Pre-Encumbrance

Report
Managing Payroll Encumbrance
Prepared by Mike Martinez
Financial Systems Operations Manager
As of IVEE 3.1.84
Managing Payroll Encumbrance
 Salary
Encumbrance vs. Benefit
Encumbrance
 Pre-Encumbrance
vs. Actual
Encumbrance
 Common
Mistakes with Encumbrance
Salary Encumbrance vs. Benefit Encumbrance
Salaries are encumbered in the Employee Position!
Payroll Journal = Encumbrance
Benefits are encumbered either in the Payroll Journal or
through a special action in Process Payroll!
Single biggest source of bad encumbrance in IVEE
Salary Encumbrance vs. Benefit Encumbrance

HR/PR > Employees > Employee Positions and Pay
Salary Encumbrance vs. Benefit Encumbrance

HR/PR > Employees > Employee Positions and Pay
Unposted Pay
Journals indicate
that this position
has salary
encumbered.
Salary Encumbrance vs. Benefit Encumbrance

HR/PR > Employees > Employee Journal
Salary Encumbrance vs. Benefit Encumbrance

HR/PR > Employees > Employee Journal
Unposted Deduction Journals indicate that benefits are
currently encumbered.
Salary Encumbrance vs. Benefit Encumbrance
So what’s the difference?

Salary encumbrance is almost created AutoMagically
every time you create/modify an employee position.
Salary Encumbrance vs. Benefit Encumbrance
So what’s the difference?

Benefit encumbrance MUST be EXPLICITLY CREATED by
someone in Payroll.

Benefit encumbrance does NOT change or get created
automatically.

Must be maintained.
Salary Encumbrance vs. Benefit Encumbrance
So how do you create/maintain Benefit Encumbrance?
Individual Employee
PR > Employees > Employee Maintenance
Salary Encumbrance vs. Benefit Encumbrance
So how do you create/maintain Benefit Encumbrance?
Individual Employee
PR > Employees > Employee Maintenance
Salary Encumbrance vs. Benefit Encumbrance
So how do you create/maintain Benefit Encumbrance?
Individual Employee
Salary Encumbrance vs. Benefit Encumbrance
So how do you create/maintain Benefit Encumbrance?
All Employees
PR > Payroll Processing > Process Payroll
Salary Encumbrance vs. Benefit Encumbrance
So how do you create/maintain Benefit Encumbrance?
All Employees
PR > Payroll Processing > Process Payroll
Salary Encumbrance vs. Benefit Encumbrance
So how do you create/maintain Benefit Encumbrance?
All Employees
PR > Payroll Processing > Process Payroll
Salary Encumbrance vs. Benefit Encumbrance
What do these processes do?

Calculates and creates actual encumbrance for all
benefits (employer AND employee) for the entire year.

Relieves benefit encumbrance for any termed employees

Does NOT affect Pre-Encumbrance!!
Pre-Encumbrance vs. Actual Encumbrance
Actual Encumbrance is the Salary and Benefits
encumbered in the payroll and deduction journals.
 Obligation to pay due to contract
 Actual Encumbrance is something you MUST pay
Pre-Encumbrance encompasses any VACANT positions and
the benefits that go along with them.
 Pre-Encumbrance is optional, it is something you MIGHT
pay
 Benefits require special attention
Pre-Encumbrance vs. Actual Encumbrance
So how do you USE Pre-Encumbrance?
GL > Configuration > General Ledger Default Settings
Pre-Encumbrance vs. Actual Encumbrance
So how do you USE Pre-Encumbrance?
GL > Configuration > General Ledger Default Settings
Pre-Encumbrance vs. Actual Encumbrance
Salary Pre-Encumbrance – Vacant Positions
PR > Employees > Employee Position and Pay
Pre-Encumbrance salary amounts are ratios!
Number of Days Left on Work Calendar
Number of Days Total on Work Calendar
= Encumbrance Ratio
Encumbrance Ratio * Position Amount = Pre-Encumbrance Amount
Pre-Encumbrance vs. Actual Encumbrance
Salary Pre-Encumbrance – Vacant Positions
PR > Employees > Employee Position and Pay
Pre-Encumbrance salary amounts are ratios!
96 Days Left
181 Day Work Calendar
= 53.04% Encumbrance
53.04% * $42,000 = $22,276.24 Pre Encumbered
Pre-Encumbrance vs. Actual Encumbrance
Salary Pre-Encumbrance – 0-Hour Time Cards
Only for Hourly/Timecard
positions with ZERO
Hrs/Day!
Pre-Encumbrance amount
based off Pre Enc minus
FTD.
$2,000 Pre Enc
- $ 410 Paid FTD
$1,590 Pre Encumbered
Pre-Encumbrance vs. Actual Encumbrance
Salary Pre-Encumbrance – 0-Hour Time Cards
WHY?
Encumber salary for
positions you plan to pay
on but may not know how
often this employee will
work!
Pre-Encumbrance vs. Actual Encumbrance
So where does Benefit Pre Encumbrance happen?
GL > Budgeting > Position Budget Modeling > Position Budget Template
Wait… what?!
Pre-Encumbrance vs. Actual Encumbrance
So where does Benefit Pre Encumbrance happen?
GL > Budgeting > Position Budget Modeling > Position Budget Template
Pre-Encumbrance vs. Actual Encumbrance
To Pre-Encumber benefits you must create Templates!
Create a Position
Budget Template for
each best-guess
combination of
employer paid
benefits.
Pre-Encumbrance vs. Actual Encumbrance
Add a Position Budget Template, then Add any Employer
Paid Benefits you wish to Pre-Encumber.
Add a record for
benefits such as:
• FICA
• ASRS
• Health Insurance
• Worker’s Comp
Pre-Encumbrance vs. Actual Encumbrance
Begin adding all applicable benefits to pre-encumber
Input the EXPENSE
offset for any
deductions.
Set either a flat ER
Amount or ER Percent
Set Pre-Encumbrance
for either Position or
Supplemental.
(Recommend: All)
Pre-Encumbrance vs. Actual Encumbrance
Create a few types of templates…
Once your templates are created then you’ll need to assign
them in Payroll.
Pre-Encumbrance vs. Actual Encumbrance
Now assign the template to the vacant position!
PR > Employees > Employee Positions and Pay
The Position Budget
Template should be set
appropriately to match
what benefits you would
like to pre-encumber for
the position.
Only effective for
VACANT positions!
Pre-Encumbrance vs. Actual Encumbrance
Now let’s pre-encumber those benefits!
GL > Budgeting > Position Pre Encumbrances > Position Pre Encumbrance
Pre-Encumbrance vs. Actual Encumbrance
Now let’s pre-encumber those benefits!
GL > Budgeting > Position Pre Encumbrances > Position Pre Encumbrance
Allows you to view and regenerate pre-encumbrance!
Pre-Encumbrance vs. Actual Encumbrance
Salaries and Benefits Galore!
Encumbrance Ratio
Common Mistakes with Encumbrance
And now…
Common Mistakes with Encumbrance
#5
Not pre-encumbering benefits for
vacant positions.
$$$$$$$$
Social Security – 6.2%
Medicare – 1.45%
Retirement – 11.3%
Health Insurance
Dental Insurance
Visions Insurance
Common Mistakes with Encumbrance
#4
Unintentionally reducing
encumbrance for One-Time pays
Set Beginning and Ending dates and pay periods as narrow
as possible!
Common Mistakes with Encumbrance
#3
That position has been
vacant for Too Long!
If keeping it for the Position Control Code,
then make sure the Position Amount is set to
$0.00
Common Mistakes with Encumbrance
#2
Over-encumbering for Terminated
Employees!
Position End Dates and Pay Period should be
set AND a Compute All Year done from the
Payroll Journal screen.
Common Mistakes with Encumbrance
#1
Not Encumbering Benefits!
Run Compute Selected
Periods on a Periodic
basis in Payroll!
Managing Payroll Encumbrance - Recap
 Salary
Encumbrance vs. Benefit
Encumbrance
 Pre-Encumbrance
vs. Actual
Encumbrance
 Common
Mistakes with Encumbrance
Managing Payroll Encumbrances
Questions?

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