Billing Types
Tutorials and guides for the features of Octaved Flow
Billing types are, for example, fixed price and by effort. The billing type determines how a work package is billed to the customer/client. If billing is based on time and effort, the invoice amount is calculated by multiplying the hours worked by the agreed hourly rate. The customer usually wants to see a time sheet as proof of performance.
With a fixed price, it is irrelevant to the customer how long the implementation took. Instead, it is even more important for you to have control over the time spent in order to keep an eye on the profitability of the job.
The billing types in Octaved Flow are:
The billing type is assigned to a work package. In Octaved Flow a project is divided into work packages. So it is possible that within a project there are work packages with different billing types.
Effort
In this billing type, the work done is billed by time. No information about the expected effort is stored in Octaved Flow.
If price categories are defined for different types of services, the appropriate price category for the services in the work package is selected here.
Effort with approx
Unlike the billing type effort, effort with approx. specifies the expected effort, using circa.
The progress bar for booked time becomes orange from a configurable threshold value, so that then internally or together with the customer the further procedure can be discussed. By default, this limit is set to 120% of the approximate effort.
The actual effort is always billed.
Effort with from/to
Effort with from/to is similar to Effort with approx., except that a from and a to value are specified here. The actual effort is also billed here, which can also be below the from or above the to value.
Effort with cap
In the case of effort with cap, it has been agreed with the customer that the work is to be finished when the maximum effort specified as cap is reached. This billing type thus differs fundamentally from the three preceding ones.
On a work package with effort with cap working time can be booked only up to the indicated cap. The actual effort is always accounted for, which corresponds at most to the cap, but can also be below it.
In other words, work on this work package is finished when the target agreed with the customer or the cap is reached - whichever comes first.
The progress bar is orange when the booked time is at 90% of the cap and red when the cap is reached.
Fixed price
Billing type Fixed price is used when a clearly defined service is agreed with the customer, which is billed at a fixed price.
In Octaved Flow, the amount is specified in Euro and the planned maximum effort, which is the basis of the price calculation:
Time sheets exported from Octaved Flow do not include fixed price work packages. The customer does not need to know if profit or loss was made on the work package. From 90%, the progress bar for booked time becomes orange. From 100%, i.e. when the planned maximum effort is reached, it turns red.
The Fixed price is used to represent a contract for work.
Info
Difference between a work contract and service contract
With a contract for work and services, no working time is agreed upon, but rather the completion of a work. For this, the contractor then receives a fixed amount. The "work" can also be, for example, a repair. The decisive factor is that the contractor guarantees to deliver what has been agreed for the fixed amount, and to do so in perfect condition. Whether or not he succeeds in doing so in the time calculated for the fixed price is his problem. If the implementation takes longer than planned, the contractor makes a loss; if it goes faster, he can take the resulting profit. If the contractor does not succeed in implementation, he does not have the right to be paid for his work.
In a work contract, no working time is agreed, but the completion of a work. The contractor then receives a fixed amount for this. The "work" can also be a repair, for example. The decisive factor is that the contractor guarantees to deliver what has been agreed for the fixed amount, and to do so in perfect condition. Whether or not he succeeds in doing so in the time calculated for the fixed price is his problem. If the implementation takes longer than planned, the contractor makes a loss; if it goes faster, he can take the resulting profit. If the contractor does not succeed in implementation, he does not have the right to be paid for his work.
By a service contract a working time to be performed is agreed. Whether a goal that the customer envisions is achieved in the process is initially irrelevant in principle. The contractor is paid for the pure working time, in principle regardless of the result. In practice, different variants of the service contract occur, which can be mapped with Octaved Flow, see above.
Contingent
The billing type contingent is fundamentally different from the effort types from a commercial point of view, even though in both cases a time sheet serves as proof of performance for the customer.
With the contingent, a number of working hours is fixed. The quota is used up by working hours. As in the case of effort types, there is no agreement that something specific must be completed.
The customer is obliged to accept the working hours of the contingent. This is the decisive difference to effort with cap, where only the hours worked up to a defined target and at most up to the cap are invoiced. In contrast, a contingent is always billed in full.
Without calculation
This billing type is used for everything that cannot be billed to the customer. For example, the acquisition of the job cannot be billed. The reason why the work package cannot be billed is included:
Settlement types in practice
The agreement of the account after expenditure is probably accepted in practice only by customers, to whom already an appropriate confidence relationship exists.
The billing types effort with approx. and effort with from/to give the client and contractor a certain framework and create an idea of what both parties expect. Details may need to be agreed separately and clarified at runtime.
The Expense with cap can be used, for example, for repairs where it is unclear whether the repair is still economical. If the repair succeeds below the agreed cap, only the actual effort is billed. If the cap is reached without the repair succeeding, further steps can be jointly agreed. An escalation of repair costs can thus be safely prevented.
The effort with cap is just as suitable for, for example, preliminary studies, evaluations, market studies and research activities.
If the customer is not yet 100% sure what he really wants or if there is a high probability that the requirements will change during the course of the project, fixed prices are certainly not the first choice. If the effort is made to describe the scope of services exactly, fixed prices are a clear and safe alternative for both sides.
In Octaved Flow, fixed prices are intended for work services only. They are not designed for the sale of goods.
Contingents are ideal when the customer needs to call a fixed portion of a budget. This may be the case for training, for example. With a contingent, the price is fixed from the outset. This is a common feature of fixed prices and contingents. They can be included in the sales forecast as secured sales. It may be that quotas are not called up, so it should be agreed with the customer what will happen in this case. A conceivable model is that uncalled working time of quotas expires after 12 months.
Timesheets
If timesheets are exported from Octaved Flow, they will only contain work packages with billing types that belong in a timesheet. Work packages with the following billing types will not be included in timesheets:
- Fixed price
- *Without calculation
Download sample timesheet
Time booking limits
Which warning levels apply to time bookings depending on the billing type and when corresponding work packages can no longer be booked can be set centrally in Octaved Flow:
See tutorial on time limit exceeded.
Internal customers with billing.
Companies in the same business group to which services are charged internally are often referred to as internal customers. Octaved Flow distinguishes between internal customers with billing (oncharging) and without billing.
Info
Settings for customers
.In the system settings under Customers you can manage customers and specify the customer type for a customer:
If the customer of the project is an internal customer with billing, the same billing types are available as described above.
Internal customers without billing.
When you set up Octaved Flow, an internal customer (without billing) is created for you, with the name you specified. Probably you have specified your company name or the name of your team. If you start an internal project with Octaved Flow yourself, then choose this customer for it.
Even though there is no internal charging of costs in this case, you may still want to specify timelines. For internal customers without billing, the field where you select the billing type has a different name. It is then called Time default.
Since there is no billing, there are fewer options. The options you can choose from are:
- None (effort) - This option is identical to billing by effort. The name None makes more sense in the context of a time limit, because Effort is also not limited.
- Effort with approx. - Same name, same function.
- Effort with from/to - Same name, same function
- Effort with lid - Same name, same function.
Info
Mapping jobs as projects
.Part of the concept of Octaved Flow is to split projects into manageable work packages. Sales orders are also often viewed as projects. Applying the logic of Octaved Flow to this, it follows that orders in Octaved Flow also correspond to projects and thus the order items of an order in Octaved Flow are mapped as work packages. The idea is obvious and makes it possible that internal projects are managed according to the same scheme as customer orders - centrally in one software.
The work packages can therefore also be seen as a commercial unit. Each work package can have a different billing type, even within a project.
The order total is then the sum of the work packages.
Summary
Billing types are used to map the commercial basis for projects and orders in Octaved Flow. Billing types define on the one hand how a work package is billed to the client and on the other hand how much time can be booked on a work package.
Links to other tutorials in this topic:
