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User Tips
A quarterly feature from WON Systems geared towards enabling users to make full use of their Agency Business Software Solution.



Tip 6

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:
  1. Estimate or agreement on scope, job, and hours is made with the FL by the agency.

  2. 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.

  3. FL performs work and is over, under, on or capped by the estimate.

  4. FL invoices the agency for the costs incurred often with explanation and job #.

  5. Invoice is approved for payment.

  6. 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.

  7. 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:
  1. Estimate or agreement on scope, job and hours is made with the FL.

  2. 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.

  3. FL performs work and is over, under, on or capped by the estimate.

  4. 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.

  5. 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).

  6. 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.

  7. 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.

  8. 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:
  1. Time is entered more regularly and budget can be better monitored.

  2. Your billable amount is generally higher and has a positive bottom line benefit.

  3. Parallels the treatment of agency staff and agency FL's.


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