HCM Information Articles

Steps to Achieving the Best End-of-Year with SAP HR & Payroll

Date: 1 Feb 2010

By Margaret Owens

It is common knowledge that many Payroll Managers dread end-of-year. This can usually be sourced to three main causes: firstly, a bad experience the previous year, secondly, uncertainty regarding the end-of-year process, and thirdly a lack of confidence in the current state of data in their payroll system.

As a former Payroll Manager, I have experienced both the good and bad sides of a payroll end-of-year and can assure you that it only took doing it the hard way once to realise that I never wanted to do it that way again! My learnings have inspired this article to assist my fellow colleagues in achieving an (almost) guaranteed successful, stress-free end-of-year. The key to this is planning - just as a lack of planning will virtually guarantee the reverse.

All too often organisations invest large sums of money in sophisticated computer payroll systems; however it's the basic common sense processes that back it all up that are fundamental. A little planning and goal-setting can often reap huge rewards.

To achieve an easier and smoother end-of-year, the Payroll team will first need to clarify their end-of-year objectives. Below is a suggested list that incorporates both system and person-centred outcomes:

1. Accurately process employee's Payment Summaries;
2. Accurately produce the ATO file;
3. Meet your deadlines ahead of schedule;
4. Be relaxed and enjoy the process;
5. Work normal hours and have weekends off in June and July.

Achieving the Objectives

All the above are equally important, and all are easily achievable if the following points are covered:

Reconciling your payroll on a regular basis (per pay run) is the main key to success. By using a few payroll reports, a few tricks of the trade and an Excel spreadsheet, reconciling is a 30-minute job or less at the end of every pay run.
Keeping your legislative knowledge up to date for end-of-year is critical. A number of organisations provide seminars in the lead-up to June. Visit the ATO web site for regular updates on the latest changes. Become a member of TAPS (The Association for Payroll Specialists; www.payroll.com.au).
Know how your SAP Payroll year-end transactions and processes work. Information on how to run end-of-year is available from a variety of sources including end-of-year courses (these are run by SAP and channel partners every year) or you can arrange for a consultant to come on site and give one-on-one training. It is recommended that you book this support in advance, as year-end can be an extremely busy time for SAP HCM consultants, just as it is for payroll personnel. Participation in user group meetings is another good way to learn from the experiences of other SAP users (www.saug.com.au). This is especially important for those of you who will process year-end in SAP for the first time, whether due to a recent implementation or staff turnover.
Ensure that your system is technically up to date in terms of support packs for Australian payroll. Again, some packs will require that you have either in-house or external functional expertise on hand so don't leave it until peak period when SAP HCM consultants are scarce.
Draw up an end-of-year checklist - there are numerous system and process items that are both mandatory and recommended. Working with your IT team, HR department and payroll officers will be required to cover off all these itemson schedule. The checklist below is a suggested example, and repeats some of the previously mentioned items:

Checklist

Apply all the latest HR Payroll SAP Support Packs to your system recommended by SAP (SAP will advise this around Mar/Apr). Those packs contain the latest updates to their software to meet current legislation for both end-of-year and any tax changes for the following financial year. Try to work with your IT department and/or external SAP services provider to keep packs up to date throughout the year, so as to lessen the effort required for testing at year end. Select periods during your business cycle when the work of application, testing, etc will least impact on the payroll team's workload. It is your responsibility to know what changes are applied and to test them to ensure they meet the legal requirements. Ignorance of legal requirements is not an acceptable excuse with the ATO. The buck stops with you.
Continue to monitor SAP OSS Notes for changes.
Check all your wage types to ensure they have been correctly configured to allocate values accurately on the PS and ETP reports. This is especially important for any new wage types that may have been added since the last year-end.
Check that wage types configured for PS and ETPs are also available in the CRT results table.
Complete a test run and check that the data is correctly displaying on the PS and ETP Summaries.
Check that all employee manual payments have been entered into the SAP Payroll system.
Check that all employee terminations have been accurately processed in the SAP Payroll system.
Check that FBT amounts for relevant employees have been entered into the SAP Payroll system.
Check and correct master data that does not meet the ATO requirements (e.g. address - no commas or full stops, names - no double spaces etc). Use Ad-hoc Query for this.
Ask employees to provide you with any changes to their home/postal address. If your organisation is using Employee Self Service, HR can send a reminder notification to all staff to update their data.
Check that all TFNs have been entered.
Reconcile your Salary and Wages clearing account.
Reconcile your Payroll results to the Payment Summary and ETP Listings Reports.
Reconcile that payments made to the ATO match the tax payments deducted from your employees. By using standard SAP reports and downloading them to Excel you can match and easily reconcile the various components from the Payroll reports to the Payment/ETP summaries listings. Initially this is done at a high level i.e. using the overall totals of the various components. If you find discrepancies then you can investigate at a more detailed level (e.g. using the wage type reporter). There is also a range of third party solutions that can be used for reconciliation.
Complete all adjustment/payments for the year via off-cycle pay run and/or Payment Summary override functionality

The following items are a suggested step by step End of Year process for 2010

Exit the final payroll of the year
Print final Payroll Reports
Print final PS/ETP Listings
Generate Payment Summaries/ETP Summaries
Run Batch Update for Payment Summaries/ETP Summaries
Print Payment Summaries/ETP Summaries
Send PS and ETP summaries to employees by correct date (14/7/10)
Send PS and ETP file to ATO by correct date (15/8/10)
Send Payment Summaries/ETP Summaries that have been returned to you to the ATO by 31/10/2010

Conclusion

Leaving everything to the last minute is a trap we can all fall into due to workload, and the unrelenting cycle of the payroll process (especially weekly pay cycles!). This is further heightened for those of you who are mid-implementation and may be going live for July 1 - a very popular date for Payroll Go-Lives.

A saying from my part of the world is "forearmed is forewarned". If you are not completely confident with your SAP year-end, then the best advice I can give you is to invest in training and support with a reputable partner who will provide you with all of the above and ensure that all those with an interest in a successful year end (management, employees, Payroll team and the ATO) get the required outcome.

Margaret Owens is a senior HCM/Payroll consultant with Extend Technologies. A key focus of her role is working with organisations implementing or already using SAP payroll to streamline their SAP payroll processes and coach and train staff. She has extensive SAP consulting experience specialising in process design/improvement, user team preparation and training, test management and change management. With 15 years Payroll Management experience, Margaret was also involved as a customer (and later consultant) in the development of Extend Technologies Australian payroll template. She is an active TAPS member and has participated at a number of interest group seminars including being a presenter at SAUG Summit 2006. She designed Extend Technologies' ‘SAP Payroll End of Year' training course and also delivers both internal and customer training on legislative changes and remuneration trends.

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