Payroll Setup Tasks for Encumbrance and Liquidation

Payroll encumbrances represent estimated payroll costs reserved against available budgets before payroll is processed. They're used to estimate payroll costs for future payroll periods and create corresponding encumbrance records.

Payroll encumbrances support reconciliation between estimated payroll costs and actual payroll costs after payroll is processed.

Setting up payroll encumbrance processing involves the following high-level tasks:

Estimate payroll costs for selected future payroll periods
Create encumbrances for the estimated payroll costs
Review estimated payroll costs and encumbrance results
Transfer encumbrance accounting entries to Subledger Accounting (SLA)
Liquidate (reverse) encumbrances when actual payroll costs are accounted for

Estimate and Reserve Payroll Costs

Use the Calculate Payroll Encumbrances process to estimate payroll costs for future, unprocessed payroll periods. The process generates estimated payroll costs and creates corresponding encumbrances for financial reporting.

The process applies the following rules:

Includes all active employees.
Excludes employees with a final close date.
Excludes time card based employees and focuses on salaried employees.
Uses current employee data, including approved future-dated changes such as salary increases or awards.

Encumbrances can be recalculated at any time to reflect workforce changes, such as employee terminations or salary updates.

When the process is rerun:

Previously created future encumbrances are automatically reversed.
New encumbrances are calculated based on the most current employee data.

Review Estimated Payroll Costs

After running the Calculate Payroll Encumbrances process, you can review the results for each payroll period. This provides clear and auditable visibility into estimated payroll obligations before payroll is processed.

Here's what you can do:

Filter results by payroll period.
Review detailed costing information.
Export results for further reporting or reconciliation.
Generate summarized views, such as period-level totals without element-level details.

Manage Encumbrance Accounting and Liquidation

The Calculate Payroll Encumbrances process generates estimated payroll costs that are reserved against available budgets.

Estimated encumbrance amounts are transferred to SLA using the Transfer to Subledger Accounting process.

The process posts encumbrance results using the Encumbrance Costs event class and event type.

When payroll is processed, estimated encumbrances are liquidated and replaced with actual payroll costs. Liquidation is performed using the SLA accrual reversal functionality.

The following SLA sources are supported for accrual reversal configuration:

Effective Date of Costing Process
Start Date of Next Payroll Period
End Date of Payroll Period
Regular Process Date of Payroll Period
Day After Regular Process Date of Payroll Period