Using Flat Rates

Using Flat Rates

The purpose of this document is to define how the DockMaster Service Management system handles Flat Rate codes. In addition, examples are provided to help the reader understand how flat rate codes are used in practical situations.

Flat Rate Information for any Operation (Opcode) is entered in the Flat Rate Info section.

Flat Rate Method- Enter the Method for the operation. The default method is None. If "None" is your selected Flat Rate then you will be charging Time and Material for Labor. A time and material operation code assumes you are charging retail price for all charges incurred on the Work Order. Labor hours and parts are billed at the retail rate. All other incidental charges are billed at your normal billing rate.

If an operation is flat rated the system charges one price for parts and labor. There are four methods for calculating how much of the flat rate fee gets charged as parts and labor income. Two of these methods allow you to add parts to a flat rated operation at retail price. The valid choices are None, Percentage, Net, Labor, Parts, or Cap.

Note: A flat rated operation charges a flat fee for a job regardless of the number of labor hours or parts charged to the operation. The flat rate amount can be either a flat fee or a per foot rate. The per foot rate can be based on the length overall, length at waterline (length of deck), or feet of spar (length of mast) of the boat. Important: Depending on the method you choose, parts or labor must be added to a Work Order in order to trigger the billing of the flat rate amount to the Work Order.

Defining Flat Rate Methods

Percentage Method - This method requires you to estimate how much of the income from the operation should be charged to parts and billing. The percentage method is illustrated by the formulas shown below:

PARTS INCOME = FLAT RATE AMOUNT X PARTS INCOME %
BILLING INCOME = FLAT RATE AMOUNT X BILLING INCOME %
LABOR INCOME = FLAT RATE AMOUNT - (PARTS INCOME BILLING INCOME)
* Billing Income refers to any Billing Codes, which are added to an operation for storage fees, etc.

If the Flat Rate Method chosen is (P)ercentage, then you can fill in the Parts Income % and Billing Income % fields. Below is a review of the formulas:

Enter a Parts Income % to distribute a portion of the flat rate amount to parts income. This percentage will be multiplied by the Flat Rate charge with the result being booked to parts income.

Enter a Billing Income % to distribute a portion of the flat rate amount to the Billing Code attached to this operation. This percentage will be multiplied by the Flat Rate charge with the result being booked to billing income.

IMPORTANT ACCOUNTING NOTE: When flat rating parts (either flat rate or percentage methods) the system uses the Retail Income Account set up from the Service Parameters. For Example: If an operation is set up as a flat percentage, the system needs to know what % of the flat rate are parts. If the parts are assigned to Department 123, which uses GL account 1004000, the accounting actually gets taken from the Retail Income account from the Service Parameters, which is 1004200.

Net Method - This method charges parts at retail price and billing codes at actual price. Labor income is the difference between the flat rate amount and the sum of all parts and Billing Code amounts. The formula is shown below:

LABOR INCOME = FLAT RATE AMOUNT - (PARTS + BILLING CODES)

Labor Only Method - This method applies the flat rate amount only to the labor hours added to the operation. The labor income amount is always equal to the flat rate amount.

Parts Method - This method applies the flat rate amount only to the parts added to the operation. The parts income amount is always equal to the flat rate amount.

Cap Method - A capped operation is very similar to a time and material operation code in that labor hours and parts are billed at the retail rate. However, you can set a monetary cap on the operation. The system will add charges to the operation at the retail price until the cap is reached. You also have the ability to break the full operation cap amount between labor, parts, and billing charges. The cap method is illustrated by the formula shown below:

LABOR INCOME = CAP AMOUNT - (PARTS CAP + BILLING CAP)

Examples of Flat Rated Methods

Percentage Method:
Flat Rate = $500.00
Flat Rate Method = (P)ercentage
Parts Income % = 30%
Billing Income % = 10%

Applying formulas:
PARTS INCOME = 500.00 X 30% = 150.00
BILLING INCOME = 500.00 X 10% = 50.00
LABOR INCOME = 500.00 -(150.00 + 50.00) = 300.00

Resulting Charges:
Parts Income = $150.00
Billing Income = $50.00
Labor Income = $300.00

Net Method:
Flat Rate = $500.00
Flat Rate Method = (N)on-Percentage
Parts Income % = Not Applicable
Billing Income % = Not Applicable
Applying formulas:
LABOR INCOME = 500.00 - (300.00 + 100.00) = 100.00

Resulting Charges:
Parts Income = $300.00
Billing Income = $100.00
Labor Income = $100.00

Labor Only Method:
Flat Rate = $500.00
Flat Rate Method = (L)abor Only
Parts Income % = Not Applicable
Billing Income % = Not Applicable

Resulting Charges:
Parts Income = $300.00
Billing Income = $100.00
Labor Income = $500.00

Parts Only Method:
Flat Rate = $500.00
Flat Rate Method = (M)aterials Only
Parts Income % = Not Applicable
Billing Income % = Not Applicable

Resulting Charges:
Parts Income = $500.00
Billing Income = $100.00
Labor Income = $250.00

Cap Method:
The scenario for this example is as follows:
Cap Amount = $500.00
Parts Cap Amount = $100.00
Billing Cap Amount = $50.00
Parts are added at a retail price of $300.00.
5 hours of labor is added at a price of $50.00/hour. (total price $250.00)
A Billing Code is added for storage fees in the amount of $100.00.

Applying formula:
LABOR INCOME = 500.00 - (100.00 + 50.00) = 350.00

Resulting Charges:
Parts Income = $100.00
Billing Income = $50.00
Labor Income = $350.00
Hint: To cap only labor, make the parts and billing cap amounts zero. To cap only parts, make the parts cap amount equal to the total cap amount.

Flat Rate All – If you want to flat rate the entire operation code, then put a check mark in this box. That would mean that all charges added to the operation codewould be flat rated according to the rate amount entered.

Flat Rate Amount- Enter a Flat Rate/Cap Amount for this operation. For example, if you charge a flat rate amount of $49.95 for an oil change; you would enter $49.95 in this field. If this is a per foot flat rate, leave this field empty.

If you entered a method of (C)apped for this operation, enter the Cap Amount.

Enter a Parts Cap Amount in the grid to the right if you entered a method of (C)apped for this operation and you want to place a monetary cap on parts added to this operation.

For example, if you set a total cap of $100.00 and a parts cap of $70.00, then labor will be capped at $30.00 (total cap - parts cap). Hint: To cap only parts make the parts cap amount equal to the total cap amount.

Enter a Billing Cap Amount in the grid to the right if you entered a method of (C)apped for this operation and you want to place a monetary cap on billing charges added to this operation.

For example, if you set a total cap of $100.00, a parts cap of $40.00, and a billing cap of $20.00, then labor will be capped at $40.00 (total cap - parts cap- billing cap). Hint: To cap only billing charges, make the billing cap amount equal to the total cap amount.

Per Foot Rate- Enter a Per Foot Rate to have the flat rate amount calculated on a per foot basis based on the length of the boat or length of spar (mast). Note: You will be required to enter the basis of your per foot calculation in the next field.

Per Foot By- Enter the basis of the per foot calculation. Choices are Length Overall, Length at the Waterline, Foot of Spar, or Area (Length overall x beam).