Employee Expense Settings-Error adding default pay code-No record for Pay Type exists

When adding a default payroll pay type in Employee Expense Settings, user get the following error:

No record for pay type xxx exists. Please choose another pay type.

• Enterprise ERP Payroll

• Enterprise ERP Purchasing

• Employee Expense Settings

• Pay Master

The wrong Category code was used for the expense reimbursement Pay Code in Pay Master. 

1. Navigate to Payroll>Payroll Setup>Pay Master.

2. Click Search.

3. Enter Pay Code.

4. Click Accept.

5. Click Update.

6. Change Category to K: Employee Expense.

7. Click Accept. 

8. Return to Employee Expense Settings. 

9. Click Update.

10. Enter Default payroll pay type. 

11. Click Accept. 

Connect 2020 - Employee Expense Reimbursement - The Ins and Outs