How to Set up Contractors in WorkflowMax

During an implementation of WorkflowMax we frequently come across the question of how to treat contractors. The objective of this article is to give you the skills to set yours up correctly and avoid some of the more common faults we come across.

If you haven’t already done so make sure you read the precursor to this helpful how-to here. It will provide you with the the information you’ll need to correctly set up your contractors in WorkflowMax.

From here there are three options:
1) Contractor as Staff only (paid via payroll)
2) Contractor as Supplier only (paid via accounts payable)
3) Contractor as Staff and Supplier (paid via accounts payable)

1) Contractor as Staff (paid via payroll)
Using this method a contractor is only a contractor to you by legal relationship. The way they use WorkflowMax, the policies they are bound by and the way they are managed is no different to any other employee. We see this most often where the contractor is long term and ‘one of the team’, you’re paying them by payroll based on an agreed rate probably with Withholding Tax deducted.

To set his up correctly simply add the contractor as a staff member using an email address on your domain or theirs. Use their agreed cost rate and billable rate and the same access as your other staff members. It’s important that they are treated ‘as one of the team’ and complete Timesheets on the same frequency as the rest of your staff. It’s also important they have the same access to training and support as other staff as they will likely have the same questions. We have more advice about providing appropriate levels of support for your implementation here.

2) Contractor as Supplier only (paid via accounts payable)
This scenario is more traditional and treats your contractor as a supplier and pays them based on their invoice (with accompanying documentation as required). Under this method your contractor does not receive a login and is not added to the staff section of WorkflowMax. You will be issuing them Purchase Orders for the value of the work you want them to do for you. They will need to invoice you either an itemised invoice with a subtotal by job or an invoice for each job. You will need to enter these as Purchase Orders and receipt them to automatically create an accounts payable in your Xero.

The benefit of this is that they require no training other than letting them know that they can expect to receive a Purchase Order number/document for future work you request from them that they need to reference on their invoice. For advice about setting these contractors up correctly and communicating the change with them ask an expert.

3) Contractor as Staff and Supplier (paid via accounts payable)
This is the most complex but most accurate of the three methods as you get both the benefit of a single point of entry, your contractors benefit from a free and convenient timesheeting system, and you receive timely financial reporting via completed Timesheets. If you have ever found yourself delaying sending customer invoices waiting on contractor invoices this is the method for you.

To set this up correctly firstly add these contractors as staff using an email address on your domain or their domain. Importantly set the base rate here as $0.00 and enter the rate you charge them out as in the billable rate box. If you dont on-charge their time enter this as the cost rate to you. This will let you see the value of their time incurred against a job before they send you an invoice. Leave all the permissions boxes unticked to allow them to complete Timesheets for their jobs only. Step two is to set them up as a supplier complete with their billing details. Step three is to have them complete their Timesheets on the same frequency all other staff do. Issue them a purchase order for any work you ask them to do and receipt that purchase order as they invoice you. For advice setting these type of contractors up get in touch with an expert.

It is not uncommon to see a combination of the above three methods used in the same business. The method you choose will impact the speed and reliability of your customer invoicing and financial reporting. To make sure you get it right for your business talk to us.

If you’d like to discuss which option to apply to a staff member in your team you can email us the nature of the arrangement or book a chat.

What our fans say

I found working with Will extremely productive. We had been using WorkflowMax for several years but Will’s input and the online training course provided us with insights into areas we hadn’t previously fully explored. In particular, we now have a range of invoice templates that suit different situations. I’d highly recommend working with Will and the team at Link Academy to get the best out of your investment into WorkflowMax.
Mark Presnell - Convergence
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