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How to Setup Payroll Expense Allocations

Setting up Expense Allocation Preferences and Employee Allocation Rules.

Before You Proceed

Before setting Allocations against Employees, you will need to complete the Payroll Preferences settings.

Expense Allocation Settings

PayrollExpAllocPref

This tab contains settings that control how payroll expenses are allocated to projects and/or the General Ledger. You can specify separate allocation rules for fixed and time-based allocations, and for the different kinds of expenses: income, allowances, superannuation, WorkCover/ACC and leave.

 

You can use the Exclude from Allocation setting on the Pay Items (MPPP2210) screen to exclude individual pay items from the allocations you set up here.

Allocation Settings

Element

Description

Posting Option

Specify where payroll expenses can be allocated to. Choose from:

  • Projects and General Ledger
  • Projects
  • General Ledger

If the Projects module is not in use, you will only be able to select “General Ledger“.

Off-Balance Account Group

If “Projects“ is selected for the Posting Option, select an account group with the type “Off-Balance“ to use in project transactions.

Flow Settings

Element

Description

Group by Labour Item

If selected, the system will generate the allocation batches grouped by labour item; otherwise, the system will post records for every employee/labour item combination. Grouping by labour item may be useful for privacy purposes in cases where you don’t want project managers to see employees’ pay details.

Bypass transactions where From and To accounts are the same

If selected, an allocation batch won’t include transactions for an expense that was created for one account and then allocated to that same account.

Automatically Release Allocation

If selected, allocation batches will be released as soon as they are created.

Main Table

Set up all of the allocation methods and types that you want to use. Only one rule can be entered for each method/type combination.

Element

Description

Active

This checkbox is selected by default. If you want to stop this expense from being allocated, deselect the checkbox.

Allocation Method

This relates to the allocation method that was selected for each individual employee on the Employees form (EP203000). For example, if you want to allocate income expenses for Fixed employees as well as Time employees, you’d need to add two rows in this table: one where the Allocation Method is set to Fixed, and one where it’s set to Time.

Allocation Type

Select the type of expense. Choose from:

  • Income – Expenses associated with Income pay items.
  • Allowance – Expenses associated with Allowance pay items.
  • Superannuation – Expenses with Employee Super and Employer Super pay items.
  • ACC/WorkCover – This allocation type is not associated with any of the pay item types directly. Instead, it’s applied to all expense transactions generated for ACC/Workcover expenses posted through a pay run.
  • Leave – Expenses related to Entitlement Accrual or Entitlement Payment pay items.

Branch Source

Select where the system will find the branch to use for time-based allocations:

  • Source Pay Run – The branch selected for the related pay run.
  • Project – The branch selected in the Branch field on the Summary tab of the Projects (PM301000) form.
  • Project Task – The Summary tab of the Project Tasks (PM302000) form. 

For fixed allocations, you can choose the branch source on the Payroll Expense Allocation tab of the Employees form (EP203000). 

Expense Account Source

Specify where the system will find the expense account to use for allocations. Choose from:

  • Source Pay Run – The GL account chosen for the related pay run.
  • Employee – The accounts selected in the Expense Account and Expense Sub. fields, found on the Financial Settings tab of the Employees (EP203000) form.
  •  Default Expense Account – The account selected in the Default Account field for this expense allocation.
  • Project – The accounts selected in the Default Cost Account and Default Cost Subaccount fields, found on the Defaults tab of the Projects (PM301000) form.
  • Project Task – The accounts selected in the Default Cost Account and Default Cost Subaccount fields, found on the Summary tab of the Project Tasks (PM302000) form.
  • Inventory Item – This can be sourced from one of two places:
    • The expense account selected in the Expense Account and Expense Sub. fields, found on the GL Accounts tab of the Non-Stock Items (IN202000) form.
    • he item selected in the Labour Item field, found on the General Info tab of the Employees form (EP203000).

Default Expense Account

If you selected Default Expense Account in the Expense Account Source field, enter the account that you want to be the expense account source.

Expense Subaccount Source

All of this field’s options are the same as those for the Expense Account Source field, described above. You can also select:

  • Timesheet (time-based allocations only) – The subaccount selected on the Import Timesheets form (MPPP7030) related to the expense transaction. The subaccount on the Import Timesheets form usually is populated in a pay, so selecting this option is usually the same as selecting Source Pay Run as the expense subaccount source.

Default Expense Subaccount

If you selected Default Subaccount in the Expense Subaccount Source field, enter the account that you want to be the expense account source.

Steps - How to Specify Expense Allocations for an Employee

Once all of the Preferences have been set, you need to specify Expense allocation requirements for each Employee.

EmplExpAlloc

Under the Payroll Expense Allocation TAB you can now add the rules for each Employee so that these allocations can be split between different Sub Accounts, Projects or GL accounts.

Obviously the most common allocation may be to allocate the Expenses between different Sub-Accounts, used for identifying different Organisational Departments.

Payroll Expense Allocation Tab

On this tab, you can specify how payroll expenses for the employee should be allocated to projects and/or General Ledger accounts.

Element

Description

Allocation Method

Choose from:

  • No Allocation - no payroll expenses will be allocated for this employee
  • Time Allocation - payroll expenses will be allocated for this employee as per their timesheets
  • Fixed Allocation - payroll expenses will be allocated to fixed accounts/projects. When this option is selected, a table appears below, which you can use to set up how the employee’s expenses are allocated. Use the Add Amount and Add Percent buttons to add rules to this table as necessary.

Fixed Allocation Table

Element

Description

Active

Tick this box to indicate that the allocation rule is currently in use.

Branch

Select the branch that expenses will be allocated to.

Account

If expenses will be allocated to a GL account, select the account here.

Subaccount

If expenses will be allocated to a GL account, select the subaccount here.

Project

If expenses will be allocated to a project, select the project here.

Project Task

If expenses will be allocated to a project, select the project task here.

Type

The type of rule. This will be one of:

  • Balance - The table will always contain one balance rule, which will be the last rule in the list. Any remining expenses not accounted for by other rules will be allocated according to this rule.
  • Amount - This rule allocates a set amount to the selected account/project.
  • Percentage - This rule allocates a percentage of the employee’s expenses to the selected account/project.

Percentage rows apply to the remaining balance, so if a Percentage row is the first row, it will be calculated as a percentage of the total allocation; however, if a Percentage row has other rows ahead of it, it will be calculated as a percentage of the remaining balance after the previous rows have been allocated. 

Amount

For rules where the Type is “Amount“, enter the amount of the allocation.

Percentage

For rules where the Type is “Percent“, enter the precentage of the employee’s payroll expenses that will be allocated.

Questions?

If you have more questions, please contact BusinessHub's support desk on 1300 733 071 or raise a Support Case.