|
User Tips
A quarterly feature from WON Systems geared towards enabling users to make full use of their Agency Business Software Solution. |
|
February 2006
Two Options for Recording Freelancers in C&P
3rd Party with Markup VS. Timecard with Rate
Option #1- 3rd Party with Markup:
This is traditionally how many agencies have handled Freelancers (FL) on the cost side as well as how to determine a rate for charging the client. Here is how the steps may happen:
- Estimate or agreement on scope, job, and hours is made with the FL by the agency.
- PO may be issued. In C&P this would be beneficial as this notes the commitment on
the job to ensure it's not missed during billing.
- FL performs work and is over, under, on or capped by the estimate.
- FL invoices the agency for the costs incurred often with explanation and job #.
- Invoice is approved for payment.
- Accounting enters the FL invoice as a charge to General Ledger Cost of Sales account (and the related job)... with a 15% (i.e.) markup. So, a $50 an hour charge from the FL, is sold to the client at $57.50 per hour.
- The client is billed accordingly.
Option #2- Bill FL at Hourly Charge out Rate:
Here is how many agencies are now billing their Freelancers. The steps may happen as follows:
- Estimate or agreement on scope, job and hours is made with the FL.
- PO may be issued. In C&P this would be beneficial as notes the commitment on the job to ensure it's not missed during billing.
- FL performs work and is over, under, on or capped by the estimate.
- The first difference occurs, through the FL providing regular time updates to agency. This can be done by the FL inputting their time to C&P, if they are on location (or through web timesheets if they re off site), or providing a weekly time update for Account Management or Accounting to enter the time.
- FL invoices the agency for the costs incurred often with explanation and job #. This of course will and has to agree with the time entered (review in C&P).
- The invoice entry is easier as only the General Ledger Cost of Sales account is affected due to the time already have been logged against the Job.
- A further option is to record this FL expense as a 6000… expense. This would be consistent to the discussion that FLs are an extension of your regular staff.
- The time on the Job accrues at the regular design, production, copy…agency rate. I think this is reasonable as they are adding value just like an internal person and in most cases the client perceives them the same.
Option #2 Benefits:
- Time is entered more regularly and budget can be better monitored.
- Your billable amount is generally higher and has a positive bottom line benefit.
- Parallels the treatment of agency staff and agency FL's.
|
|
