggest integration challenges
• We’ll cover some useful tips for configuration and
processing Tips
• We’ll examine the process flow of SAP ERP Financials
and A/P postings

1
What We’ll 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

2
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

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

3
Payroll 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

4
Introduction 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
5
1: Running the Payroll

• First, select “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

6
1: 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

7
1: 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

8
 2: Creating the DME

• Next, we’ll 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
9
2: Creating the DME (cont.)

• How to generate the DME:

Pre-program DME

Create DME

DME management

Print check
• Menu path

HR > Payroll > Americas >
Check register is updated USA > Payroll > Bank
transfer

10
 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
Issue

In other words: The payroll may be run successfully, with check
and direct deposits for payroll cut and distributed, without
updating FI/CO!

11
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
12
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 employee’s 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 13
 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

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)
Tip 14
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

15
3: Posting to Accounting

Process posting run is the

same when using or not using
the new General Ledger
(transaction code PCP0)

16
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

Period 11/01 Period 12/01

Payable 1,000 Payable 2,000
Salary 11/01 1,000 Salary 11/01 500
Salary 12/01 1,500

17
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
Period 11/01 Period 12/01
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
18
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

19
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

20
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

21
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

22
 4: Posting Third-Party Remittance

• Payables may be generated for vendors as a result of

HR/Payroll. Examples include: Great

Garnishment processors

Taxing authorities
Feature

Benefit providers
• This is an additional 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 AP vendor if the third-party remittance posting
run is not executed
Good

Once you post your third-party remittances, the proper AP
vendors’ accounts are updated so that you can process them
Thing like any other liability through the AP payment program 23
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
24
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

25
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

26
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
27
 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

28
What We’ll 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

29
 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
Tip
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

30
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

31
 Utilizing the Payment Program (cont.)

• It’s 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
Warning won’t be linked to an accounting document

32
What We’ll 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

33
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

34
1: 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

Expense – Income statement

Technical – Clearing account

Vendor – Vendors

Customer – Customers

Loans – Employee loans
35
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
36
1: Defining Symbolic Accounts (cont.)

• Selecting the EG-depend field will determine whether the

feature PPMOD impacts the posting to accounting

37
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

38
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
39
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

40
 3: Tips for Mapping Wage Types to Symbolic
Accounts (cont.)
• When in doubt, create a new symbolic account (cont.)

Often, when it is time to change how the wage type is posting in
the G/L, people take a shortcut and change the mapping of the
symbolic account that is assigned to that wage type
Warning

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 (−)

41
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

42
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

43
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 44
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

45
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
Warning
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

46
What We’ll 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

47
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

48
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

49
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

50
What We’ll 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

51
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 52
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, and
tax 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

53
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

54
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

55
What We’ll 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

56
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

57
Payroll Reconciliation Report (cont.)

• Wage types may be traced directly to G/L account

postings

58
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

59
What We’ll 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

60
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

61
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

62
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
63
Your Turn!

How to contact me:

Mike Timm
mtimm@icgllc.net
(866) 415-0072
64