Set up labor cost posting

Easily manage and track your direct and indirect labor costs per project by automating your workflow process to post labor costs upon approval. This enables you to manage the financial performance of your project and monitor project profitability using the latest data, which improves data integrity by eliminating error-prone manual processes.

All time submitted by project staff posts automatically into the General Ledger accounts you've specified. Then, you can generate reports with current and immediate insight into project financial performance.

Basic and advanced labor cost posting

Advanced labor costing enables a more detailed analysis of staff costs, and enables you to override the accounting and cost rate at the individual timesheet line item level by using different types of time, called time types.

Use advanced labor cost posting to:

  • Distinguish between and track different types of time, such as overtime, travel time, vacation, and so on.
  • Override an earning type on a case-by-case basis in the timesheet. For example, override an earning type when the cost rate or accounting are different, such as for overtime, hazard pay, or travel time.

Select General Ledger journal and default account

  1. Go to Projects > Setup > Configuration.
  2. When the Configure Projects page displays, scroll down to the Timesheet GL Posting section.
  3. Under Journals, select a Labor cost journal.
  4. Under Accounts, select labor cost accounts.
    • Select a Payroll liability account.
    • Optionally, select a Variance account.
  5. Optionally, for more detailed analysis, and to get the option of overriding certain individual timesheet entries, select the Enable earning type at the time type and task level checkbox.

Create earning types

Earning types dictate how to calculate the employee’s rate. That's, whether the employee is on salary or an hourly wage, and whether an overtime multiplier applies to this earning type. Creating an earning type also sets up the GL expense account (on the debit side).

  1. Go to Projects > Setup > Employees, and select Add (circle) next to Earning types. The Earning Type Information page appears.
  2. Enter the desired information, including the GL accounts to which to post billable time and non-billable time.
If you do not want to distinguish between billable and non-billable time, select the same GL account for both.

Associate earning types with employees

Assign earning types to employees to determine their pay rate (salary, hourly, overtime, and so on) when they submit time. An employee must have an earning type for costs to post.

  1. Go to Projects All > Employees. The Employees list appears.
  2. Find the employee you want and select the adjacent Edit link.
  3. On the Employee Information tab select an earning type.
  4. On the Cost Rates tab enter the employee’s salary or hourly wage.

Set up advanced labor cost posting

Setting up advanced labor cost posting takes only a few minutes more than setting up basic labor cost posting. For more detailed information about these and other options on these pages, select the Help link for each page.

Create a time type

  1. Go to Projects > Setup > Time > Types, and select Add (circle) next to Time types.
  2. Type in a name for the time type and select the Time Type GL Account to which you want it to post. This is the debit side of the transaction.
  3. Optionally, enter the offset (that's, credit side) GL account. If you do not select a GL account, the account specified as the offset account on the Project configuration page is used instead.
  4. Optionally, associate an Earning Type with the time type.
    • If you select an earning type, the GL account for the earning type will be used for the expense or debit side of the transaction instead of the GL account you selected in Step 2 above. The earning type can also be used to obtain a multiplier for hourly employees, which is valuable for overtime costing. For salaried employees, the time type will have no effect.
For salaried employees, the time type has no effect.

Time types are exactly what they sound like: different categories of time, such as salary, contract hours, overtime, vacation, travel time, and so on. All entries of a given time type post automatically to the general ledger accounts you assign to that time type. This makes it possible to generate reports that clarify how much of a project’s staff cost is spent on different categories of work time.

You can also assign a time type to a task, which causes the timesheet line to default to the task’s time type.

If you do not enable the ability to select a time type on the timesheet grid, you will not be able to override the default time type.

Enable time type entry on your timesheet

  1. Go to Projects > Setup > Configuration.
  2. Scroll down to the Timesheet table display section and select the Show time type checkbox.

Assign a time type to a task

  1. Go to Projects > All > Projects > Tasks. The Task list appears.
  2. Find the task you want and select Edit. (You can instead select Add to create a new task.)
  3. Select the Additional Info tab. Select the time type to which you want to associate the task.
  • If you DO NOT enter an earning type into your time type:
    • No earning type is associated to a time type.
    • GL account posting is taken from time type. If no GL account is associated to the time type, it’s taken from the earning type associated to the employee.
    • Multiplier is taken from earning type associated to employee
    • If employee is salaried, no multiplier is added.
  • If you DO enter an earning type into your time type:
    • You enable this option in the Configure Projects page (via the Enable earning type at time type and task level checkbox).
    • The GL account posting is taken from the earning type associated to the time type and NOT from the time type directly.
    • The multiplier is taken from the earning type associated to time type.

    That's it. You're done!

    How can I calculate labor costs?

    There are 3 distinct methods of calculating and posting costs:

    • Hourly. The employee’s posted hours are multiplied by the hourly rate.

    Labor cost rates are always calculated by the hour, regardless of whether timesheet entries are by day.

    • Salary. The employee’s annual salary determines the total cost per timesheet period. Regardless of the hours worked, each timesheet period is calculated the same way and pro-rated to the project/tasks on which the employee worked.
    • Salary with variance. The employee’s annual salary is used to determine both the total cost per timesheet period AND the employee’s equivalent hourly cost rate. The project/task on the timesheet is charged by multiplying the hours by the rate. Any difference between the total of the hourly costs and the total timesheet cost (set up a variance account for labor cost on the Configure Projects page) posts to a variance account. You can activate salary with variance from the Employee information page, by selecting the Post actual labor costs with variance option just below the Earnings type box.

    For examples of different labor cost calculations, see the Sample Entries section, below.

    After you've completed and saved the information on these pages, as timesheets are submitted and, if need be, approved, labor costs are automatically posts to the General Ledger in the accounts which you've specified.

    Labor cost posting in a multi-entity environment

    In a multi-entity environment, timesheets for projects created at the top level can be entered against those projects at the entity level.

    Employees must bill their time against top-level projects only at the entity to which the project is associated. Billing time against top-level projects at other entities will cause revenue leakage.

    Examples

    If you select salary the rate entered is the annual salary of the employee. This can be a fully-loaded rate.

    Assumptions:

    • Number of weeks in a year: 52
    • Number of hours in a year: 2080
    • Number of hours in a week: 40
    • Employee Salary = 75,400.00
    • Weekly Salary = 1,450.00
    • Equivalent Hourly Cost = 36.25

    Sample timesheet

    Project Task Mon Tues Wed Thurs Fri Sat Sun Total % Salary
    Amt    		 HRLY
    COST    		 Variance
    ABC
    Setup    		 Training       8 8     16 37.21 539.53 580  
    ABC
    Setup    		 Uploads 3 3 2         8 18.6 269.77 290  
    HK Setup Uploads 3 1 3         7 16.28 236.05 253.75  
    HK Setup Configuration 3 5 4         12 27.91 404.65 435  
        9 9 9 8 8     43 100 1450 1558.75 108.75

    Salary journal entry, with variance OFF

    GL Account Employee Department Location Project Customer Task/Item Debit Credit
    Salary & Wage
    Expense    		 Karen Thomas Services CA ABC
    Setup    		 ABC Training 539.53  
    Salary & Wage
    Expense    		 Karen Thomas Services CA ABC
    Setup    		 ABC Uploads 269.77  
    Salary & Wage
    Expense    		 Karen Thomas Services CA HK Setup HK Uploads 236.05  
    Salary & Wage
    Expense    		 Karen Thomas Services CA HK Setup HK Configuration 404.65  
    Payroll Payable Karren Thomas Services CA ABC Setup ABC Training   539.53
    Payroll Payable Karren Thomas Services CA ABC Setup ABC Uploads   269.77
    Payroll Payable Karren Thomas Services CA HK Setup HK Uploads   236.05
    Payroll Payable Karren Thomas Services CA HK Setup HK Configuration   404.65
                  1,450.00 1450.00

    Salary journal entry, with variance ON

    GL Account Employee Department Location Project Customer Task/Item Debit Credit
    Salary & Wage
    Expense    		 Karen Thomas Services CA ABC
    Setup    		 ABC Training 580.00  
    Salary & Wage
    Expense    		 Karen Thomas Services CA ABC
    Setup    		 ABC Uploads 290.00  
    Salary & Wage
    Expense    		 Karen Thomas Services CA HK Setup HK Uploads 253.75  
    Salary & Wage
    Expense    		 Karen Thomas Services CA HK Setup HK Configuration 435.00  
    Payroll Payable Karren Thomas Services CA ABC Setup ABC Training   580.00
    Payroll Payable Karren Thomas Services CA ABC Setup ABC Uploads   290.00
    Payroll Payable Karren Thomas Services CA HK Setup HK Uploads   253.75
    Payroll Payable Karren Thomas Services CA HK Setup HK Configuration   435.00
                  1,558.75 1,558.75

    Variance entry

    GL Account Employee Department Location Project Customer Task/Item Debit Credit
    Payroll Payable Karren Thomas Services         108.75  
    Variance Karren Thomas Services           108.75
                  108.75 108.75

    Employee hourly cost rate: 35.00

    Sample timesheet

    Project Task Mon Tues Wed Thurs Fri Sat Sun Total % HRLY
    COST
    ABC
    Setup    		 Training       8 8     16 37.21 560
    ABC
    Setup    		 Uploads 3 3 2         8 18.6 280
    HK Setup Uploads 3 1 3         7 16.28 245
    HK Setup Configuration 3 5 4         12 27.91 420
        9 9 9 8 8     43 100 1505

    Hourly journal entry

    GL Account Employee Department Location Project Customer Task/Item Debit Credit
    Salary & Wage
    Expense    		 Karen Thomas Services CA ABC
    Setup    		 ABC Training 560.00  
    Salary & Wage
    Expense    		 Karen Thomas Services CA ABC
    Setup    		 ABC Uploads 280.00  
    Salary & Wage
    Expense    		 Karen Thomas Services CA HK Setup HK Uploads 245.00  
    Salary & Wage
    Expense    		 Karen Thomas Services CA HK Setup HK Configuration 420.00  
    Payroll Payable Karren Thomas Services CA ABC Setup ABC Training   560.00
    Payroll Payable Karren Thomas Services CA ABC Setup ABC Uploads   280.00
    Payroll Payable Karren Thomas Services CA HK Setup HK Uploads   245.00
    Payroll Payable Karren Thomas Services CA HK Setup HK Configuration   420.00
                  1,505.00 1,505.00