Setup the cost per hour for the staff member, or the salary package details. Use the cost details for reporting on the actual cost of the staff member transactions.
|Setup required before use||Who can use it?||Where is it?|
|Staff > Costs tab|
What are staff costs?
For the Professional Synergy product, define the cost per hour for the staff member.
For the Business or Enterprise Synergy product, enter the staff annual package, annual salary, or hourly pay rate. The actual cost is then calculated using the total number of hours worked in a year and the total availability of the staff member. The target utilization on the staff record tracks the amount of time that will be utilized towards billable project tasks. The utilization is used to determine the target charge out value for the staff member.
- Open the staff record to the costs tab.
- Type the cost for the staff member per hour into the 'set cost' field.
- Set the 'effective from' date for when this rate will start from.
- Open the staff record to the costs tab.
- Select the salary type.
- Select how the salary will be calculated - annual package, annual salary, or pay rate per hour.
- (Optional) Check the values for extras, superannuation %, hours per year, availability %, overhead adjustment, and target utilization. Update if required.
*This feature is available for the Synergy Professional product only.*
The actual cost and charge value for the Synergy Professional product is based on the 'set cost' value entered against the staff member. This is the value the staff member is paid per hour. The target charge value is the minimum level that a staff member should be billed out at per hour, to still meet the companies profitability requirements defined in financial controls.
The architect Jill Lockhart is paid $110 per hour. The charge-out rate for an architect is $140 per hour. This value of $110.00 is entered as the 'set cost' against her staff record in Synergy. The organization has a target profit setup in financial controls of 25%.
- Actual cost (set cost) = $110 per hour
- Target charge value = Actual cost ($110) x target profit (25% - 1.25) = $137.50
The actual cost for 4 hours of Jill's work as an architect is (4 x $110) = $440.00, with a default charge-out value on the transaction from the rate of (4 x $140) = $560.00. The minimum charge-out value for this staff member based on the target charge is $550.
*This feature is available with the Synergy Business or Enterprise products.*
The actual cost is based on the salary cost details for the staff member, and the operating costs for the organization. The staff cost per hour is based on:
- Cost = annual package / (availability x hours)
- Annual package is made up of the staff salary, annual extras, and superannuation or pension fund contributions.
- Office operating expenses setup in financial controls for the organization.
- Overhead adjustment applied if the staff member works from home or from a regional office that is cheaper to run than the head office.
- The target profit required for the organization is applied to the cost of the staff member.
The annual package salary for David Choice is $80,000. This package value include any extras and super / pension fund contributions. David's staff record has been setup to show he works 1976 hours per year, and has an availability of 80% after leave is taken into account. The organization has an overhead rate of 2, and a target profit of 20%. Using these details David's actual cost is calculated as
- Hours (1976) x availability (0.80) = 1580.80 hours.
- Salary package ($80,000) / 1580.80 hours = $50.61 adjusted cost per hour.
- Adjusted cost ($50.61) x overhead rate for the organization (2) = $101.22 actual cost per hour.
- Actual cost ($101.22) x target profit (25% as 1.25) = $126.56 target charge value.
If you have updated the staff record by mistake, then use the 'undo last change' option to remove the top row shown in the history panel.
Click the page actions button in the top right, and select undo the last change.
- Staff type At the Professional product level the only option in this drop down is 'set cost'. This allows you define the staff members cost per hour.
- Set costThis field is only shown when the 'set cost' type is selected. Enter the cost of this staff member per hour.
- Effective from date Type the date that the cost will take effect from. This defaults to today's date, click into the field to select another date from the drop down calendar.
- Staff type Select type of staff member: Salary, wages, part-time, set cost, casual or contractor.
- Effective from date Type the date that the costs will take effect from. This defaults to today's date, click into the field to select another date from the drop down calendar.
- Set cost This field is only shown when the 'set cost' type is selected. Enter the cost of this staff member per hour.
- Calculate by options Select if the staff member has an annual package (salary + super + extras) or an annual salary (base salary excluding super) or a pay rate per hour (hourly rate excluding super). Available for salary, wages, part time, casual, or contractor types (no set cost).
- Cost settings (Optional - click the drop down to view)
- Extras Enter the value for any extras paid on top of the salary, such as car, mobile phone, internet etc. If annual package is used as the calculation method, when you type an extras value it is used to re-calculate the fields annual salary and pay rate per hour, and super total.
- Superannuation - on-costs The percentage of the annual package that will be paid into the staff members superannuation fund. This is also known as a pension fund, 401K, and Kiwi Saver. This is normally a government regulated percentage that each salaried person must contribute to their retirement savings. This value defaults from the financial controls.
- Super total The total value that will be paid per year into the superannuation or retirement fund.
- Hours per year Value defaults from financial controls. This is the number of hours the staff member could work per year if they didn't take any leave. For example 8 hours per day, 5 days a week is 2080 hours per year. Update this value for a staff member to more accurately work out a base hourly cost value.
- Availability Value defaults from financial controls. This is the percentage of the year that the staff member is available to work. Availability takes into account that out of the 52 weeks in the year that staff may only work for 43 weeks after taking holidays and medical leave. Update this value for a staff member to more accurately work out a base hourly cost value.
- Adjusted cost The adjusted cost is the cost for the staff member before any costs for running the office they are located in are applied. This value is worked out as: Step 1: the number of hours per year (1976) x availability (0.80) = 1580.80 hours. Step 2: the salary package ($80,000) / 1580.80 hours = $50.61 adjusted cost per hour.
- Overhead rate Value from financial controls. The overhead factor is the cost of running office where the staff member work, and is set to cover the office costs when calculating actual cost and profit in Synergy.
- Overhead adjustment The overhead defaults to 100%. Update this percentage to mark up / down the overhead cost for a staff member. This can be required when a staff member works from home, or from a remote office which does not cost as much to keep them employed as a staff member working in the primary office location. If the staff member works in the primary office location this figured is expected to be left at the default value of 100%. e.g. Update the overhead adjustment value to 80% and the actual overhead cost for the employee is discounted by 20%. When the overhead cost is reduced the actual cost charge out rate is the then also reduced for that staff member.
- Actual cost The actual cost for the staff member after the costs of running the office location are applied. This value is worked out as: Step 1: the number of hours per year (1976) x availability (0.80) = 1580.80 hours. Step 2: the salary package ($80,000) / 1580.80 hours = $50.61 adjusted cost per hour. Step 3: adjusted cost ($50.61) x overhead rate for the organization (2) = $101.22 actual cost per hour.
- Target utilizationNominate a percentage value of how much time the staff member is working on project billable tasks. Value defaults from financial controls.
- Target profit A percentage % added above the overhead factor to determine target profitability levels. This will add the % margin above the break-even overhead rate to determine the target charge value for staff. Value from financial controls.
- Target charge The staff minimum charge value. The lowest value that this person should be charged out at on a project, if the other business overheads and target profits are to be met. This value is worked out as: Step 1: the number of hours per year (1976) x availability (0.80) = 1580.80 hours. Step 2: the salary package ($80,000) / 1580.80 hours = $50.61 adjusted cost per hour. Step 3: adjusted cost ($50.61) x overhead rate for the organization (2) = $101.22 actual cost per hour. Step 4: Actual cost ($101.22) x target profit (20% as 1.2) = $121.46 target charge value.