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Payroll Processing II: The Payroll Process

In part two of Payroll Processing we will cover the payroll process from start to finish:

  • Start payroll processing

  • Review the payroll and confirming that everything is correct

  • Print any manual cheques if required

  • Process the paper and email ay statements

  • Generate the deposit file for paying employees by direct deposit.

  • Finish the payroll and update the database.

The process, review, and correct cycle

If at any point before generating the deposit file or updating the payroll you notice an error in the pay run, the pay run can be cancelled. You can then make any changes needed to correct the pay run and restart the payroll processing.

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Only after the payroll is 100% correct should you proceed to you print cheques, process pay statements, or generate the direct deposit file.

Processing a Pay Run

Payroll processing is initiated from Canadian Payroll > Payroll Processing > Process Pay Run.

From the process pay run window:

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  • Select when the employees will be paid using the Payment Date field. This is the date for the EFT payment and the date printed on any cheques.

  • Select the pay period to process by entering the Pay Period Ending date.

  • Select which Pay Groups to process.

  • Enable one or more Options to change the payroll process.

The process pay run window will save the settings between uses. This makes it easy to re-run a payroll if you had to cancel it before updating.
Example 1. Process Payroll for our Employees

The pay period we want to process for our employees ended on January 12th. The employees are normally paid on the first Friday following the end of the pay period.

  1. To process the payroll for the pay period we enter

    • January 18th for the Payment Date, and

    • January 12th for the Pay Period Ending date.

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  2. Once those dates are entered, we can select the Pay Group containing our employees.

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    We do not need to enable any additional Options when processing this payroll.
  3. The payroll processing starts once pressing OK.

    The processing can take a few minutes depending on the number of employees to process. While processing is happening, you can view the progress from the Progress section at the bottom. This section will contain important information about the result or the payroll, including any payroll errors or warnings to occurred during processing.

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Once the payroll processing finishes, we can print the Progress messages by pressing Print and close the process pay run window by pressing Exit.

Reviewing the Payroll

After processing the payroll, the next step is to review the payroll to confirm that everybody was paid correctly. There are three reports that will be especially helpful in this:

The Payroll Register report:

This report looks at the payroll from the point of view of each employee, allowing you to spot errors in individual employee payrolls.

The report can be run from Canadian Payroll > Payroll Processing > Registers & Summaries > Payroll Register.

The Payroll Register report contains

  • a listing of all the employee earnings, benefits, and deductions by code. The period and the year-to-date (YTD) amounts are displayed next to each.

  • the employee name and number.

  • the total EI Hours and EI Earnings for the period.

  • the deposit number for EFT payments and the cheque number for payments by cheque.

  • the Net Pay amount.

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The Payroll Summary report:

This report looks at the payroll from the point of view of the earning, deduction, and benefit codes, allowing you to spot errors in those codes quickly.

The report can be run from Canadian Payroll > Payroll Processing > Registers & Summaries > Payroll Summary.

The Payroll Summary report contains

  • a listing of all earnings, benefits, and deductions process in the payroll. The total amount for the payroll will be listed next to each.

  • any changes to units accrued or taken will be listed next to the corresponding benefits. You will normally see a change in Leave Accrued for vacation for example.

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The G/L Distribution (in Summary) report:

This report looks at the payroll from an accounting point of view, allowing you to quickly spot errors in the G/L accounts.

The report can be run from Canadian Payroll > Payroll Processing > G/L Distribution (in Summary).

The G/L Distribution (in Summary) report contains

  • a summary of each G/L account and the corresponding debits and credits from each.

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Knowledge Check
Once payroll processing has begun it cannot be stopped?

False. The payroll process can be cancelled and restarted at any point up until generating the deposit file and updating the payroll to the database.

What report would be best when looking for problems in the accounting aspect of the payroll?

The G/L Distribution (in Summary) report would be useful when looking for accounting problems.

What report gives a listing of each employees net pay, earnings, deductions, and benefit amounts?

The Payroll Register report contains this information.

Print cheques for employees paid by cheque

Once the payroll has been reviewed you can print pay-cheques. Pay-cheques only need to be printed if you are not paying your employees by direct deposit.

Cheques can be printed from the print cheque window located at Canadian Payroll > Payroll Processing > Cheque/Statement Printing > Print Cheques.

From the print cheques window you can

  • Override the Print From to use when printing the cheque.

  • Override the range of cheques to print. (This comes in handy if you need to reprint only a couple of cheques from a large pay run.)

  • View the bank that the cheques will be drawn from.

  • Enter optional cheque comments (comments must be enabled on the selected Print Form beforehand).

  • Change the destination printer and printer options from the Printer Setup tab.

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Within our group of employees, we have one employee—Kai Hurst—who is still paid by cheque. We can print this cheque and an accompanying cheque stub now.

To print the cheque:

  • We should not need to change any of the default settings under Cheque Selection.

    By default, only cheques for employees that are setup to receive payments by cheque will be printed.

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  • We check that the correct printer is selected under Printer Setup and that the correct cheque printer paper is loaded in the printer.

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Print pay statements for employees

Some employees may need to have paper statements printed and mailed to them. If an employee has an email address on their employee profile or is using web services, they may be able to receive statements electronically instead.

Pay statements can be printed from the _print statements window located at Canadian Payroll > Payroll Processing > Cheque/Statement Printing > Print Statements.

From the print statements window you can

  • Override the Print Form used when printing the statement.

  • Choose to print Email or Web statements.

  • We check that the correct printer is selected under Printer Setup.

  • Select a Range of employees to process, or filter by Location code.

  • Enter optional statement comments that will appear on all of the statements printed (comments must be enabled on the selected print form beforehand).

  • Change the destination printer and related printer options from the Printer Setup tab.

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Example 2. Printing pay statements

Within our group of employees, we have 1 employee who still receives paper statements.

To print the statement:

  • We should not need to change any of the default settings under Statement Selection.

    By default, only statements for employees that are not setup to receive statements by email or web-services will be printed. If you want to override this behavior enable the corresponding Email or Web option under Include Statements before printing.
  • We check that the correct printer is selected under Printer Setup.

We can preview the statements that will print by pressing Print Preview and if everything looks correct, we can send the statements to the printer by pressing Print and get the statements ready to mail off.

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Email statements

If any of your employees have opted to receive their pay statement via email you can process these statements from Canadian Payroll > Payroll Process > E-mail Statements > E-mail Processed Statements.

From the email processed statements window:

  • You can choose whether to also email web statements,

  • Include a message in the outgoing emails,

  • Choose which employees in the pay run to email.

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By default, the email processed statements window should be setup to email statements to any employees in the pay run that have opted to receive statements by email only.

In practice, this will only email employees with the Payment Option of Direct Deposit and Email Statement selected on the Employee Profile > Payment Method and do not have Use Web Services enabled.

To email statements to employees using the web services, make sure that you enable both Email and Web under Include Statements

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Knowledge Check
What payment option must be select on the employee profile in order for an employee to be paid by cheque by default?

Setting the Cheque, Stub and Statement option on the employee profile will only pay the employee by cheque.

True or False
By default, printing statements from the print statements window will print statements for every employee (True/False)?

False. By default, only the statements for employees that are not web-enabled or have opted to received statements by email will be printed.

When processing email statements any employees that did not opt to paper statements will be emailed by default (True/False)?

False. There is a third delivery method for statements—they can be delivered using web services. By default, employees using web services to receive statements will not be emailed.

Direct Deposit

The last step before updating the pay run will usually be to create the direct deposit file. Before generating the direct deposit file, it is a good idea to review the deposits in the pay run.

You can review the deposits from Canadian Payroll > Payroll Processing > Direct Deposit Processing > Deposit Batch Status.

From the direct deposit status window:

  • View the batches and transactions for each bank in the pay run,

  • View the total amounts for all transactions in the pay run.

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Take a moment to make sure that the number of Transactions and the total Credits are correct.

If you have more than one pay group processed in a single pay run you might have multiple banks being drawn upon for direct deposit. You can switch between banks using the arrow buttons or the bank dropdown.

Create the direct deposit file to transmit

Once the deposit amounts for the batch have been reviewed, we will need to generate the file to transmit to the bank. We can do this from Canadian Payroll > Payroll Processing > Direct Deposit Processing > Create File to Transmit.

Before proceeding with creating the deposit file you should make a backup of the company database. Creating a Production deposit file cannot be undone.

From the create file to transmit window:

  • Change between Test and Production deposit files,

  • Select the location where the deposit file will be saved,

  • Select which batches of payroll data to include in the deposit file,

  • Review the totals for the deposit file.

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At this point it is time to generate the deposit file to pay our employees. Remember that because 1 of the employees in our group was paid by cheque we will only be generating 4 transactions and not 5.

Once we’ve opened the create file to transmit window we do the following:

  1. Confirm that the correct Employer Bank is selected. This is the bank that will be drawn on to make the payments.

  2. Select Production for the Transmission Type. Production will finalize the payments when the direct deposit is run by the bank.

    We could run a test deposit with our bank to make sure that the routing and account numbers are correct. We would do this by selecting the Test Transmission Type and informing our bank that we are sending a test transmission. If there are any problems in the file, the bank will be able to communicate back to us what changes need to be made.
  3. Select a location to save the deposit file.

  4. Select the batches to include in the deposit file. Our pay run only has a single batch of payroll data in it, but it is not unusual for a single pay run to contain many batches.

  5. Press OK to create the deposit file.

Once the deposit file is created, we are prompted to print a summary report of the deposit file. This is a record containing each employee, their direct deposit information, and the deposit amount.

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  1. Once we have printed or saved the report we are prompted to transmit the bank file.

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    Press Yes and the bank website (or program) will open. We can proceed with the direct deposit transmission from there.

    The bank website or program that opens is configured in Cheque Reconciliation > Install Bank Information > Direct Deposit using the Transmission URL/Program setting.

Update Pay Run Process

Once we have sent off any cheques and statements to the employees in our pay group and confirmed that the direct deposit processed correctly it is time for us to update the pay run. Updating the pay run will take all the data in our pay run and commit them to the database.

There is no way to undo this process, so if you have not already made a backup of the database it is strongly encouraged to do so now.

Updating the pay run is done from Canadian Payroll > Payroll Processing > Update Pay Run Processing.

  1. Before updating the pay run check that you have completed the required processes. Completed processes will have a checkmark next to them.

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  2. When you are ready to update the pay run into the database press OK. You will be prompted to confirm the update before it run one last time

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    Pressing Yes will update the database immediately and the update pay run window will close.

    The deposit file is still saved if you press No: you will simply need to transmit it at a later time.

Conclusion

Congratulations! That was the payroll process from start to finish. We’ve taken a pay group of employees and run a complete payroll.

Over this course you should have learned all about the pay roll process:

  • We’ve covered how to create a batch of payroll data using Payroll Data Entry.

  • We’ve explained how those batches are processed during a pay run, and what to look for if a batch of payroll data is not being included with the pay run.

  • We’ve stepped through the pay run process from start to update:

    • Review the pay run and confirm that it is correct.

    • Print cheques for employee’s paid by cheque.

    • Print and email pay statements.

    • Generate the deposit file for the direct deposit payments.

    • Update the pay run to the database.

J
Jack is the author of this solution article.

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