Performing SAP HCM Payroll is a multi-step process which can span the duration of a regular eight hour working day. There are many steps involved in the standard payroll process, not including any custom reports that can be used for data validation or uploads. With the many steps involved in payroll, it is easy to fall into the trap of using inefficient methods to finish payroll. Understandably, the priority is to get your employees paid on time, but certain methods can prove to be inefficient over time.
To increase productivity in the payroll process, it is essential to understand the five most common signs of inefficiency and how to simplify the process.
1. Excel Macros and V-Look Ups
Microsoft Excel can be an excellent tool to sort and manipulate data. However, Excel should not play a major role in your payroll process. I often find members of a payroll team relying heavily on Excel macros and VLOOKUP for data verification. This process of verification adds an additional step, therefore increasing unnecessary time to the overall payroll process. Importing employee data into an Excel file can put sensitive data in jeopardy. To alleviate the need for Excel, an ABAP consultant can create a custom report with the logic built in to the system.
2. No Formal Process or Checklist
Payroll is a long process that typically takes more than one business day to complete from end to end. There are many sequential steps needed to ensure that the payroll process runs correctly, and this does not include custom reporting/programs. It is always a best practice to create a payroll checklist that documents the steps in detail. Therefore, if the unexpected happens to a member of the payroll team such as termination, illness, or change of job title, there is nothing missed. The payroll checklist is also a way to document who is responsible for what task, as well as back-ups. If your company does not have a formal process document readily available, then even the most efficient payroll is at risk.
3. Manual Data Comparison
Manually comparing a large amount of data line by line can be the biggest time killer during a payroll run. This manual process can take valuable time out of your day, and it is also prone to mistakes. The solution is to create custom reports that will allow SAP to automatically do the data comparisons for you. For example, you are manually looking for employees who have a difference of pay by more than 10 percent. The inefficient way to handle this situation is to compare the net pay from last period to this period and manually check for large differences by hand. The most effective way to handle this is to build a program that can calculate a percentage difference between the current period and the previous period. Then the program will display the data for employees whose net percentage is greater than ten. A process that could have taken more than ten minutes is reduced to a few seconds with a simple output report.
4. Recurring Errors, Warnings, or False Positives
Errors/warnings are inevitable during payroll processing. The issue escalates when there are recurring errors or warning messages from period to period. An example of this would be the existence of uncleared claims sitting in the system. Although payroll can still be running with no problem, these claims will show as warning messages every time payroll runs. There is a temptation to simply ignore these messages for the sake of moving on in the payroll process. This might be acceptable to do the first time; however, ignoring them indefinitely could be consequential. Ideally, you would want a clean error log so that only new issues are populating. If not, then you could spend unnecessary time searching through a congested log with old errors, warnings, and/or false positives. This is especially important if your company were to ever acquire another company whose newly added employees can double or triple these recurring errors.
5. No Simulations Prior to Payroll
Lastly, not running payroll and time simulation prior to the day of payroll can present major complications. Running a payroll simulation on the day of payroll is a good best practice and can give you a general idea of what errors you may encounter during a live payroll run. It gives you the opportunity to correct the errors prior to the improper results being saved within the system. The only downside to this is that it takes time to run a population in simulation and then the process to correct the issues. The best way is to run simulations prior to the day of payroll to catch any issues and not have the pressure of finishing payroll activities on the same day. There are factors such as time and attendance data that might be coming from a third party, and running payroll/time earlier will still allow time to catch errors in advance. If you can catch issues such as missing infotypes and incorrect rates early, you will have more flexibility the day of payroll.
If your company is running an inefficient payroll, it results in a waste of both time and money. Unfortunately, there will inevitably be issues during payroll that cannot be accounted for ahead of time. However, there are ways to either catch or minimize some errors, which can save your payroll team time. The time saved can then be allocated to other revenue generated activities. A more efficient payroll process can also allow for greater flexibility when organizational changes occur, such as turnovers and acquisitions.
For instance, your company acquires another company which will add thousands of employees to the payroll. Issues your payroll team may have faced previously and ignored thus far will now become bigger issues. Another example would be if a key payroll team member goes on leave or decides to leave the organization. If your payroll process has the proper infrastructure, checklist, and processes, then there will not be a downgrade in terms of the quality.
Contact a Whitaker-Taylor consultant to optimize efficiency in your SAP HCM payroll process.