Factoring in SAP HR: A Comprehensive Guide

In payroll, factoring is a crucial technique for adjusting payments accurately based on an employee’s work schedule, absences, or other variables that affect their working duration within a pay period. SAP HR offers a robust factoring mechanism to ensure employees are compensated fairly and in accordance with company policies. Let’s delve into the nitty-gritty of factoring in SAP HR.

Why Factoring Matters

• An employee joins or leaves mid-period: When an employee starts or leaves a company outside of the standard payroll cycle, factoring ensures they receive payment only for the duration they were actively employed.
• Unpaid absences: If an employee takes unpaid leave, factoring allows you to deduct the corresponding amount from their salary.
• Changes in Pay: When an employee’s base pay changes within a pay period, factoring accurately calculates their earnings based on the different pay rates.
• Organizational shifts: Factoring plays a role if an employee moves to a different cost center or department with a different pay structure.

How Factoring Works in SAP HR

1. Partial Period Parameters: Processing classes within the payroll schema determine how a wage type is treated during factoring. SAP delivers standard settings, which you can customize for your organization’s needs.
2. Factoring Infotypes: These info types are vital for storing factoring-relevant data:

• • Infotype 0014 (Recurring Payments/Deductions)
  • Infotype 0015 (Additional Payments/Deductions)

1. Schema Configuration: The payroll schema is the heart of factoring in SAP HR. Key subschemas involved include:

• • X000 (Main payroll schema)
  • XAL9 (Subschema for factoring)

Factoring Methods

SAP HR commonly uses factoring methods like:

• Daily Factoring: Calculates Pay based on calendar days an employee was active.
• Hourly Factoring: Pay is precisely calculated based on actual hours worked.
• Fixed Factors: Applies predetermined factors for specific scenarios.

Setting Up Factoring in SAP HR

1. Wage Type Configuration: Within table V_512W_D, assign processing classes to wage types, indicating how they should be treated during factoring.
2. Factoring Infotypes: Utilize info types 0014 and 0015 to store relevant data, such as absence information, for factoring.
3. Schema Customization: You can adjust the payroll schema by configuring subschema XAL9 with the factoring rules and methods that suit your requirements.

Example: Factoring for Unpaid Leave

Let’s say an employee earning $3000/month takes five days of unpaid leave in a month with 30 calendar days.

• Daily Factoring:
  • Daily Rate: $3000 / 30 = $100
  • Days Paid: 30 – 5 = 25
  • Factored Pay: $100 * 25 = $2500

Important Note: Factoring configurations can be intricate. It’s advisable to work with an SAP HR consultant to guarantee your setups comply with local regulations and your specific enterprise policies.