If an employee changes company code and, for example, after the change receives a backdated pay increase which also affects the time before the change, receivables and payables incur between the two company codes.

Although the relevant expenses wage type changes for the period for which retroactive accounting is run, the amount to be paid to the employee remains the same. The payment amount firstly changes in the current period so that the system transfers the payments that the old company code must make because of the backdated pay increase from the new company code.

In this way, receivables and payables incur between the company codes. They appear as balances on the company code clearing accounts.

The graphic shows the case where an employee changes from company code 0001 to company code 0003 at the start of period 02. In period 02, his/her monthly salary is increased by 1,000 for period 01.

In period 01, the employee receives a monthly salary of 5,000 (wage type M020). This amount is also paid to the employee (wage type /559) as no other payments and deductions are taken into account in this example.

In period 02, the employee gets a monthly salary of 6,000 for period 02 (wage type M020) as well as a backdated pay increase of 1,000 for period 01.

In this way, expenses of 1,000 incur in company code 0001. The payment amount is not increased retroactively for period 01, but is transferred to the current period instead using the wage types /551 Recalculation difference and /552 Subsequent clearing from previous period. The payable against company code 0003 of 1,000 offsets the expense of 1,000 in company code 0001.

A payment amount of 7,000 incurs for the current period in company code 0003; this amount is made up of the increased salary of 6,000 and the subsequent clearing of 1,000 from the previous month. This amount is posted to the Payment account in credit. This is offset by an expense of 6,000 that is posted to the debit side of the Remuneration account, as well as the receivable of 1,000 against company code 0001 that is posted in the debit side of the company code clearing account from company code 0003.

The receivables and payables between the company codes are paid to the company code clearing accounts set up for this purpose.

• The balance of the company code clearing account for company code 0002 shows a receivable of 1.000 from company code 0001.
• The balance of the company code clearing account for company code 0001 shows a receivable of 1.000 from company code 0002.

The symbolic account to which the wage types /551 Recalculation difference and /552 Subsequent clearing/previous month has the account assignment type FL Balance sheet account for checking the balance in the case of retroactive data. For more information, see the Implementation Guide (IMG) for Payroll, under Reporting for Posting Payroll Results to Accounting ® Special Scenarios ® Posting to Company Code Clearing Accounts.

The balances of the company code clearing accounts correspond to the receivables and payables between the company codes.

You must manually clear the receivables and payables between the company codes. When doing so, you also clear the balances of the company code clearing accounts.