How to Reduce Payroll Closure Window With SAP Payroll Control Center
Payroll closure window (the time during which the data input is locked) should be kept to a minimum, especially when there is a distributed payroll and HR team – In addition to a streamlined process definition enabling an efficient hand off between teams; Payroll Control Center offers functionality that can further reduce the payroll lock down window.
In a service center or managed services based set up where the payroll is run centrally, there is always a challenge to ensure that the employee’s data is entered in a timely fashion by the managers/HR teams distributed across various locations. With the traditional payroll processing in SAP, the payroll team typically require about 4 to 5 days to complete the payroll processing. Considering a bank transfer may take up to 3 days, the system is locked down for employee changes for about 7 to 8 days. This means that the cut off for the users entering employee changes (managers or HR team) is much earlier in a payroll period. This challenge is even greater if an organisation processes weekly payrolls.
This blog describes some of the reasons for a prolonged payroll closure window and how Payroll Control Centre can help minimise the period between release and exit of the payroll control record.
- A number of checks and reconciliations are reliant on one set of payroll data being available. As standard, for the SAP system to generate payroll results, the payroll area has to be released for payroll i.e. during the payroll lock down period.
Payroll Control Center (PCC) offers the functionality to perform checks based on simulated results. The de-clustering functionality stores the simulated results in separate databases and hence, can be reported on even before the payroll control record is released. This functionality provides the payroll team an opportunity to identify the potential errors in the payroll and also, make the variance reports (exceptions) available to various recipients to investigate and make corrections to employee data. In other words, the cut-off date for the managers /HR team to input all the data can be extended.
- A considerable amount of time and effort is spent on liaising with the managers or HR team to resolve any issues encountered during the payroll processing.
Using Payroll Control Center (PCC) administrator’s role, the exceptions/errors can be assigned directly to the HR team members thereby reducing the time required to send emails or make phone calls to resolve the issues.
- If the payroll team is large, the monitoring and resolutions of payroll exceptions can take up a lot of time and effort as the payroll managers, in most cases, rely on emails and individual conversations to understand the progress of exception resolution.
The manager’s role within PCC includes a very useful dashboard and progress monitoring tools. Payroll managers can dynamically change the exceptions/errors assigned to the administrators by considering the workload and the progress made by various team members.
In addition, the feature pack 4 from SAP offers individual administrators an option to look at the errors/exceptions assigned to the payroll area and pro-actively assign any unassigned issues/error to themselves.
- A number of issues/exceptions are identified much later in the payroll process, for e.g., missing cost centers, missing GL account, overpayments recovery, and negative net pay handling. These issues/exceptions might involve a considerable amount of time and effort in co-coordinating with relevant non-payroll teams to implement a solution.
As PCC is an open framework, a lot of the validations (both master data and payroll results related) can be built in. These validations are triggered much earlier in the payroll process thus, reducing any unexpected errors once the payroll is released. E.g., any missing cost centers against employees can be identified during the validation stage instead of waiting until a posting simulation document is generated.
- In payroll teams where the employee attrition rate is high, a further delay is caused in the payroll processing as new members within the team need to be trained in identifying the root cause of the issue and identify appropriate solutions.
The Payroll Control Center has been designed to be an intuitive tool. In addition, it can be configured to highlight the root cause of the issue, provide further details on the possible solutions and direct the payroll administrator to the area within the system to apply corrections. Because of this, the time taken to analyse the issue and implement a solution can be reduced. In addition, the time required to train any new team members is minimum.
The payroll control center does not negate the need for an effective hand off between teams in an end to end process. However, with PCC, the payroll process can be made much more efficient by reducing the payroll closure window thereby allowing various non-payroll teams more time to input transactional HR data.
We have implemented Payroll Control Center with one of our customers, and with great success. The customer cannot do without it today. One of the things that the/our customers like about the product, is that it makes it much simpler to run payroll, and even with greater certainty that all the internal rules are followed. Who does not think that the rules were respected for all salary payments.
The customer post-it budget has been cut dramatically 🙂 . This is done by the fact that they do not need to write down all the small things to remember. This also gives a better overview for all the participants.
As you pointed out in the article, you can better plan the pay period with PCC. Already from day 1 of the pay period, you can begin to see what challenges you have with the next salary payment.
But even PCC product can be better. This especially applies to everything around posting. Therefore, we have also expanded the functionality around accounting. Now we can also check the accounts even before the first test payroll. This is done by testing the accounting based on the declustered results being generated by PCC.
This gives our customer the full picture of where the obstacles are during the next payroll period. It gives more confidents in the payroll process, but also reduce the costs.
From what I know not many have implemented PCC in productive environments, but from my point of view this is a game changer in how the payroll process will be done in the future. That said, it would be nice to know, if other have more “real live” experience.
Thanks for sharing the story. It's encouraging and useful to hear such success stories.
And, indeed, its a game changer. Looking forward to enhancements in this area by SAP.
I was wondering how the following is accessed - "In addition, the feature pack 4 from SAP offers individual administrators an option to look at the errors/exceptions assigned to the payroll area and pro-actively assign any unassigned issues/error to themselves."
Thanks for the great article