Table of Content

Introduction

The purpose of this document is to describe the on-cost functionality.  The term on-cost will be used throughout this document to refer to any adjustment made to either the pay or sales side, regardless of whether the value is an addition or a deduction.

The on-cost functionality will only be made available to clients who have purchased the Advanced Invoicing Module.  It is essential that the requirements for invoice exports is considered before electing to use the functionality provided by this capability.

Specification

Types of On-Cost

The system will support the following types of on-cost:

• An absolute amount per timesheet, e.g. £10 per timesheet

• A percentage of the pay amount, e.g. 5% of the timesheet pay

  • This option shall also allow for an optional minimum amount and/or optional maximum amount to be specified, e.g. 5% of the timesheet pay with a minimum of £10 and a maximum of £50

  • A percentage of the charge amount, e.g. 3% of the timesheet charge

    • This option shall also allow for an optional minimum amount and/or optional maximum amount to be specified, e.g. 5% of the timesheet charge with a minimum of £10 and a maximum of £50

    • An absolute amount per time unit.  For an hourly rate this would be an amount per hour worked, e.g. £1.50 per hour.  For a decimal rate this would be the amount for each unit booked on that rate, e.g. if a decimal rate is used for a day of work, this could be used to apply a discount £5 per day

In all cases the figures may be positive or negative.  Positive values are treated as additions and negative values are taken as deductions.

The system will allow discounts to be:

• Margin affecting only, in which case the discount will never be made available for invoicing.  The accounts exports from RSM InTime will not include these costs unless you have commissioned RSM to write a custom accounts extract

• Invoiceable, in which case the discount will be both margin affecting and will appear on the invoice.

The system will allow for up to 5 rules to be specified on the purchase side and 5 rules on the sales side.

On-costs will be calculated after all other adjustments, such as any filters that have been configured on the client or placement.  For example, if you have a filter that splits time onto basic and overtime rates, any on-costs will be calculated after that split has been performed.

Levels at which On-Costs can be Specified

The on-costs may be configured at the following levels:

• The placement
  
  

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• The client.  In this instance the on-costs will be applied to all placements belonging to that client unless the placement has its own on-cost configuration. 
  
  

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• The supplier (i.e. contractors or umbrella companies).  In this instance the on-costs will be applied to all placements belonging to that supplier unless the placement has its own on-cost configuration. 
  
  

   

If the placement has its own configuration then the placement’s rules are used entirely and no rule from the client or supplier will apply.

Applicability of On-Cost

The system will provide the facility to state whether the rule applies:

• The rule always applies

• The rule applies to pay elements specified in a list, e.g. the rule applies if the rate is “Basic” or “Overtime” only

• The rule applies if the rate is hourly

• The rule applies if the rate is decimal or tick-box

Rules will be calculated at the point of timesheet submission.  Subsequent changes to the on-cost configuration will not affect a submitted timesheet unless that timesheet is re-submitted, or reverted and subsequently submitted.  The on-costs will always be re-calculated when a timesheet is submitted.

Invoicing

The system will provide a summary on the invoice for all invoice-able on-costs.  These will be added towards the bottom of the invoice body, beneath the line items and above the tax break-down.  One line will be displayed for each on-cost description and will show the total of all associated on-costs for items on the invoice.

Configuration

On-Costs can be configured by going to Configuration > On-Cost Configuration.

User Interface Changes

An example of how on-costs are configured is shown below.  This is an image from the placement financials tab and it shows that 3 on-costs have been configured on the purchase side and 1 on-cost has been configured on the sales side.

Clicking on an on-cost will expand the details.  The image below shows the results after clicking on the Health Care on-cost.

It can be seen in this example, a 5% on-cost for health care has been added.  The following fields will be available:

• Description.  The description of the on-cost.  For on-costs that are invoiced, this description will be shown on the invoice

• Type.  The type can be “Amount Per Timesheet”, “Amount Per Time Unit”, “Percentage Of Pay” or “Percentage of Charge”.

• Apply.  The apply field determines the conditions under which the on-cost is applied.  This will be one of:

  • Always – the on-cost will always be applied

  • To Hourly Rates – the on-cost will be applied to hourly rates only

  • To Decimal Rates – the on-cost will be applied to decimal and tick-box rates only

  • To Pay Elements – the on-cost will only be applied to rates that use on of the pay elements specified in the Pay Elements field.

  • Amount.  This field is either an absolute amount or a percentage, depending on the Type of the on-cost.

  • Minimum.  This is only applicable for percentage based rates.  The value of the on-cost will be the greater of the minimum and the value calculated using the percentage calculation.

  • Maximum.  This is only applicable for percentage based rates.  The value of the on-cost will be the minimum of the maximum field and the value calculated using the percentage calculation.

  • Nominal.  The nominal field will be used to determine the nominal code used in the accounts system export.  Note that you may require a custom invoice exporter.

  • Invoice On-Cost.  If this field is ticked then the on-cost will be added to the invoice.  If this field is not ticked, the on-cost will only affect the margin.

  • Tax Code.  For invoiced on-costs this value can be used to select a different tax code for the on-cost.

  • Invoice To.  This field will cause the on-cost to be invoiced to a different party.

  • Apply To Timesheets.  The on-cost will be calculated for timesheets if this box is ticked.

  • Apply To Expenses.  The on-cost will be calculated for expenses if this box is ticked.

In addition:

• The client screen will be updated to include similar functionality to the above but will only show the sales on-costs

• The limited company contractor and umbrella edit pages will be updated to include a configuration section for purchase on-costs
  
  
  
  

Margin Report and Timesheet Views

Throughout the system the timesheet charge and timesheet pay values will not be affected by on-costs.  On-costs will be included in the “Total Cost” figure on the margin report and an additional column of “Adjusted Charge” will be added.  The Adjusted Charge column will be the Charge value of the timesheet plus the value of all applicable on-costs.

The margin figure will be adjusted to be calculated using the new Adjusted Charge column.

Examples

For the examples below, the following information is used

• The pay rate is £50 per hour

• The charge rate is £70 per hour

• The number of hours worked is 35

• The total pay without adjustments is £1750 and the total charge is £2450 giving a gross margin of £700

Scenarios

I need to raise a purchase invoice and I want to add a percentage value for employers NI (or equivalent), worker’s compensation and management fee to the invoice

In order to do this you should create three on-costs on the purchase side, one for the employers NI, one for the worker’s compensation and one for the management fee.  These on-costs would be created as “Percentage of Pay” values and would be “additions”. You would select the option to add the items to the invoice.  These three items will be added to the purchase invoice and the margin will be reduced as these items appear as additional costs on the timesheet.

I need to charge a percentage administration fee on the client invoice, based on the charge value

You would add a single on-cost on the sales side.  You would choose the type as “Percentage of Charge”, choose “addition” and enter the required percentage.  You would select the option to add the items to the invoice.  This could be done at the client level in which case it will apply to all of that client’s placements, unless the configuration is overridden on the placement.  The on-cost will be added to the sales invoice.

I want to deduct a percentage from the client invoice, based on the charge value.  This could be for a rebate or an MSP fee for example

You would add a single on-cost on the sales side.  You would choose the type as “Percentage of Charge”, choose “deduction” and enter the required percentage.  You would select the option to add the items to the invoice.  This could be done at the client level in which case it will apply to all of that client’s placements, unless the configuration is overridden on the placement.  The on-cost will be deducted from the sales invoice

I want to reduce the margin by a percentage but I don’t want to show the deduction on the sales invoice

You would add a single on-cost on the sales side.  You would choose the type as “Percentage of Charge”, choose “deduction” and enter the required percentage.  You would not select the option to add the items to the invoice.  The on-cost will be deducted from the margin but not from the sales invoice.  The invoice export will not include the value of the on-cost unless you have requested a custom invoice exporter.

I want to include a percentage cost to reduce the margin but I don’t want it to show on the purchase invoice

You would add a single on-cost on the purchase side.  The type would be “Percentage of Pay”, you would choose “addition” and enter the required percentage.  You would not tick the option to include on the invoice.  The on-cost will not be shown on the invoice and will not be included in the invoice export unless you have requested a custom invoice exporter.

I want to add a flat fee for each timesheet to the umbrella invoice

You would add a single on-cost on the purchase side. The type would be “Amount Per Timesheet” and it would be set to “addition”.  You would enter the value which will be applied using the pay currency of the placement.  If the umbrella company is paying contractors in different currencies then you may wish to put the on-cost on the placement value so that you can use different values.  The on-cost will be added to the client invoice.

I want to add a management fee to the umbrella invoice.  It should be a percentage value with minimum and maximum values

You would add a single on-cost to the purchase side.  This would be “Percentage of Pay” and would be an addition.  You would enter the required percentage, minimum and maximum values.  This could be applied on the umbrella record.

I want to reduce the margin to take account of estimated employers NI

You would add a single on-cost on the purchase side.  This would be a “Percentage of Pay” and would be an “addition”.  You would not tick the option to include the on-cost on the invoice.  The value of this on-cost will only be included on the invoice export if you choose to have a custom invoice exporter developed.