Field-Tested Strategies to Avoid or Overcome the Most ...€¢ Add Infotype 0006 Address and you can...

Produced by Wellesley Information Services, LLC, publisher of SAPinsider. © 2015 Wellesley

Information Services. All rights reserved.

Field-Tested Strategies to Avoid or Overcome the Most Common and Costly Payroll and Time-Related Challenges

Mike Timm Integrated Consulting Group

1

In This Session

• We’ll tackle some of the most common payroll challenges

• Provide essential information every payroll professional can use

to overcome challenges and streamline processes

• Explore common payroll issues

• Come away with tips to more efficiently troubleshoot and resolve

payroll errors

2

What We’ll Cover

• Understand the components of the payroll process

• Identify issues before they happen

• Understand payroll schemas and rules

• Utilize CATS and time evaluation functionality

• Troubleshoot the process model and how to properly restart

• Manage mergers and acquisitions like a pro

• Find data issues by running Tax Reporter in simulation

• Wrap-up

3

Understand the Components of the Payroll Process

• The payroll process is based on several components

SAP programs

Table configuration

Schemas and functions

Rules and operations

• There are multiple sources of input to the payroll process

including some outside the control of the payroll department

Upgrades and HRSP application and testing

Managers, employees, other department processes

Master data – employee and non-employee

Other HR submodules configuration

Other SAP modules configuration

4

Components of the Payroll Process

• The payroll components and input are processed based on the

schema

• The schema determines how the payroll program should be

utilized by calling table configuration and data inputs

Schema

Function

Rule

Operation

Payroll Program

(Driver) contains

Function

modules

Operation

modules

Table

Configuration

Time Cluster

5

Sources of Input

Payroll Process

Time Data

• Employee entry

• Time clocks

• Manager approval

• Time evaluation

HR Master Data

• Actions

• Infotypes

• Interfaces

SAP System

• HRSPs

• Configuration

6

What We’ll Cover








• Wrap-up

7

Training and Documentation

• Subject matter experts (SMEs) may not understand how the

system processes work

Translation may be lost between IT and business

Infrequently occurring process may be forgotten

• User/employee/manager doesn’t know what to do

Wrong tool is utilized or process is not performed

Not sure how to resolve an issue

• Lack of understanding of the overall process

May lead to process not being run or not run in a timely manner

• Training is very important to fully utilize the system

New employee training

Continual training for users to identify methods to improve

existing processes or new processes

8

The Challenges of Payroll Audits

• The payroll department typically owns the end product –

remuneration – just as the quality assurance (QA) department

owns the final product from the production line

How many resources have been dedicated to QA departments

for ongoing improvements?

Compare that to the resources dedicated to the payroll

department for ongoing improvements

• SAP provides some tools to audit payroll, and many companies

develop their own or purchase third-party software

• Unfortunately, the need for an auditing tool is often identified only

after go-live and its selection and use are afterthoughts

A quick implementation often takes precedence over

consideration for ongoing support

9

The Challenges of Payroll Audits (cont.)

• Typically, payroll audits are performed by payroll administrators on

payroll processing day

Many tools are time consuming to use and reside outside of the SAP

system, especially when implemented after go-live

SAP-provided tools are not always understood or payroll

administrators are unaware of them

Audits are time consuming and affect the timeline of payroll

processing

At some point, audits are skipped to just get the checks out

• The last audit recourse is waiting for errors to occur or an employee to

identify an issue

We’ve now reached the reactive “put out the fire” stage

Employees watch closer and lose all trust in the payroll department

10

Proactive Data Validation

• Proactive data validation reduces errors at the time of input and

prior to the payroll process beginning

Validate data entry at the time of entry with user exits

Can be used to default fields or provide user feedback

Can contain logic to look at multiple fields and determine if

one needs further review or is unacceptable

Remember, user exits are not modifications to SAP code and

are not overwritten during upgrades or HRSP applications

Validate data by running reports to verify all employees contain

specific data, such as:

All employees in a specific personnel area/subarea have TX

as their Work Tax Authority

11

Proactive Data Validation (cont.)

• Validate data entry using the SAP report Logged Changes

(RPUAUD00)

Run a periodic Logged Changes report to identify modified

employee records

If an employee infotype was modified several times during a

specific period, it should be flagged – there may have been

an issue during entry

Check for changes to infotypes (e.g., cost center changes) that

will cause retroactivity outside of a certain range

Infotypes causing retroactivity are defined in configuration

Infotypes must be set to log

• Utilize CATS user exits to identify specific validation logic

12

Data Validation Example: Missing Cost Center

• Use the Flexible Employee Data report (S_AHR_61016362) to

identify employees with a missing cost center in Infotype 0001

13

Data Validation Example: Missing Cost Center (cont.)

• Even with a proactive audit in place to verify that

cost centers exist in Infotype 0001 for all employees,

a cost center may be removed between the audit and

payroll processing

• To catch this error, you can create a payroll rule to run during the

payroll process that checks Infotype 0001 for a missing cost

center

• The first and third line takes the

first character of the WPBP cost

center

• The fourth line says if it is any

value, then process

If the first character is blank, an error is generated

14

Data Validation Example: Locked Employee Records

• Use the “Personnel numbers that have to be unlocked for payroll runs”

report (PC00_M44_UCPL) to identify employee records currently being

maintained by a user

Payroll should communicate a time users should not be maintaining

employee records

15

Data Validation Example: Payroll Variances

• Use the Wage Type Reporter (S_PH9_46000172) to identify

variances from period to period

• Enter selection criteria to narrow down the scope of employees to

review those potentially affected by configuration or master data

changes

16

Data Validation Example: Tax Infotype Summary

• Use the Tax Infotype Summary (S_AHR_61016142) to get detailed

tax master data

• Run by employee

17

Data Validation Example: Ad Hoc Query

• Ad Hoc Query (SQ01) is typically underutilized in organizations

and could add a great deal of reporting power

• Infotypes can be selected and combined and then output to a file

for analysis

• The Tax Infotype Summary is run by employee, but using Ad Hoc

Query allows all employees or selected groups to be run and

display Tax Infotypes

• Add Infotype 0006 Address and you can verify the residence state

and Infotype 0207 match

• If you aren’t currently employing Ad Hoc Query, check it out as

soon as possible

18

Data Validation Example: W-4 Withholding Allowance

• Use the W-4 Withholding Allowance Report (S_PH9_46000361) to

find claim exemptions vs. allowed exemptions

19

What We’ll Cover








• Wrap-up

20

Schema Introduction and Configuration

• Schemas control the payroll processing steps

They provide the instructions for payroll

Supplies the logical flow of data in, calculation performance,

and data out

Customizable and flexible to meet business requirements

However, configuring has a feel of mixing table configuration

and programming together

• The payroll program contains code that is called by the schema

The schema utilizes the snippets of code within the payroll

program for calculations, etc.

Schemas control the use of functions

21

Schema Introduction and Configuration (cont.)

• Transaction code PE01 is used to maintain schemas

• Copy SAP standard schemas to a customer name range

Copy standard payroll schema U000 and then only

maintain the new Z000 schema

Reduces issues when SAP provides updates to a

standard schema with support packages or upgrades

When making an update to the custom schema,

make a backup copy first since there is no version

management

Makes it easier to reverse changes or scrap all the changes

quickly if needed

22

Schema Example

• We’ve made a copy of standard SAP schema UT00 and called it

ZML2 to handle customized time data processing

• The payroll driver uses ZMLT (copy of U000) and calls ZML2

instead of UT00

Customized rules

Customized function

23

Schema Tips

• Compare schemas with menu path Schema Compare after

displaying the schema in transaction code PE01

• Program RPDASC00 outputs a schema with differing levels of

detail set by the user

24

Overview of Function Use in Schemas

• Functions are snippets of code found in the payroll program that

are called by the schema

Function may or may not have parameters set in the schema —

it isn’t always a requirement

You can determine the available parameters by using the F1

(Help) key when you put your cursor on a function in the

schema view

• Functions may read

Infotypes

Process rules

Process multiple tables to calculate wage types

Process payroll internal tables

• Version management is available

25

Function Use in Schemas Example

• In our example schema ZML2, we can see the use of standard and

custom functions

• The functions request the snippet of code from the payroll

program

Standard

functions

Custom

function

26

Function Use in Schemas Example (cont.)

• Maintaining and displaying the functions is done using

transaction code PE04

You may configure the characteristics of the function and

available parameters

Available for countries

Parameter 3

Parameter 4

Using F1 (help) next to RAB in the schema

27


• Standard SAP function RAB pulls all absences in from Infotype

2001 and assigns work center split indicators

When an absence appears in an inactive period (after

termination, LOA, etc.) an error is received

This may be changed with Parameter 4, but this allows all

absences in an inactive period to pass without an error

message

• Our goal is to make it so we don’t receive the error message for

specific absence types

Copy RAB to ZRAB and modify ZRAB using transaction code

PE04 Config change

28


• SAP standard RPCMAS09_FURAB

Calls function HR_CONVERST_2001_INTO_AB_TECH

• ZRPCMAS09_FUZRAB

The function is identical except that the custom version calls

function ZHR_CONVERST_2001_INTO_AB_TECH

And we also define a custom operation, which we’ll look at later

Code change

29


• ZHR_CONVERT_2001_INTO_AB_TECH

Zpermitabsences contains absence types that won’t cause errors

If the absence type is found in the custom table, then no error and

allow continued processing

If the absence is not found in the custom table, then error (follows

SAP standard)

Additional code

Custom table absence

type lookup

30

Summary of Function Use in Schemas

• We’ve been able to use an existing function to make quick and

easy modifications to handle business requirements

Now we are able to process a specific set of absence types in

an inactive period without errors

Other methods were available, but those methods required

much more complex configuration

Later, we’ll go through an example to show how proration has

to be modified to handle these absences

• Functions are not as difficult to review and understand as most

people first think

• Use custom functions only when existing options will not meet

business requirements

Just because you can, doesn’t mean you should

31

Rule Introduction and Configuration

• Rules provide the logic flow of processing payroll

They are attached to schemas and executed during payroll

processing

Functions in the schema process a rule

Rules contain operations that perform calculations or other

decision logic

• Configuring rules is not necessarily intuitive

Configuration has a feel of mixing table config and

programming together

Not directly date delimited like table entries, but options are

available to work around this

Placement of the rule in the schema needs to be carefully

considered

32

Rule Introduction and Configuration (cont.)

• Highly customizable to meet business requirements

Rules may make decisions on a variety of objects such as

employee group/subgroup, personnel area/subarea, etc.

Wage types contain splits that link related data, such as WPBP

to it and should be considered when developing rules

Wage type specific or generic

Hard-coding values should be avoided and table entries such

as constants should be used instead

Variables may be set and used for later processing to trigger

other rules to perform specific tasks

33


• Rules are configured in transaction code PE02

Display or maintain rules

Make decisions based on objects such as employee

group/subgroup or wage type processing class

Operations are set within the rule

34


• Transaction code PE02 is used to display/maintain rule U010

Multiple operations are performing steps for the desired output

Indicates decision

Adds wage type to

output table

35

Operation Use in Rules

• Just like functions, operations are snippets of code found in the

payroll program that are called by a rule

• Operations perform calculations or other data manipulation steps

Manipulate one wage type at a time and store the wage type in

an output table

May perform decisions within the rule to determine a path to

follow — personnel area, employee subgroup

Up to six operations may be entered on one line of a rule and

you have the option of sequential rows allowing for more

operations when needed

Operations allow for parameters to determine how the

operation should behave

• Version management is available

36

Tips for Creating a Custom Operation

• Use standard SAP routines when possible

• Follow SAP standards when creating new operations

• Do not hard code values in operations; look up the values in

tables allowing for easier maintenance and date effectivity

• Variables seem to get overlooked and need to be cleared so they

are not carried along

• Make sure to include error handling that provides useful feedback

• Do not sort internal tables used in the main payroll driver since

the main program might be expecting the internal table to be in a

specific order. If needed, copy data to a new internal table for use

in custom operations or functions.

37

Maintaining and Displaying Operations

• Maintaining and displaying the operations is done using

transaction code PE04

You may configure the characteristics of the operation and

available parameters

Available for countries

Parameters

Using F1 (help) next to PPAR in the rule

38

Example: Operation Use in Rules

• Following our example of allowing specific absences to process

through payroll without error, we had to create operation %TACT

• Operation %TACT allows for proper proration when the absences

are in the inactive period

If we had not modified proration, the absence in the inactive

period causes a reduction in hours paid during the active

period

The operation returns a Y or an N depending on whether the

Infotype 0000 action is the same as the parameter set

The work week contains 40 hours and runs Monday through

Friday

The allow absence occurs on Friday and the LOA action occurs

on Wednesday

39

Example: Operation Use in Rules (cont.)

• %TACT is used only in the United States

• The parameter input is two characters with an output of one

character

40

Example: Operation Use in Rules (cont.)

• In the rule, we use operation %TACT and tack on the action we

want to look for UB

• If %TACT finds UB, the Var.Key is set with a Y

• If %TACT does not find UB, the Var.Key is set with an N

• The Y or N then drives how proration will take place

41

What We’ll Cover








• Wrap-up

42

CATS Data to HR Infotypes

• Attendances/Absences (Infotypes 2001/2002)

CATS feeds HR actual hours attended or absent

CATS validates absences with absence quotas

Payroll uses Infotype 2001/2002 data during processing

• Substitutions (Infotype 2003)

Position option may be used to assign payment for the work

according to the specifications of a different position

• Employee Remuneration (Infotype 2010)

One-time earnings/deductions may be passed from CATS to HR

Used to process manually – calculated wages or bonuses

• Work Tax Area (Infotype 0208) Override

CATS allows a work tax area to be entered that is different than the

default area in Infotype 0208

43

Utilize CATS

• CATS = Cross-Application Time Sheets

• CATS uses the SAP Human Resources authorization concept

• Data entry in CATS may be done by individual employee or by

defined groups of employees

• Data entered in CATS may be set to require a procedure for

approval

• CATS allows you to spread costs over the cost centers actually

worked in instead of the employee’s home cost center (which is

the SAP default when posting from Payroll to FI/CO)

• CATS 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 has powerful user exits to validate and default data

44

CATS User Exits

• Utilizing user exits allows for additional functionality and behind-

the-scenes data processing

• Most of the user exits will perform exactly the same through your

time entry portal

• Some of the more useful user exits are

CATS0002 – CATS: Supplement entered data

CATS0003 – CATS: Validation of entered data

CATS0005 – CATS: Customer field enhancements

CATS0006 – CATS: Validation of entire time sheet

CATS0008 – CATS: Determine workflow recipient for approval

45

User Exits Example CATS0002

• Employees enter a premium number to identify the shift they

worked

• When a premium number is not entered by the user, the user exit

CATS0002 automatically populates the premium number based on

Infotype 0007

The Infotype 0007 work schedule starts with the shift (1-5X80, 2-

5x80, 3-5X80)

46

User Exits Example CATS0002 (cont.)

First, gets the work

schedule from

Infotype 0007

Second, places the

work schedule in

the premium

number

47

User Exits Example CATS0005

• Employees are not allowed to enter time in advance

• User exit CATS0005 validates this requirement and generates

error if future dated entry is made

48

User Exits Example CATS0005 (cont.)

• Employees are required to enter time to the tenth of an hour

49

Utilize Time Evaluation

• SAP time evaluation is very powerful and flexible

Understand and use what is available

• Time evaluation uses a variety of data elements for processing and

generation of output:

Infotypes – work schedule, absences, attendances, quota, etc.

Configuration tables – record settings

Schemas and rules – instructions

• Use transaction code PT60 and enter screen parameters

Position, rate, tax, etc., overrides are processed

Overtime calculations are performed and quotas updated

Wage types to be further processed by payroll are generated

• The employee B2 Time Cluster is created/updated with the data

necessary for subsequent processing

50

What We’ll Cover








• Wrap-up

51

Troubleshooting the Payroll Process Model

• Payroll process models are great when they run without errors, but

on occasion we have to figure out why the check we expected to print

did not

• SAP makes troubleshooting payroll

process models easier by providing an

icon for each step in the model

The screen shot to the right shows

we have a green light (successful) in

Step 2 and a stop sign (possible error)

in Step 4

• However, restarting the process model may not be as easy as simply

restarting the step with a stop sign

We restart Step 4 because it has the stop sign, but we get an ongoing

process symbol because the problem wasn’t fully resolved

52

Example: Troubleshooting a Process Model Error

• In this example, an off-cycle payroll was processed on September

28 with a pay date of October 2

The October period had not been opened by accounting and the

process model stopped in transaction PUST

53

Example: Troubleshooting a Process Model Error (cont.)

• We first check the document created in transaction PCP0 and note

that period 10.2010 is not open

We contact accounting and period 10.2010 is opened to allow

for the check to be posted

• We then highlight “Release posting document” and select repeat

The result is the ongoing process symbol icon

The original document created in PCP0 was not deleted first, so

we go back and delete it

54

Example: Troubleshooting a Process Model Error (cont.)

• Since we deleted the original document in transaction PCP0, we

need to create a new document

• Then, instead of highlighting “Release posting document,” we

highlight “Execute Posting to FI” and select repeat

This restarts the process model at that step

The process then is able to successfully complete the “Release

posting document” step and move on

The third time the “Release posting document step” ran, it

finished with a green light

55

Payroll Process Model Troubleshooting Tips

• The process model overview provides some key information

In the Text section, you can see the period, payroll area, and type of

off-cycle being processed

By highlighting a step, you can right-click and identify persons being

processed

56

Payroll Process Model Troubleshooting Tips (cont.)

• You can also display

additional information

by right-clicking on the

process step

The program name and

variant are displayed if

you need to manually

run the step for

troubleshooting

purposes

57

Common Payroll Process Model Issues

• Accounting period issues are the #1 cause of payroll process model

issues

Towards month-end, you may run a payroll for the following month,

but the account period isn’t opened so errors during posting creation

occur

Get a schedule of open and closing of periods from accounting

• Check printing issues are the second most common cause of payroll

process model issues

Printers get jammed, disconnected from the network, etc.

• Another issue is when someone runs the subsequent processes of off-

cycle activities and doesn’t set selections correctly

Make sure to limit process models, payroll areas, and exact personnel

numbers being processed so only the employees you should be

processing are included

58

Common Payroll Process Model Issues (cont.)

• It is best to narrow down the selection criteria as much as possible by

using a personnel number

59

What We’ll Cover








• Wrap-up

60

Mergers and Acquisitions Challenges

• What is the timeline to bring the new company to SAP?

• How are the two companies’ payrolls structured now?

Centralized or decentralized

Will the payroll departments merge or will distinct service

centers be maintained?

Can the company coming to SAP conform to the SAP common

pay practices or do differences need to be maintained?

Does the new company get unique payroll area(s) or added to

existing payroll area(s)?

• What system(s) does the company coming to SAP currently run?

SAP, non-SAP but centralized, non-SAP free for all

Beyond payroll, will company be brought on SAP for FI and

other modules?

61

Mergers and Acquisitions Timeline

• Mergers and acquisitions seem to always have short timelines

from when a decision is made to when both companies are

expected to be on the same system

• The idea is “We already have SAP running so it should be easy”

• However, the same steps taken to implement SAP originally need

to be taken. Make sure to reiterate this at every opportunity!

Requirements gathering and blueprinting

Realization and testing

Deploy and support

• Small things like the pay date can become huge issues to

overcome

Same work week, but incoming company was paid on Thursday

will now get check on Friday

62

Mergers and Acquisitions Timeline (cont.)

• Change Management and open communications between the payroll

departments and the inherited employees will be crucial

Maintain blog or project status Webpage

Let everyone know what will be happening and when, just make sure

the when will be hit to reduce anxiety

Be sure to fully explain and hold meetings so people can voice their

concerns and take the invaluable knowledge back to the project

• If departments will be eliminated or merged but people let go,

considerable amounts of knowledge may walk out the door

Bonus programs and longer severance packages to stay can help

alleviate the issue

Asking everyone to write their job description and what they do is a

sure way to have people shut down

63

Mergers and Acquisitions Payroll Structures

• Maintaining multiple service centers can be tricky. If this is

required, open lines of communication and visibility is essential.

• When merging companies are unable to quickly conform to a

common pay practice you can still get them on the same SAP

instance

However, configuration and programs may need to act

differently and this is a difficult long-term solution and will

cause confusion

• Creating new payroll areas for the incoming company allows

continued distinction which may provide an easier transition

If the service centers are not merged or payroll is decentralized

this reduces risk

When things settle down, payroll areas can be consolidated

64

Mergers and Acquisitions Payroll Structures (cont.)

• Even if both companies are on SAP, moving the configuration and

programs over may not be simple

Both systems will have been developed and tweaked over time

Detailed analysis and documentation should be performed on

the SAP system being retired

• A thorough gap analysis should then be performed to see what is

missing in the continuing SAP system

The gap analysis will identify the additional functionality that

needs to be configured or programmed

Wage types, benefit plans, pay frequencies, pay dates, union

requirements, etc. should all be included

65

Mergers and Acquisitions Payroll Systems

• Will the merging companies be maintaining their current Accounting

systems or merging?

Payroll will need to know if the GL accounts and/or cost centers will

be restructured as part of the merger to determine impact to current

processes

If the merging companies will maintain their existing Accounting

systems for a period of time, payroll needs to fully understand where

payroll needs to post, what formats, and any intricacies that may be

involved

• Understand the timeline for other areas as it may require a combination

of short- and long-term solutions

Payroll is told to merge prior to accounting merging. The short-term

posting will require multiple systems, but the long-term is all in SAP.

66

What We’ll Cover








• Wrap-up

67

Find Data Issues with a Tax Reporter Simulation

• In the “Identify issues before they happen” section, we covered

many reports we can use to validate employee master data and

payroll results

• Those reports should be run on an ongoing basis so that when it

is time to run Tax Reporter that data is already in great shape

• Running Tax Reporter will produce the necessary reports in the

correct format for government authorities

We’ll assume you are up-to-date on HRSPs and/or CLCs

• The Tax Reporter log will provide warnings and errors that need to

be reviewed and addressed

68

Run Tax Reporter in Simulation

• Tax Reporter (PU19) allows test runs that will generate forms and

output files for review and validation

• Once we enter in the selection criteria, we can then hit the Log

Manager to review warnings and errors

69

What We’ll Cover








• Wrap-up

70

Where to Find More Information

• www.spinifexit.com/2012/10/20/key-sap-hcm-items-during-a-

merger-or-acquisition-part-1/

John Talio, “Key SAP HCM items during a merger or acquisition

– Part 1” (SpinifexIT Blog, October 2012).

• Satish Badgi, “Efficiently Handle Mergers and Acquisitions in SAP

HR” (HR Expert, June 2006).

• Owen McGivney, “A Lift-and-Shift SAP Payroll Implementation”

(HR Expert, January 2014).

• www.payandbenefitsmagazine.co.uk/pab/article/integrating-

payroll-and-hr-forum-12318982

Integrating Payroll and HR Forum 2011

71

7 Key Points to Take Home

• The importance of continual training and documentation cannot

be understated

• SAP provides many reports that can be used to pre-audit payroll

and tax reporting

• Payroll schemas and rule allow flexibility table configuration

cannot

• CATS user exits are a powerful way to validate data input

• Carefully consider where in the process model you should restart

it after fixing an error

• Mergers and acquisitions require the same steps as an

implementation

• The Tax Reporter Log Manager can be used throughout the year

to identify issues

72

Your Turn!

How to contact me:

Mike Timm

[email protected]

@MikeTimmSAP

(866) 415-0071

Please remember to complete your session evaluation

73

Disclaimer

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or

an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective

companies. Wellesley Information Services is neither owned nor controlled by SAP SE.

Field-Tested Strategies to Avoid or Overcome the Most ...€¢ Add Infotype 0006 Address and you can...

Documents

Transcript of Field-Tested Strategies to Avoid or Overcome the Most ...€¢ Add Infotype 0006 Address and you can...