Edition: Business, Enterprise
User-level: Director, System Administrator
Synergy has a default set of standard financial settings which are used for calculation controls in the project financials reporting. It is important to set up your company's own financial controls at the start of using Synergy to achieve accurate project reporting. Consider seeking advice from an accountant when determining the figures to be used in financial controls.
Updating financial controls
From Side Navigation, click your organisation > Organisation Settings > Financial > Financial controls
Click 'Update Financial Controls'
Enter the organisation wide financial controls
Hours per week - The standard number of hours per week that staff are expected to be working.
Target Margin: The target margin is the profit goal above break-even, accounting for overhead and costs. It also calculates a standard cost by subtracting the target margin from the charge-out rate.
Superannuation: The standard retirement fund percentage for new staff. e.g. Percentage for a Superannuation fund (Aus), Kiwi Saver (NZ) and on-costs (USA).
Availability factor: The percentage of time each staff member is available to be in the office, less any annual/holiday leave, public holidays, medical/sick leave, and any other leave types that apply.
Utilisation factor: The percentage of time a staff member should be working on billable tasks.
Overhead factor The overhead factor is used to show by what factor do the 'costs' have to be uplifted by in order to recover the organisation overheads such as office,
Effective from date: The effective date is the start date for when these new financial controls rules will be applied in Synergy. Type the required effective date or select it from the drop-down calendar shown.
Select Save.
You have now set your organisation's financial controls - make sure to adjust them at the staff member level if necessary
Overhead Calculations
The overhead factor determines the markup needed to cover business overheads.
Organisation overhead factors should be reviewed every six to twelve months. Updating the factor automatically adjusts all staff actual costs and standard charge-out rates per hour.
Calculate the cost of billable work. Formula : (Package $ x Utilisation %) = Cost of billable work
To do this, you can create a spreadsheet including the staff name, their package (salary per year + extras + retirement / pension fund) and their utilisation target. You can use this to multiply the package by the utilisation percent.
The utilisation percentage varies for each staff member depending on the type of work they perform. For example, Billy-Bob is set to 0% utilisation as an administrative staff member who does not undertake billable work. Other staff may also have lower utilisation percentages if they spend time on internal tasks alongside billable work. For example:
Calculating the overhead factor. Formula: 'annual practice costs' / 'annual total cost for staff billable work'.
Two figures are required to calculate the overhead factor. The first figure is the 'annual practice cost (excluding profit)' and this cost is normally obtained from your accountant. This value includes all staff salary package values (utilised and non-utilised staff salaries - all staff), and costs for operating an office like rent, phones, computers, insurances etc.
The accountant will obtain this value from the profit and loss statement, and the value represents "total expense for the practice - any expense reimbursable from clients". This means that any expenses that are on-charged to clients via the projects are excluded from the overall running costs of the business, as you will recover the money for these expenses via the project invoicing in Synergy.
Example
Annual Practice costs - $2,000,000
Annual total cost for staff billable work - $791,453.73
Practice Overhead = 2.53
How overhead impacts staff costs
Staff 'Jill Lockhart' costs = $30 per hour
Organisation overhead factor = 2.53
Minimum charge out for Jill Lockhart (without profit markup) = $75.90
$30 x 2.53 = $75.90
The actual cost in projects
When Jill is charged out at $90 per hour, an actual profit of $14.10 is recorded per hour against the project. ($90 - $75.90 = $14.10 profit)
If a transaction for Jill is written off, then there will be a loss recorded of $75.90 against the project.
*This feature is available with the Synergy Business or Enterprise products. *
Availability factor calculation
The availability factor should be set for most staff in the financial control settings. It can be adjusted individually in each staff member’s profile during setup.
Determine each staff member’s total leave weeks per year, including annual leave, public holidays, sick leave, and office closures.
Subtract the total leave weeks from the total weeks in a year to get the number of weeks available.
Calculate the availability factor using: (Weeks available ÷ Total weeks) × 100. As seen below.
This is then the default availability to be applied to new full time or equivalent (FTE) staff records that are created in Synergy.
Rollback your financial controls
Rollback is used to restore a previous set of financial control rules, which are controlled by the effective date field. This allows you to restore a previous set of organization-wide financial controls, when changes to the 'overhead factor' or 'target margin' have been made by mistake.
Go to side navigation > organisation name > organisation settings > financial > financial controls
To roll back click the ellipses button to the right of the financial controls > select rollback.
The fields at the top of the screen are refreshed to show the old settings reapplied. The changes are made to re-apply the old history row to both the staff and organisation-wide settings.