Paying expenses through payroll: connecting SAP Concur to your payroll system

Most organisations reimburse expenses through accounts payable: the claim is approved in SAP Concur, posted to the ERP, and paid in a payment run alongside supplier invoices. It works. It is also a whole payment cycle, with its own approvals, its own bank file and its own reconciliation – for money that is going to the same people you already pay every month.

Paying through payroll collapses that second cycle into one you already run. Approved claims leave Concur, arrive in payroll as an addition to the employee’s next pay, and are paid with salary. No separate bank file, no separate reconciliation, and – for the employee – no wondering which Thursday the money lands.

How the flow actually works

The mechanics are less involved than people expect. Once a claim is fully approved in Concur it becomes eligible for extraction. On a schedule you set, an extract of approved, unpaid claims is produced and delivered to payroll, keyed on the employee identifier both systems share. Payroll treats each line as a non-taxable addition – or a taxable one, where the expense type calls for it – and includes it in the next pay run. A confirmation comes back so Concur can mark the claim paid rather than leaving it open indefinitely.

The financial posting is a separate matter from the payment. Your expense accounting still needs to reach the general ledger with the right cost centres, tax codes and company codes attached. Paying through payroll changes who moves the money, not who records the cost.

What the integration will not do for you

Two things catch people out, and both are easier to plan for than to retrofit.

Cash advances do not fit the model cleanly. An advance is money paid before the spend happens, then reconciled against claims afterwards. Payroll is built to pay amounts that are already settled. Organisations that run advances at any volume usually keep them in accounts payable and route only ordinary reimbursement through payroll – which is a perfectly reasonable split, provided it is a decision rather than a discovery.

Payroll cut-off is now an expense deadline. Accounts payable will run again next week. Payroll runs once. A claim approved the day after cut-off waits a full month, and the employee experiences that as the system being slow rather than as a calendar they were never told about. This is worth communicating properly at go-live, and worth reflecting in your approval SLAs so claims do not sit with an approver through the cut-off.

The details worth settling first

• The employee key. Concur and payroll must agree on one identifier. Where HR is the master, that key should reach Concur through the HR feed rather than being maintained by hand.
• Taxable versus non-taxable. Expense types need to map to the correct payroll wage types. Get this wrong and you have a tax problem rather than an integration problem.
• Multi-country. Payroll is rarely one system. A group running several providers needs the extract split and formatted per country, and needs to decide whether every country moves or only some.
• Negative balances. Where a claim nets to a negative – an over-advance, a correction – decide in advance whether payroll deducts it or whether it is recovered separately.

Is it worth doing?

For organisations paying a meaningful volume of employee expenses each month, generally yes. It removes a payment run, shortens the time between approval and money arriving, and takes a recurring reconciliation off the finance team. For organisations with low claim volumes, or heavy use of cash advances, the case is weaker and accounts payable may simply be the better home.

The honest answer depends on your volumes, your countries and what your payroll provider will accept. That is worth establishing before anyone builds anything – the integration is straightforward, but only once the decisions above have been made.