Description
FastTrack360 now supports the ability to assign payment terms to a contractor so that the payment of their timesheets can be deferred until the payment terms due date, as calculated by the system based on the applicable payment terms, has been reached.
Normally an interpreted timesheet is included in a pay batch if the timesheet end date falls within the date range of the current (open) pay period or, for adjustment pays, the date range of the adjustment period. If a timesheet is subject to payment terms, the timesheet will only be included in a pay batch if:
the payment terms due date falls within the current period of the pay batch - for all payroll countries except the United Kingdom
the payment terms due date falls on or after the start date of the current period of the pay batch but before the current period normal pay date - for the United Kingdom only.
The current period normal pay date is the predefined payment date for the corresponding pay period, as defined in Pay Group Maintenance.
For example, consider a scenario where the pay period cycle is weekly, a timesheet is for the work period 13/02/2022 - 19/02/2022 and the payment terms apply a payment offset of 28 days from the pay period end date. In that scenario, the payment terms due date would be 19/03/2022 (i.e. 28 days after 13/02/2022) and therefore the timesheet will not be paid until the period 13/03/2022 - 19/03/2022.
A timesheet that is subject to payment terms is never paid in the current period to which the timesheet corresponds based on its timesheet end date and therefore the timesheet can only be paid in:
an adjustment pay batch for the adjustment period into which the timesheet end date falls
a normal pay batch for a pay group that has the Include Prior Period Timesheets in Current Period option enabled (for more information, see Including Prior Period Timesheets in Pay Batches).
In either case, the timesheet will not be included in the pay batch unless the payment terms dues date is within the current (open) pay period or, for the United Kingdom, on or after the pay period start date but before the normal pay date of the current pay period.
To help identify the periods in which such timesheets are due to be paid a new report called Contractor Payment Terms Due Date is available. For more information, see Contractor Payment Terms Due Date Report.
Contractor payment terms apply only to payees who have a tax type of Contractor (for all countries except Australia) or Company (for Australia only).
A proforma remittance can be generated and issued to the contractor when their timesheet is approved and has undergone interpretation as an interim indication of what the contractor will be paid once the payment terms due date is reached and the timesheet is paid. For more information, see Issuing Proforma Remittance Advice.
When you create an adjustment pay batch the Payroll > Pay Process > Pay Batch > Create Batch screen lists the number of timesheets that are available to be paid for each respective adjustment period that is available for pay group that you select.
The timesheet count shown for each adjustment period on the Create Batch screen does not include timesheets that are subject to payment terms and will be paid in the corresponding adjustment period due to the payment terms falling due.
Benefits
This enhancement allows payment to a contractor to be deferred until after the client, to whom the contractor has provided services, has paid the invoice for the service that were provided.
Configuration
Before payment terms can be applies to contractors, the different variations of pay terms that can apply must be configured under Maintenance > Terms Maintenance. For more information about how to configure the pay terms, see Terms Maintenance.
Once the required pay terms have been configured in Terms Maintenance, they can be assigned to contractors by selecting the relevant pay terms in the Contractor Payment Terms field in the Contractor/Company Tax Details section of the Payroll > Payee > Payee Entry screen, as shown in the example below.
The contractor/company tax details on a Payee record are subject to validity periods. Therefore, if payment terms are to be assigned to an existing contractor who has already been paid, a new validity period must be created before the payment terms can be assigned and the payment terms will only take effect from the start of the new validity period.
Once the required pay terms have been configured in Terms Maintenance, they can also be applied as a pay company default so that when new Payee records are added for contractors, the relevant payment terms can be defaulted based on the pay company default settings.
To define the default contractor payment terms in the pay company default settings, select the relevant payment terms in the Contractor Payment Terms field on the Payroll > Maintenance > Pay Company > Edit Pay Company > Default Settings screen, as shown in the example below.
