What is advance payment in SAP PY - Payroll?

SAP Term: advance payment

• Component: PY

• Component Name: Payroll

• Description: Lump-sum payment of income which has already been earned but for which payroll has not yet been run. Such payments are usually effected between two ordinary payments of either wages or salaries. Rather than pay the full amount of earned income after each payroll run, many companies and organizations prefer to effect one or even several advance payments during the payroll period. The advance payment is roughly equal to the amount of income which the employee has already earned. The exact amount of remuneration is calculated later. The advance payments are deducted from the total and the employee receives the remaining amount, usually when wages and salaries are paid in the following month.

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• Key Concepts: 
  Advance payment is a feature in SAP Payroll (PY) that allows employers to make payments to employees before the end of the payroll period. This can be used to cover expenses such as travel, medical bills, or other costs that may arise during the payroll period. The advance payment is then deducted from the employee's salary at the end of the payroll period. 
  
  How to use it: 
  To use advance payment in SAP Payroll, employers must first set up an advance payment account in the system. This account will be used to track all advance payments made to employees. Once the account is set up, employers can make advance payments to employees by entering the amount and selecting the appropriate account. The advance payment will then be deducted from the employee's salary at the end of the payroll period. 
  
  Tips & Tricks: 
  When making an advance payment, employers should ensure that they are aware of any applicable tax laws and regulations. Additionally, employers should keep track of all advance payments made to employees and ensure that they are deducted from their salaries at the end of the payroll period. 
  
  Related Information: 
  For more information on advance payments in SAP Payroll, please refer to SAP's official documentation on the topic. Additionally, employers may want to consult with a tax professional or accountant for advice on how to properly manage advance payments in their payroll system.