Sunday, 24 September 2017



This Article belongs with Fusion Payroll, and how it functions. In this part, we will discuss about Payment Methods in Fusion Payroll.

There are three types of payment methods

1.Organization Payment Method - Related to payments with the organization.

2.Personal Payment Method - related to the employees.
3.Third Party Payment Method - related to payments to third parties that do business with the organization.

Organization Payment Method :

  • Organization payment methods define the payment type and currency selected for the employees. 
  • The task associated with it is Manage organization Payment Methods.
  • For multiple payment sources, payment rules are used to determine the appropriate payment source based on the tax reporting unit (TRU).
  • Any payment method that you define must belong to one of the payment types that your enterprise supports.
  • Each payroll must have at least one valid organization payment method for each payment type available to employees on that payroll. There may be more than one payment method with the same payment type.
The most common payment types are:
  1. Electronic funds transfer (EFT)
  2. Check
  3. Cash
  • For any payment method through Electronic Fund Transfer (EFT), a bank account has to be set up in Payroll initially.
  • Your enterprise may support a different range of types that are appropriate for your localization. For example, some localizations do not allow cash, some do not support checks, and very few support postal money orders.
  • The names of payment types can vary by localization. For example, in the US, the payment type for EFT is NACHA(National Automated Clearing House Association);
  • In the UK it's BACS(Bankers' Automated Clearing Services),
  • and in Australia it's BECS(Bulk Electronic Clearing System).

Payment Sources :

For Payroll processing, at least one payment source has to be defined for each organization payment method. This can be a bank account or any other source of funds. In Oracle Fusion Cash Management, it is associated with an active bank account.
Personal Payment Methods:

  • It is the definition of how the payments are handled from the employee’s perspective (those within the organization).
  • Associates a person to a payment method, currency, and payment source.
  • Holds the payment method details for a person.
  • The task associated with it is Manage Personal Payment Methods.
  • In case a personal payment method is not assigned to an employee, the Default Payment Method that is provided at the time of Payroll Definition will be utilised for that employee.
  • An important aspect of the personal payment method is that it has to be associated with an organization payment method in order to specify the payment source. As with the organization payment method, a bank account is required for EFT payment.
  • If an employee does not have a bank account, then a personal payment method has to be attached to him/her, and it is usually either Check or Cash.
  • Processing Order - in the case of multiple payment methods, the order in which those methods have to be processed is to be specified
Amount Type - the type of payment to be done
Amount - the actual amount of payment

Third-Party Payment Method

  • Enables separate payment information for payments to third parties who aren't on the payroll. Payments to  third parties, such as garnishments or other involuntary deductions, are typically check payments processed separately from the payroll.
  • A bank account is needed if the Payroll organization Payment Method is EFT.
  • The task associated with it is Manage Third Party Payment Methods.
  • When Third Parties are created, corresponding records for them are created as trading community members in the trading community application. Third parties can either be persons (individuals) or organizations:
  • Third Party Persons - the application automatically assigns a party usage code for the External Payee
  • Third Party organizations - you assign a party usage code specifying whether it is a Pension Provider, a Professional Body, or simply an External Payee.
  • After creating the required third parties, payment methods can be created for the third parties so that they can be utilised in Payroll processing.
  • When creating a Third Party Payment Method for an organization, an organization Payment Method has to be provided. For a Third Party Payment Method to a third party person, an organization Payment Method has to be provided along with the relationship with any employee within the organization.

Written By: Duggireddy Narendra


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