SAP Payroll: Reconciling Third-Party Remittance Functionality at an EE Level

  • by Imran Sajid, Senior Education Consultant, SAP
  • November 18, 2015
Learn how to use standard SAP Payroll functionality to drill down into third-party remittance documents and see employee-level (EE) detail. By default, the system does not show you the level of detail at an employee level. For many companies this makes it hard to really understand and tie the numbers together, and understand exactly from which employee the amounts are coming when HR is trying to explain the dollar amounts.
Learning Objectives

By reading this article, you will understand:

  • The standard SAP payroll third-party remittance functionality
  • The standard reporting delivered by SAP for third-party remittance
  • How to configure and set up the system to allow reporting at the employee level (EE) for easier reconciliation
Key Concept

In SAP systems, third-party remittance is the process of paying third-party vendors via the transfer of financial posting data from HR to Financial Accounting (FI)/Controlling (CO) accounts. This functionality generates payments either by bank transfers or checks depending on the setup. Unlike financial posting, this functionality exclusively handles posting and payment information for external payees such as tax authorities, garnishment vendors, and benefits providers.

As part of the standard post payroll processing steps, a company has to pay its vendors the amounts calculated in payroll. An example of some of these vendors are the following:

  • The federal government for taxes withheld
  • The state for taxes withheld
  • Benefits vendor for premiums
  • Garnishment vendors for withheld wages for a garnishment

I show and explain a standard solution for reconciling and reporting the amounts that you are paying your third-party vendors at an employee level (commonly referred to as the EE level). This provides a great amount of transparency in allowing you to micro-analyze the dollar amounts to figure out if there are any incorrect amounts or discrepancies from the expected amounts.

By creating the necessary configuration within SAP Payroll, you can clearly see and reconcile the amounts. The standard reporting functionality for third-party remittance displays information at an HR payee level, but not at the employee level. This does accomplish the goal of providing Financial Accounting (FI)/Controlling (CO) with all the numbers for the entire payroll area, but if there are any discrepancies it will be like looking for a needle in a haystack.

Understanding Third-Party Remittance Functionality

The first step in understanding this functionality is to learn about the concept of third-party remittance and what you are trying to accomplish with it in the SAP system. Once you know this, you’ll know how this functionality works within the SAP system.

Imran Sajid

Imran Sajid is a Senior Education Consultant at SAP based in the Atlanta, GA, area. At SAP, he focuses on teaching classes in the HCM area within both SAP and SuccessFactors. Previously, Imran was a consultant who implemented and provided post-go-live support for more than a dozen different client systems spanning many industries, including manufacturing, automotive, retail, information systems, the public sector, and energy. He is the author of the book entitled, The Payroll Control Center for SAP ERP HCM and SAP SuccessFactors, as well as a frequent contributor to SAP Experts, where he has published almost a dozen articles. Imran is also frequent blogger on SAP Community Network (SCN). He graduated from the Georgia State University Robinson College of Business with a degree in Computer Information Systems. Imran can be found on Twitter @ImranSajidSAP.

See more by this author


No comments have been submitted on this article. 

Please log in to post a comment.

To learn more about subscription access to premium content, click here.