fact sheet
trueRATE bill rate calculator for accurate invoicing
A huge part of managing the extended workforce is handling invoicing. Organizations have differing, complex ways of determining bill rates. The calculation process can be difficult, especially when multiple variables – such as coefficient, markups, and statutory cost – must somehow fit into the equation.
Currently, many human resources and procurement professionals find themselves managing these bill rates outside their vendor management system (VMS), using spreadsheets and other complex methods to calculate the correct numbers for their invoices. Hiring managers may find themselves using a basic calculator tool within their VMS but, lacking insight into statutory components and markups, simply trusting the system to calculate costs correctly. At Beeline, our clients automatically receive the added benefit of using trueRATE – Beeline’s exclusive, pre-configured bill rate calculator – to determine their bill rates based on multiple, complex variables.
To help users understand trueRATE, we have sought to define some of the most common terms used when calculating bill rates:
Pay Rate – the rate that the worker will be paid, which is often regulated by the government. For this reason, it is important that it is not manipulated and shows the actual rate the worker receives, outside of any statutory costs.
Pay Rate + Variables = Bill Rate
Bill Rate – the rate a client will pay, which also appears on the invoice. The Bill Rate is composed of the Pay Rate as well as any variables added to the Pay Rate.
The benefits of trueRATE
trueRATE gives you the opportunity to achieve cost savings through better understanding of all rate components.
With trueRATE you can:
| — | Gain visibility into complex rate calculations and understand how and what your bill rate is made up of. |
| — | Gain negotiating flexibility. With earning code level rate components displayed, you now have more negotiating power. |
| — | Update the variables easily when statutory or legislative regulations require these changes. |
| — | Define variables by earning code, supplier, job title, geography, work location, etc. |
| — | Add or subtract defined fixed amounts/rates, as trueRATE supports more than just percentages. |
What are the variables that make Bill Rate so complicated?
Variables: These tend to create the most complexity when determining bill rates, including items such as coefficients, markups, and statutory costs.
| 1. | Coefficient: This term, used most commonly in Europe, refers to the gross margin and social costs multiplied by the Pay Rate. Often negotiated on an annual basis between the client and supplier, a coefficient is always a multiplier and can never be a percentage (percentages are considered markups). |
| 2. | Markup: This term describes a percentage or fixed amount added to the Pay Rate to account for the administrative costs and gross margin for a supplier. |
| 3. | Social Costs/Statutory Costs: These terms refer to the mandatory fees that a supplier or client must account for when procuring a worker. Generally, these are government fees, but they may also include benefits to the worker. Examples include National Insurance, Working Time Directive, and Pensions Enrollment. |
trueRATE gives you full visibility into every variable that makes up the Bill Rate, so you never again have to wonder how the system calculated the final numbers on your invoices.
Other helpful terms to understand include:
| — | Rate Components: Rate components are additional costs that are added to the pay rate to calculate the bill rate, and can also be referred to as Variables. Rate components can be a percentage of the pay rate or a flat amount. Examples include mark-up, social costs and coefficients. |
| — | Administrative Costs: This refers to the costs a supplier incurs to support a worker. |
| — | Secondary Drivers: Examples include geography (work location), supplier, industry, resource type, and job title, which can also influence the Bill Rate. |
A real-world example
As an example, let’s say the Supplier Submitted Pay Rate is £200 and the Bill Rate is £279.74. How did the Beeline system calculate this Bill Rate? Users have an opportunity to click an option to View Rate Breakdowns, and a Rate Calculation Breakdown screen appears. When the Rate Calculation Breakdown screen appears, it will display that the National Insurance cost for this particular resource type is 13.8%, the Working Time Directive Cost for this resource type is 12.07%, and the pre-defined markup is 14%. It will also display the computed values for these percentage amounts. In this example, trueRATE calculated: Pay Rate = £200 // NI Cost = (£200 * 13.8%) = £27.60 // WTD Cost = (£200 * 12.07%) = £24.14 // Markup = (£200 * 14%) = £28.00 //
Bill Rate = £200 + £27.60 + £24.14 + £28.00 = £279.74
Frequently asked questions:
| — | Can I use multiple calculations to make up my Bill Rate? Yes. You can define multiple rate component calculations and use that in conjunction with your earning code and coefficient calculations. |
| — | Can I import my data or does this all have to be entered manually? We have an easy import template that can be uploaded into the system efficiently. |
| — | What if I have a different calculation for each country? Can trueRATE support those different calculations? Yes. trueRATE calculations can differ by industry and therefore can be used globally to support variations in complex bill rates. |
| — | What if my values differ based on a number of drivers? Can trueRATE support multiple drivers? Yes. trueRATE can support multiple drivers for rate component values. These include industry, supplier, job title, work location, resource type, earning code, and rate card categories. A minimum of one driver must be defined per value but you can also associate a mixed set of drivers. |