billing of hourly techs

[btk]

I am discussing cost of sales and billing issues with current service manager and I have a question for the group.

They bill out the hourly techs based on actual time spent on job-this is done electronically through ADP payroll integration. I do not agree with this costing for a few reasons. Your cost changes all the time based on how long that techncian takes to do a certain job and it also lowers your unapplied labor, giving you the appearance of higher productivity of the hourly techs.
It would seem to me the correct way to do this would be if the job pays an hour the hourly tech gets paid an hour regardless of how long it takes. Then the difference between actual clock hours here and his produced or flagged time get charged to unapplied labor.

Would like to hear if anyone sees this different then I do.

[DealerProfit]

btk,

Your method is the ONLY correct method.

[Old Irish]

Excuse my dull wittedness but I am a bit confused.

Are you talking about flat rate techs or techs paid by clock hours ?

Cheers
DD

[svrmrg]

My hourly tech (pdi, and lube techs) are flagged the flat rate standard. As stated above the time remaining is applied to unapplied labor. This is the same way a guarantee is handled.

[robc]

Lot's of varations, to which your situation of using clock time is probably the lesser used.

More common would be to flag as if a flat rate and then book unbilled time as unapplied labor or a labor adjustment.

Some shops will show no cost on the RO and put all the amounts as an adjustment to labor.

Since all strive to get the actual gross profit number correct on the Doc and financial statement (and not necessarily the individual ROs), I guess it is players choice. I would lean towards treating hourly techs as flat raters (and adjust for non-billable time) because someday they are going to be and we need to have an honest track record of their performance.

== Rob ==

[This message has been edited by robc (edited 11-29-2007).]

[DealerProfit]

robc,
zero costing the RO and taking it all to unapplied would get the overall gross retention number accurate no the statement, but not the individual accounts. It also limits the ability to look at profit performance per labor operation......

[robc]

Exactly - isn't that what I said?