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Freelancers

We're just starting with Clients & Profits this week, and would like to know how others handle this situation:

We have certain independent contractors that we pay hourly and also bill out hourly. They submit an invoice and a time sheet to us. In the past we used separate systems for time&billing and for accounting, so we input the timesheet in the first and the invoice in the second. There was no duplication of costs doing this (just lots of duplication of effort.)

We also receive a purchase order for the cost from the project manager.

In C&P, if we use a real cost rate for the freelancer in staff setup, then the cost will be duplicated if we put the invoice against the job. However, if we don't put the invoice against the job then we either have to not input the P.O. or delete it when the invoice is input (rather than applying the payable against the P.O.) If we don't input the P.O. against the job then we have no tracking that there is an outstanding commitment on the job if we try to bill it before the invoice comes in.

I can zero out the cost rate for the freelancer in staff setup, leaving the payment to the freelancer as the only cost, but then the invoice is sitting against the job. Since a vendor can't be marked as non-billable, we would have to remember to make every invoice for the vendor non-billable. I hate having systems that rely on having to manually do something every time, as they will always get missed at some point.

But -- it seems that my choices are either ignoring the invoice as it relates to the job, or remembering to make every invoice for the vendor non-billable. Has anyone come up with a better way to do this?

Thanks in advance.

Brent A. Byrd Chief Financial Officer Point Zero, Inc.

I think you are on the right track with how to input the time and costs for this vendor. Here's what we do for a freelance copywriter we use:

He is set up as a Staff member with no cost, but with the proper hourly bill rate for Copywriting. His time is input in Time Sheets by job as we receive his hours during the month. When we get his invoice at the end of the month, I input only the NET COST with no mark-up and no Gross amount. You're right -- you have to remember to make this vendor's invoices unbillable, but I've entered a "Pop-up AP Note" in the vendor set-up (it's under Acct Info) that says "enter as Non-Billable - enter Net cost only". You will see this reminder pop-up on your screen whenever you begin to enter an invoice for this vendor.

Dorinda Sample COO Janzen IdeaCorp

We also use independent contractors and this is how we handle the invoices.

1. We have set them up as a staff and enter their time, coding it to jobs.

2. We enter the invoice as an overhead invoice (which could be matched to an existing PO).

I hope this helps.

Ann Adams J. Stokes & Associates

We treat contractors/freelancers as normal vendors. Instead of having them set up as staff members, we issue purchase orders prior to the work being completed and upon completion the freelancer would submit an invoice. This gets entered in AP against the appropriate jobs. You can mark up their net cost and bill the client accordingly. Hope this helps.

Jennifer Cockerham Manager, Client Financial Services Coyne Beahm Inc.

We set up the freelance as a staff person with their actual cost rate and a billing rate. They fill out regular time sheets which I enter and that time will post to the job.

When their invoice comes in, I enter it as a job cost invoice, but post it to job "NONE" and put it to a "Job Cost" account called Freelancers/Contract Labor. I do this because the time from the timesheet will post to the job, but time does not affect the G/L. When you post their invoice to a Job Cost expense (Freelancers), it will force it to show up on your Income Statement.

I don't issue P.O.s for the freelancers. I would recommend that you have them fax the timesheets on a weekly basis, and just include copies with their invoice as backup. We do progress billing monthly, so I don't worry too much about time not getting billed.

Hope this helps!

Catherine Colangelo The Phillips Agency

Our way is probably really screwy, but it works for us. First, most of my clients are on a retainer with time reconciliations quarterly. Here's what we do:

1-we have an agency overhead job to put all overhead costs to. 2- we have a task called free. (for all freelance time). 3- all freelancers bill us with time to a job on the invoice. So, the invoice gives a total amount, and listed under is the real job number and hours to the job. We don't pay without an accounting of time, even if the agreement was for a project fee. 4- the invoice goes to the individual who hired the freelancer (studio manager, creative director, etc.) 5-they approve the cost and hours on the invoice, and code the cost to the overhead agency job, not the actual job time was accrued for. 6-accounting enters the full invoice amount against the overhead agency job and enters the time under the correct working job (yes, this means I do have several "staff" members set up for time sheets) for reconciliation (or billing). 7-when the client is billed, they are given the back up from the C&P and not from the actual freelancer. It is none of their business whether our staff worked on the job or a freelancer or what we pay our staff or the freelancer.

Hope this helps,

Shelly Constantz

You have two options. You can continue to add the timesheets for your freelancers as you have been. Then, add the a/p invoice as an overhead invoice. This will update the vendor and g/l information and not duplicate the cost on the job ticket.

The other option is to skip the timesheet step and just add the freelancers invoice as any other vendor invoice.

Thanks,

Rebecca Cox C&P Consultant/Trainer