Unique contract management
It is possible to mix all of the below contract types on the same project which provides unique contract mangement in your organisation. This means that you can have an overall budget on the project, where you can follow the total progress, and on each contract you see the specific progress.
In all types, except for prepaid hours, it is possible to separate invoicing and revenue recognition. This gives the project manager an opportunity to structure the payment plan towards the customer in one way, and manage how value is divided on hours and costs, e.g. work, expenses and travels, in another.
The eight contract types overall take their point of departure in Time & material or Fixed price contracts:
1. Time & material – Standard contract
This contract type is the simple one with its point of departure in hours x hourly rate. When you use a contract on time & material, you have the opportunity to divide it into more contracts to separate travel time and expenses from the main delivery/agreement, or devide the project into several budgets to follow the agreements made with the customers. It is also possible to set an upper limit to what is invoicable and receive a notification when a percentage of the budget is used.
2. Time & material – On account with end-balancing
This contract type is typically used for large and long-term project on time & material. On this type of projects, the customer often pays an amount of the contract value upfront or concurrent with the project. When the project is over, you can invoice with TimeLog Project's contract mangement, and take the difference between the prepayments and the agreed price for the project into account. Time trackings do not appear when invoicing before the contract is ended, but may be booked as revenue if TimeLog EVM is used.
3. Time & material – Prepaid hours
Prepaid hours is used when a number of hours are paid upfront (e.g. 50, 100 or 200 hours), and there is an opportunity for the customer to get a discount. If you use TimeLog EVM for revenue recognition of work in progress, the hours are shown for revenue recognition, but not for invoicing. The project manager may choose to receive a notification when a percentage of the prepaid hours are used, in order to contact the customer in time before the prepaid hours expire.
4. Time & material – On account with periodic balancing
This contract type is used when you perform periodic (typically monthly) work such as salary management, bookkeeping or service agreements. Here, there is an expectation of how many hours should be delivered, and the customer pays upfront when the month starts, and is invoiced when the month ends, where the prepayment is deducted from the actual number of hours.
5. Fixed price – Standard contract
You may have several fixed price contracts on the same project to get an easier overview of large and complex projects. Each contract contains its own budget, payment plan and income. All fixed price contracts may contain external expenses such as expenses for sub-suppliers, and you choose what amount of the contract value the external expenses should represent of the internal value distribution.
6. Fixed price – Continuous service contract
This contract type is used when you perform periodic (typically monthly or yearly) work such as salary management, bookkeeping or service agreements. This may be seen as small periodic fixed price projects. When the period ends, hours and expenses are divided on the periodic payment as a periodic fixed price project. With a simple setup on the contract, you may define when payments should take place, and a new payment is automatically created, so you have payments ready for the next 18 months. In this way, you see your potential when making forecasts.
A repetition pattern for invoicing is set up where you decide:
- Start of the agreement, e.g. May 1, 2015
- Period: e.g. month
- Budget period start, e.g. the first day in each month
- Budget for number of hours, budget amount and budget for expenses
- Payment for each period
- When payment is due, e.g. last day in the period before the budgeting period
7. Fixed price – Task driven revenue
On this contract type, each task on a project gets its own contract, whereas on a normal fixed price project, a group of tasks is connected to an overall payment plan. The payments are attached to each single tasks, and it is possible to divide the tasks into sub-tasks and allocate a part of the overall value of the contract to each sub-tasks.
8. Fixed price – Continuous item invoicing
This contract type is used when you perform periodic (typically monthly or yearly) work such as salary management, outsourced bookkeeping or invoicing of software licenses. Here, the customer pays per transaction and not per hour. A recurring payment may be determined based on an in advance fixed number of goods for invoicing. Through our API, it is possible to make an automatic update of the number of units that should be invoiced, e.g. payslips for a customer.