You can use ContactsLaw to report overheads associated with workgroups and/or members. These can then be compared with sales in order to assess the profitability of an organisational unit.
Figures for overheads are dervied from several sources:
- Calculated overheads (such as salaries and superannuation)
- Nominated expense accounts (apportioned by workgroup)
- Arbitrary overheads (applied to each member on a conditional basis)
Similarly, figures for sales may come from:
- Calculated sales figures (determined by bills)
- Nominated income accounts (apportioned by workgroup)
Reports can be generated for a specific month, quarter or financial year. Note that it is not possible to report on a arbitrary date range as figures are only accurate to the nearest whole month.
Overheads reports are available from the Workgroups tab and Members tab of The Practice, as well as a dedicated Overheads tab under each workgroup/department.
Prerequisites for reporting overheads
In order to produce meaningful reports, overheads must be configured and budgets/targets for relevant accounts and KPIs must be entered:
- Assign members to categories or groups as appropriate
- Identify income/expense accounts to include in overheads reports
- Set budgets for income and expense accounts
- Set targets for sales at the workgroup and member levels
- Identify arbitrary overheads for members and enter amounts
- Apportion members to workgroups (percentage worked)
- Apportion income/expense accounts to workgroups (percentage incurred)
All proportions and budgets are stored as date-dependant settings, meaning that ContactsLaw maintains a full history of changes and when they take effect. This does, however, mean that you cannot back-enter figures for an earlier period (without first deleting any latter figures). Therefore, figures must be entered in chronological order, starting from the earliest date for which you wish to report overheads.
Where accounts/members are apportioned across workgroups, percentages should add up to 100. If proportions are not supplied for a member or account, that item will not contribute towards the total.
Calculated overheads
ContactsLaw will automatically include overheads obtained from payroll; i.e. salaries and superannuation. These figures will be grouped under the corresponding controlled accounts. These figures implicitly break down on a per-member basis, but when reporting on a per-workgroup basis ContactsLaw will use the proportions configured for each member (percentage worked in each area).
The budget figures for salaries and superannation are calculated using the payroll settings and normal hours worked for each member. Again, the configured proportions are used when reporting on a per-workgroup basis.
Nominated expense accounts
Where it is possible to apportion specific expenses to one or more workgroups, you can nominate expense accounts to include in the overheads report. ContactsLaw will include the activity on those accounts (excluding the
end of financial year rollover). The configured proportions are used to report on a per-workgroup basis. To report on a per-member basis, ContactsLaw uses configured proportions to determine the relative weights of each member.
The budget figures for nominated expense accounts are derived from the general account budgets. These are apportioned to workgroups and members in the same manner described above.
Arbitrary overheads
It is not always possible to apportion expenses to specific workgroups (e.g. insurance for staff). As an alternative, you can arbitrarily define overheads that will be applied to each member (or a subset of members based on categories and groups). For each active member included in overheads reports, ContactsLaw will apply the nominated monthly figure. When reporting on a per-workgroup basis, the relative weights for each member will be calculated; such that members who spend the most of their time working in that area incur the greatest proportion of the overhead.
The budget figures for these overheads simply match the actual figures for the period (i.e. the variance will always be zero).
Calculated sales
ContactsLaw will automatically include sales figures obtained from bills. These figures will be grouped under the corresponding accounts for professional fees, fixed charges, products billed upfront, interest, etc. These are implicitly broken down by member, with the file manager receiving credit for any amounts not allocated to a specific fee earner. These figures also implicitly break down by workgroup, so the configured proportions have no effect here.
The budget figures for sales are taken from the sales performance targets for each member. When reporting on a per-workgroup basis, the targets for each workgroup are used. When reporting on both, the configured proportions are used to further break down the member targets. Since the sales KPI is an aggregate of several accounts, budgets will only appear beside the total sales (with N/A displayed beside each account that contributes towards the figure).
Nominated income accounts
For any income not derived from bills that is to be apportioned to members/workgroups, you can nominate income accounts to include in the overheads report. ContactsLaw will include the activity on those accounts. The configured proportions are used to report on a per-workgroup basis, with the relative weights of each member being used to report on a per-member basis.
The budget figures for nominated income accounts are derived from the general account budgets, apportioned using the configured proportions as above.