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How To: Charge Out Hourly Work (Person or Machine Time)
Background
Some users perform hourly work that is to be charged out directly to the customer based on an hourly machine charge-out rate and/or an hourly employee charge-out rate. Common examples include road-building jobs, firefighting work, or mechanic time spent working on a machine belonging to another company.
The Logger's Edge allows you to set up a revenue contract based on time and materials. You then set up charge-out rates for equipment and/or employees to be used in connection with this revenue contract. When you enter time slips, you indicate the appropriate revenue contract so that The Logger's Edge is able to separate time spent on regular work covered under your block contract from time that is directly chargeable to the customer at a particular hourly rate.
You can generate customer invoices for this hourly work directly from The Logger's Edge, and you can run Revenue Contract Reports that allow you to see the machine hours spent in total for a given contract, as well as a profit & loss statement for that job.
Notes:
a. Charge-out rates can be hourly rates, day rates, or some other basis reflective of time slips or production activity slips entered into the system.
b. Company-owned equipment as well as contractor equipment can be charged out. Non-employee workers can also be charged out.
c. Truck time can be charged out (as well as equipment).
Steps Involved
1. Set Up BlockEnsure that your block is set up under the menu item Setup | Block | Block. (Users configured with an extended blockconfiguration will have a step in the wizard asking you to associate the block with the relevant revenue contracts. Since we have not yet set up the relevant revenue contract, you will simply skip past this window in the wizard.
If hourly chargeable
work is done in connection with an active harvesting block, some users like to
have the time assigned directly to the actual block. This way, they can
see the revenue amount earned for road-building on the Block P&L report, and the
hourly costs will reflect both road-building work and harvesting work.
Other users prefer to assign all road-building work to a special block they set
up specifically to accumulate all road-building time. Under this second
approach, the time (and revenue/costs) would not appear on reports associated
with the actual block at all. You should decide up front how you want to
track your information.
2. Set up Revenue Contract
Select the menu item Contracts | Revenue Contracts. (Users using the standard (rather than extended) block set up configuration may not see this menu selection. If you don't see it, just call a support representative to enable it for you.) Click the Add button to begin the setup process. Then click Next to move to Step 2 of the Revenue Contract Setup wizard.
You should see a window like this. Choose the 2nd radio button: Calculate Revenue Based on Hours/Production and Materials. The "Use Employee Hours/Production and Charge Rates) is checked by default. If that selection is correct, simply move to the next step. Alternatively, if you only charge out the equipment itself, uncheck the first checkbox and check the second box, then click Next. (If you bill out the labor component separately from the equipment component to your customer, you can check both boxes.)
In the next window, select the customer whom you will invoice for this work, then click Next.
Next, choose the blocks where the chargeable work will be performed. (Again, if you set up a special block to accumulate this time rather than accumulating it under an actual physical block, you should select that special block in this step.) Click Next after making your selection.
Next, enter the start and end dates within which the work will be performed.
Select the pay activities that you will use on the time slips that are associated with this revenue contract and are chargeable to the customer. If your workers record a wide variety of activities on the time slips for this type of work, be sure to select all those activities for which you want to charge the customer. Then click Next.
Finally, give the contract a code and name that will be descriptive enough that you can recognize it while entering your time slips or running revenue contract reports.
Click Next, and then click Finish to save your work.
3. Set up Charge-Out Rates for Employees and/or Equipment
Depending on your selection in step 2 of the wizard, you will need to set up charge-out rates for either your equipment and/or your employees.
Charge-Out Rates for Employees
You can set up employee charge-out rates under Setup | Workers | Worker Base Rates.
Notice that, like base pay rates, charge-out rates can vary from one worker to the next. Also note that charge-out rates can be set up for any rate-type, not just hourly rates.
If your
charge-out rates vary for a given person depending on the activity he is
performing, you can set up a charge-out differential rate for that person.
Go to Setup | Workers | Employee Charge-Out Rates. Set up a rate
differential like the following:
This differential entry says: charge out BC at $20 per hour more than his base charge-out rate of $65 per hour (shown above) when his time sheet shows that he is doing Graveling in connection with the revenue contract "RV-RDS." If the 'Percent?' checkbos is checked the differential is a percentage (e.g. 20.0%) instead of a dollar differential.
Charge-Out Rates for Equipment
You can set up equipment charge-out rates under Setup | Equipment | Trucks | Equipment | Equipment Charge Out Rates. Click Add to enter your charge-out rates. The grid below shows how you can vary charge-out rates for a given piece of equipment depending on the revenue contract and/or the activity.
There are some important rules to note about this rate setup grid.
1. Use of NONE in the grid would be interpreted as “regardless of the value of the item in the column.” It is permitted for activity and for revenue contract, but NOT for the equipment itself.
The first row says charge out M2800 at $151 per hour if the pay activity on the time slip is DEVELOP and the revenue contract is RV-RDS. The second row says: for all revenue contracts other than RV-ROADS, charge development work out at $140 per hour.
2. The “trumping" order for the matching when NONE is used works as follows: Match on activity, then revenue contract. So, a time slip with the activity = GRAVEL and the revenue contract = RV-RDS will be charged out at $148, rather than at $135.
4. Enter Time Slips
Enter your employee and/or contractor time slips as you normally would, paying particular attention to selecting the proper activities and revenue contracts based on your contract setup in Step 2 above. (Enter time slips Under Data Entry | Time Slips.)
5. Run the Invoice Calculator
The system calculates all revenue amounts via the Invoice Calculator. This calculator will take all time entered in connection with a chargeable revenue contract and charge the equipment and/or employee time out based on the charge-out rates you have set up.
To run the calculator select, Calculators - Invoices, Full from the main menu:
Select the period (or periods) that include the time span you need to charge out, and click OK.
When complete, the calculator will tell you if you have errors that need addressing. See below for common charge-out errors encountered during the invoice calculators.
Correct any errors that need correcting, and rerun the calculators.
6. Generate an Invoice to Send to Your CustomerTo review the invoice containing your charge-outs, select the main menu item Reports | Invoices.
If you want to send an invoice that corresponds to your pay periods, you can select the View By Pay Period menu sub-item. Alternatively, you can view invoices by customer/invoice number. The invoice will have a summary page showing information by revenue contract, followed by a detail page (or pages) showing the individual machines and charge-out rates by day.
The most common way of generating and viewing invoices for hourly chargeable work is to use the menu sub-item called "Generate Ad Hoc Invoices." Ad Hoc invoice creation is popular because users often want to send an invoice that covers only a single revenue contract, even though they may be performing work under multiple revenue contracts simultaneously for a given customer. Click on the link to learn how to generate ad hoc invoices.
7. Run Employee and/or Vendor Calculators
At this point, you have handled the calculation of revenue associated with these chargeable time slips, but you have not yet paid your employees/subcontractors for this time, nor have you generated the costs associated with the machines used. You must run the employee and/or vendor calculators for the pay periods that encompass your time entries in order for the cost side of the job to be calculated. Run these calculators as you normally would, cleaning up any errors you encounter.
8. Review your Contract and/or Block Reports
If you want to review a P&L for all work assigned to a particular revenue contract, you can do so in the Reporting Tool (which you can launch using the main menu item Reports | Business Reports). You will find contract-related reports under the menu item "Contracts." An example of the Contract P&L for the RV-RDS contract used above is shown below:
If you want to look at the individual block P&L reports where the hourly chargeable work was actually performed, you can do that as well: because the time sheets allow you to specify both a block, and a revenue contract, you can look at the information either way. A block P&L where hourly work was performed is shown below:
Notice how each revenue contract (one for harvesting, one for graveling, and one for roads) associated with a block appears on the Block P&L.
Common Errors
Error: "[1]: Error #1401: Charge Out Rate not found for EQUIPMENT_CODE [M2800];
Date: [11/7/2005]; Contract: [RV-GRAVEL]; Basis: [HR]; Activity: [GRAVEL]"
Explanation: You have a time slip (on 11/7/05) for M2800 where the activity on the time slip is GRAVEL and the revenue contract is RV-GRAVEL. This revenue contract is flagged as an equipment charge-out revenue contract, but you have failed to set up a matching charge-out rate for that piece of equipment. Check your effective dates, check the activity on the charge-out rate, and check the revenue contract. Also check that the basis on your rate is hourly.
Error: I have set my revenue contract up to charge out hourly, and I run my invoice calculator, but there are no hourly charges appearing on an invoice for this customer. Why not?
Explanation: This error is trickier because the calculators do not flag it as an error to you. In fact, the calculators have no way of detecting the error. The error generally occurs when you have set up your revenue contract with dates that do not capture your time slips, or when you have failed to select the activities on the revenue contract that you have used on the time slips. Check the activities to ensure that the activities used on your time slips are, in fact, selected on your revenue contract. Also check your start and end dates on the revenue contract.
Appendix of Permissible Charge-Outs
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Checkbox on Revenue Contract Set to: |
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Charge Equipment |
Charge Employee |
Charge Both Equip. & Emp. |
| HOURLY CHARGE-OUTS - EQUIPMENT | ||||
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Employee Time Slip using Company-Owned Equipment |
Yes |
Yes |
Yes |
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Employee Time Slip using Contractor Equipment |
Yes |
Yes |
Yes |
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Subcontractor Time Slip using Company-Owned Equipment |
Yes |
NA |
NA |
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Subcontractor Time Slip using Contractor Equipment |
Yes |
NA |
NA |
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Equipment Time Slip (Either Company-Owned or Contractor Equipment) |
Yes |
NA |
NA
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| HOURLY CHARGE-OUTS - TRUCKS | ||||
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Employee Time Slip using Company-Owned Truck |
Yes |
Yes |
Yes |
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Employee Time Slip using Contractor Truck |
Yes |
Yes |
Yes |
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Subcontractor Time Slip using Company-Owned Truck |
Yes |
NA |
NA |
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Subcontractor Time Slip using Contractor Truck |
Yes |
NA |
NA |
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Equipment Time Slip (Either Company-Owned or Contractor Truck) |
Yes |
NA |
NA |
| PRODUCTION CHARGE-OUTS | ||||
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Employee Production Slip using Company-Owned Equipment |
Yes
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Yes
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Yes |
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Employee Production Slip using Contractor Equipment |
Yes |
Yes |
Yes |
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Contractor Production Slip using Company-Owned Equipment |
Yes |
NA |
NA |
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Contractor Production Slip using Contractor Equipment |
Yes |
NA |
NA |
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Prod – Equip Only Slip |
No such thing! |
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