Considering the intricacies of doing business in the world today, it’s probably not surprising that SAP Fieldglass identifies 15 different methods of determining a final bill rate. These methods are called Rate Types.
Rate Types define the different approaches to determining the final bill rate, based upon particular business drivers. It is required that you select a rate type when creating a rate in SAP Fieldglass.
To help explain why there are so many rate types we’ll concentrate for the moment on just three of them:
- The Rate,
- Bill Rate Based, and
- Pay Rate Based.
The Rate Rate
The Rate rate type is, well, the rate!
It’s sort of the "what-you-see-is-what-you-get" rate used by Buyers who don’t need to see the Supplier’s fees or Worker’s wages that ultimately make up the final Bill Rate.
So since it doesn’t contain any rate components, the Supplier’s rate of 100 equals the 100 Bill Rate presented to the Buyer.
For instance, in a job posting WorkingNet may simply set a maximum rate that they will pay the supplier for Joe, and reCrewIt then presents that rate as the final Bill Rate as agreed.
In this case, WorkingNet has chosen not to capture the Pay Rate or any applicable Rate Components in the SAP Fieldglass application.
With the basic Rate rate type, the Pay Rate equals the Bill Rate.
The Bill Rate Based Rate
With Bill Rate Based, the Buyer is given insights into how the Supplier arrives at a Pay Rate from a negotiated Bill Rate.
So the final Bill Rate is static, but the Rate Components are visible, showing how the rate is allocated, and what the resulting Pay Rate will be.
For example, reCrewIT has negotiated that WorkingNet will be billed a rate of 100, with 80 promised to Joe and the remaining 20 comprising reCrewIT’s fee.
This allows WorkingNet visibility into reCrewIT’s costs and determine whether the final bill rate has been arrived at fairly.
With the Bill Rate Based rate, the Bill Rate is determined first and the Pay Rate and Rate Components are derived from it.
The Pay Rate Based Rate
Pay Rate Based results from a negotiated Pay Rate, so the Bill Rate is variable, based upon the Pay Rate plus the Rate Components. Again, this shows how the components are allocated, but specifies up front how much is to be allocated to the worker’s pay.
So in this case, WorkingNet and reCrewIT have negotiated that Joe will be paid 80. The remaining amount will be reCrewIT’s fee. Based on this approach, the final bill rate can change based upon reCrewIT’s fee.
Several countries dictate that worker pay be a static amount, so this approach is often the result of regional regulations.
With the Pay Rate Based rate, the Pay Rate is defined first, and the Bill Rate is derived from it plus any Rate Components.