As we hurtle toward the end of 2012, SAPexperts author, SAP Mentor and HR consultant Jarret Pazahanick recently shared his year-end payroll tips with SAPinsider's Dave Hannon.
Their discussion covered new regulations and advice for staying on top of SAP technology, including BSI Tax Factory releases. He also had some practical suggestions to manage the challenge of getting the right talent to handle EOY payroll issues.
He also shared his reminders on US payroll changes for the year, along with the steps that are key to any year-end payroll process.
Read on here for Jarret's advice or listen to his full interview in our podcast section.
Dave Hannon, SAPinsider: This is Dave Hannon of SAPinsider. Today I’m speaking with Jarret Pazahanick, managing partner of EIC Experts, an SAP mentor, and a consultant who has specialized in SAP HCM since 1998.
Jarret, I want to start out by asking what’s on your checklist to close out payroll for 2012. Is there anything that has changed dramatically this year in terms of US regulations?
Jarret Pazahanick: I think the exciting and sometimes challenging thing about US payroll is that it is constantly changing and there always see ms to be new laws and regulations. Looking at 2012 - 2013, some of the big hitters that customers should be on the lookout for are things like:
- The Healthcare Reform Bill – Patient Protection and Affordable Care Act, which has some impacts in SAP Benefits and Flexible Spending, as well as W2 Reporting, where there’s a new DD code.
- Additional Medicare tax, effective in January for people who make over $200,000
- The State of Illinois has decided to be a little unique, and is requiring mandatory monthly reporting for SUI and New Hire Reporting, and that’s effective January as part of Medicaid Reform
- And customers just want to make sure they are on BSI TaxFactory 9.0H, as it is mandatory.
Looking into the future, SAP and BSI have announced that BSI 10.0 will be released in 2013 - just keep that in the back of your mind. But for now, customers will want to make sure that they’re on 9.0H.
Dave: Any lessons learned that you would be willing to share -- or pitfalls that payroll teams in general must always avoid?
Jarret: Due to the changing tax laws and complexities of US payroll, there is really no silver bullet that will make year-end simple. But I think there are definitely some things customers can do to make it a lot easier.
The biggest thing is to stay informed.
Mani Kak and the rest of the SAP Payroll team do a great job of providing information, so each year in October they do a great presentation for ASUG members, and are constantly updating information on the SAP Marketplace. So I make sure to check weekly on the SAP marketplace starting in October through February. SAP does a great job there of providing presentations, key notes, changing rules & regulations. Hundreds of Fortune 500 companies are using SAP Payroll, a nd they have done a really great job of staying current.
Keeping an eye out for podcasts like this and blogs and articles is always a good idea as well.
Dave: Do you have any other specific advice for SAP customers for completing their end of year payroll?
Jarret: I think one of the big things is to just be proactive – that always seems to pay big dividends. You don’t want to start your year end processes in December. I always encourage my customers to start in late September or early October at the latest.
Some items that should be on every customer’s yearly checklist – the ones you’ll want on your list every year – are things like:
- Load the appropriate HR Support Packs (HRSP) up to the year-end base support. SAP will provide you with a number to tell you, based on your SAP version, where you need to be.
- Load appropriate BSI Tax Factory TUBS.
- Apply any necessary OSS Notes (Tax Reporting, IRS Levy). You’ll want to be watchful of some that come out every year -- an IRS garnishment levy table, tax filing, tax reporting -- that you’ll want to be on the lookout for
- Generate Work Schedules
- Update Payroll, Posting and deduction model periods each year
- Clear any outstanding claims
- Review any uncollected taxes
- And the biggest thing you can do is test, test, test - especially around tax reporting.
SAP has a lot of simulation functionality. So there’s no reason you can’t go out and start running simulations of your W2s and your tax reporting, and start doing some balancing to see if you’ll have an issue before it happens. It’s a lot easier to solve issues if you have a couple of weeks to address them instead of a couple of days.
Another key is to stay on top of your payroll data, so you are not spending the last few weeks scrambling to fix data errors that have occurred throughout the year. Unfortunately, for some organizations, they don’t see they have problems until they start to balance. A lot will flush out at the end of the year, with closing the year doing all the balancing and all the tax reporting.
Unfortunately, if you find an issue at this point, you not only have to troubleshoot it, you may have to perform extensive fixes — especially if the issue occurred across hundreds of people throughout the year. Starting everything earlier gives you time to be proactive versus being reactive.
Dave: Lastly, a lot of companies are looking for talent in this area— for payroll consultants specifically. Do you have any advice for those companies in terms of recruiting or hiring these consultants?
Jarret: This is an area I am very passionate about. If a US customer needs a payroll consultant, it is important to find someone that REALLY has experience in US Payroll, who has been through multiple year-ends, and who has really strong troubleshooting skills.
I always strongly recommend that customers do a detailed technical interview and check at least two customer references. Sadly, there is currently a lot of fraud and people lying about their skills and experience to try to get their foot in the door and learn on the job.
I have written several blogs on ASUG News and SAP Community Network on ways customers can help ensure they get a good consultant. Because if they’re going to be paying the big dolla rs for SAP consulting, they’ll want to make sure they get someone in there that can help solve some of their issues. At year end, you just don’t know what types of issues you’re going to get, and some will be extremely specific.
People need a really broad SAP understanding and knowledge to solve one of these specific issues, and if you don’t understand all the pieces, how they work, and how they integrate within SAP, it becomes really hard to do any troubleshooting.
The downside is that I’ve seen that in Q4 a lot of customers start looking for consultants. The supply and demand equation is such that there are always a lot of payroll opportunities in Q4, and a lot of the good consultants are typically on projects or already have commitments.
One of the ways I have seen customers think outside the box is to consider a remote consulting arrangement with senior payroll consultants. The nature of Year End Payroll work does not always lend itself to require 40 hours a week, from October to February. It could be 20 hours one week, 5 hours the next, 35 hours the next week. I’ve seen a remote consulting model be very successful.
The key is you still have to go through the technical interview, and get someone who has been through multiple year-ends in the past. If customers can consider the remote model, it will open up the talent pool of prospective consultants.
The one thing you don’t want to do is settle for someone with limited experience, as they will ultimately do more damage than good.
Dave: Thank you very much, Jarret. I’ve been talking to Jarret Pazahanick, man aging partner at EIC Experts. It’s very useful advice!
Jarret: Thanks a lot for having me.