Management payroll was calculated in Excel spreadsheets, separately from the group’s operational accounting.
Management accounting • Payroll • Multi-currency
Configuration of payroll calculation and payment, as well as settlements with individual entrepreneurs, in the Business Central management database
The management database received a dedicated subsystem for payroll calculation and payment, linked to the company’s posting groups and General Ledger entries rather than functioning as an isolated module outside the core accounting environment. The CBPM Service team implemented employee records, employment agreements, multi-currency payroll accruals and payments for the client’s HR and finance teams, taking into account payroll already accrued in local databases.
📑 Payroll moved from Excel into a structured system
A dedicated functional block within the management database
📉 Multi-currency payroll accruals and payments
Payroll can be accrued in one currency and paid in another
🕐 HR records consolidated into a single entity
The HR team can view hiring, transfers, terminations, and payroll accruals in one place
Situation before the project
Without automation, it was difficult to manage HR changes, planned accruals, absences, settlements, and payments within a single management system.
The management database had to take over additional group operations, including payroll, compensation, and expenses, with accruals in multiple currencies (the US dollar as the local database currency and the euro) and payments in a different currency regardless of the accrual currency.
The management database had to take into account tax accruals and payroll payments processed in local databases while supporting multi-currency accounting.
Objectives and critical requirements
The client requested the creation of full payroll functionality within the management database to reduce the amount of manual work performed by the HR and finance teams while integrating with the company’s posting groups and General Ledger entries.
1. Payroll calculation and payment in the management database
Implement the full payroll calculation and payment cycle within the Business Central management database.
2. Multi-currency accruals and payments
Enable payroll to be accrued in one currency and paid in another, regardless of the accrual currency.
3. Payment options and accounting for individual entrepreneurs
Support cash and cashless payments, as well as payments to cryptocurrency wallets, while also providing accounting for individual entrepreneurs and tax compensation calculated either as a percentage or a fixed amount under different models depending on the country.
4. Accounting for base salary and bonuses
Implement separate accounting for base salary and bonus components, with accruals, payments, and compensation reflected in employee ledger entries.
5. Accounting for taxes from local databases
Recognize taxes accrued in local databases directly as expenses in the management database and settle employee balances while taking into account payroll already paid in those local databases.
Technical constraints:
Complexity of modifying the standard Employee Ledger Entries and Detailed Employee Ledger Entries to meet the client’s requirements.
Risks:
Payroll for a single employee may be accrued in different currencies within the same document, while opening and closing balances must also be reflected correctly for employees whose salary is accrued in a currency other than the US dollar.
What the CBPM Service team did and how
Payroll calculation and payment functional block
◻ A dedicated functional block for payroll calculation and payment was implemented in the management database. The solution was developed according to the client’s requirements and does not include full tax calculation within the management database: taxes accrued in local databases are transferred into management accounting as expenses.
◻ Multi-currency functionality was implemented, allowing payroll to be accrued in one currency and paid in another, along with different payment options: cash, cashless payments, and payments to a cryptocurrency wallet at the specific request of the client’s finance team.
◻ Accounting for individual entrepreneurs and a tax compensation mechanism were implemented for cases where the company covers such expenses, with configurable tax rates and compensation models depending on the country.
Modification of employee accounting ledgers
Employee ledger entries and detailed employee ledger entries were modified by adding fields required to correctly reflect accruals, payments, compensation, and bonuses.
Base salary and bonus logic
Payroll logic was divided into two components: the base component, which includes salary, premiums, compensation, and other recurring or one-time accruals, and the bonus component, which depends on sales performance and profit generated by deals.
◻ Separate bonus calculation logic was implemented depending on the manager type, accrual period, and target achievement: some bonuses are calculated based on monthly results, some on quarterly results, and some with annual targets taken into account.
◻ For quarterly bonuses, phased payment was implemented: part is paid after the quarter if the target is achieved, followed by a final recalculation and additional payment after annual results are analyzed.
◻ Under the annual model, the bonus amount increases when targets are exceeded and decreases when targets are missed. Coverage of the base salary by bonuses is controlled separately: accruals are recorded continuously, while payment depends on defined control conditions.
Complex aspects and non-standard solutions
Standard Business Central functionality does not provide for payroll calculation and payment within a management database, especially in multi-currency scenarios where payroll is accrued in one currency and paid in another.
The solution also does not include full tax calculation within the management database, so taxes accrued in local databases are transferred into management accounting as expenses.
Another non-standard aspect was accounting for individual entrepreneurs and compensating their taxes when the company covers such expenses, using different models depending on the country, as well as separating payroll logic into base salary and bonus components.
Detailed bonus calculation logic, taking into account products, positions, and target achievement, was handled as a separate functional area.
Implementation methodology
The implementation followed the CBPM Service sprint-based methodology: we gathered requirements from the client’s HR and finance teams, aligned on the high-level concept, and detailed the technical specification for each payment scenario.
After development and testing, the functionality was demonstrated to the client. We incorporated clarifications regarding compensation models and bonus logic, then presented the final version and launched it into production operation. Support and consulting continue as part of the ongoing working process.
Working with the client’s team
One of the key factors in the successful delivery of the project was the client’s appointment of a responsible project manager with decision-making authority, while a top executive joined as project sponsor and participated in monthly coordination meetings.
This made it possible to maintain efficient communication, resolve issues in a timely manner, and control task execution without delays or the need for escalation.
Qualitative results:
Payroll functionality in the management database: a dedicated functional block was implemented for payroll calculation and payment, including multi-currency accruals and payments, cash, cashless, and cryptocurrency payment options, as well as accounting for individual entrepreneurs and a tax compensation mechanism.
Payroll logic was divided into base salary and bonus components, with separate bonus calculation logic depending on the manager type, accrual period, and target achievement.
Modified accounting ledgers: employee ledger entries and detailed employee ledger entries were enhanced to correctly reflect accruals, payments, compensation, and bonuses.
Less manual work for the client’s team: calculations that were previously maintained manually in Excel are now performed within the system, with control over currencies, compensation, and HR changes.
HR accounting was implemented through the Employment Agreement entity to meet the client’s HR management requirements.
The Employment Agreement entity was implemented to consolidate employee information on hiring, internal transfers, termination, changes in position-related parameters, organizational unit, payroll accrual currency, types of accruals, and other HR and accounting data.
