When completing a payroll run, you may occasionally find during/after the payroll finalization process that some payroll items were recorded with incorrect amounts. This can pose a problem because at this point, the amounts in the payroll register are not editable.
Solutions to this will vary depending on the item that was incorrect, at what point you find the mistake, and how time-sensitive the solution is.
No matter which solution you choose, remember to fix the problem at the source. If an insurance item’s rate has changed, or if a duplicate payroll item was accidentally added, the necessary changes should be made on the Employee - Single View > Payroll tab so that you don’t have to manually change the values every payroll run.
Solution 1: Void the employee’s payroll
If you realize your mistake before sending out paychecks/direct deposit files, you can void that employee from the entire payroll and create a new payroll run for that employee only, with their total wages for the pay period. This method is especially preferable when the changes will impact an employee’s net pay.
Solution 2: Fix the mistake on the next payroll run
If you can wait until the next payroll run to fix the mistake, you may choose to leave the mistake temporarily, then adjust the amounts of the next payroll run in order to make up for it.
For example, let’s say you run two payrolls each month, and the health insurance liability is only due after the second payroll. If you forgot to raise an employee’s rate from $30/payroll to $35/payroll, you can add an extra $5 to the next payroll. If payroll 1 deducts $30 and payroll 2 deducts $40, the total at the end of the month is still the correct $70.
If the affected liabilities need to be paid right away, you could also ignore the predicted liability payment (calculated from incorrect payroll items) and instead pay a higher or lower amount as necessary. This will leave a non-zero balance in the vendor’s liability. On the next payroll run, do the same adjustment to make up for the previous incorrect amount.
Using the same example above but assuming the payment can’t wait until the next payroll, the predicted liability would be $30. If you record the payment as $35, it will leave a -$5 balance. When the second payroll deducts $40 from the employee, it would be added to the -$5 balance, and you would be asked to pay the expected $35.
Solution 3: Create a duplicate payroll run for the same period
If neither of the above solutions are suitable, you can create a new payroll run for the same pay period, and add the employee to this second payroll run. Depending on the exact change required, you may issue an additional payment to the employee, indicate they owe you money or change the liability owed to a vendor.
These articles explain how to deal with three different situations that might require a second payroll run to be issued for the same pay period:
Each of these duplicate payroll runs will likely result in changes to at least one liability.
If the affected liabilities have not already been paid, then you should skip the first payroll run’s liability so that its balance is pushed forward and becomes a “previous balance” on the most recent second payroll run. The “current balance” and “previous balance” should add together to equal the amount that you expect to pay.
If the affected liabilities have already been underpaid, leaving you with a positive liability on the second payroll run, then you may wish to make a second payment. If it is a very small amount and if the vendor agrees, you may also skip the liability, and the balance will be added to your next payroll run’s liabilities.
If the affected liabilities have already been overpaid, leaving you with a negative liability on the second payroll run, then you will likely need to skip the liability. The negative balance will be added to the next payroll run you create, reducing what is owed. However, you may wish to discuss the matter with the vendor to decide on a course of action.
Always indicate that the payment amount in SchoolInsight Financials matches what was withdrawn from the district bank account. If an automatic withdrawal debited a different amount than predicted by the liabilities page, you must record the payment accurately. Void an inaccurate payment if necessary.