Record additional payroll costs in construction projects

Overview

Utilize payroll adjustments to capture performance payroll costs in your projects and ensure accurate margins.

Things to know

• A technician's pay type determines the payroll earnings seen in reporting and job costing. Since payroll adjustments are a form of performance pay, set your technicians to the Both pay type so their timesheets and performance pay are seen in reporting and job costing.

• Payroll adjustments have five different types. For construction customers, Direct payroll adjustments are best practice as they do not have associated calculations.

Use Cases

• Use payroll adjustments to make positive and negative corrections to an employee's payroll. You can create adjustments on an invoice to accurately track job costing or add adjustments directly to an employee's payroll.

• You can use payroll adjustments to account for labor activities outside of ServiceTitan that you want to include when calculating job costing.

Why payroll adjustments?

Construction and production homebuilding customers on ServiceTitan use payroll adjustments to capture and record performance payroll earnings in their projects as it ensures accurate job costing and precise project margins as a result. Due to the unique nature and timeline of construction projects, it is often the case that performance payroll automation can not take place in the same payroll period, making payroll adjustments the vehicle of choice for construction contractors to record their performance payroll costs.

There are multiple ways to add payroll adjustments to ServiceTitan and each area has its own benefits.

The ways to add payroll adjustments are:

• To an invoice

• To an employee,

• Either option through a bulk upload

Referencing the table above, the best place for construction customers to add payroll adjustments for their projects is on the invoices associated with their projects. This ensures that the payroll adjustment cost is included in the project's job costing and that the payroll adjustment is seen in payroll reporting.

Applying payroll adjustments to job invoices compared to non-job project invoices

Within the context of construction workflows, it is best practice to associate the payroll adjustment with a job invoice rather than an application for payment invoice. By linking the payroll adjustment to a job invoice that is associated with a project, you can use the project labels on the section for technician splits to categorize any expenses for the project's Budget vs Actual table. Additionally, a job invoice has a job costing flyout whereas an application for payment invoice or project invoice does not because there is no job associated with either an application for payment invoice or project invoice

Tip: Add payroll adjustments to job invoices that are associated with your projects. This way, you can view the payroll adjustment's impact on the job's job costing flyout and categorize the payroll adjustment's cost with a project label in the Adjust Splits section on the invoice page.

Use reporting to identify payroll adjustment opportunities

Prior to adding the payroll adjustment into your account, you may need to use reporting to identify instances where commission or additional earnings need to be reflected in ServiceTitan.

Revenue example

A common example for construction customers involves installing technicians' performance pay throughout a months-long project. In construction workflows job invoices are primarily used to capture costs and material consumption, meaning that there are no revenue items on the job's invoice which can stop payroll automation from taking place. In cases such as this, customers leverage reporting options such as the Job Costing summary report because the report provides insight into the jobs individual costs while providing the foundation to group the data by the project number to view multiple jobs by project number simultaneously.

By adding KPIs to the report such as Project Number, Labor Pay, and Total Hours Worked you can easily see a breakdown of project-related jobs, the amount of hourly gross pay the system generated, and all hours worked across all appointments for the project-related jobs. This provides the necessary information to facilitate bulk payroll adjustments for any additional payroll costs you want to have reflected in ServiceTitan and your project's margin.

Note: Editing custom reports is available in the ServiceTitan Works package.

Tip: You can group reporting data by dragging a column into the purple bar. In the screenshot above, the data has been grouped by Project Number.

Note: Underlined data in reporting signifies that the data can be further examined and broken down by clicking into the cell. This is referred to as drill-down data. In the screenshot above, you can drill-down into the total technician paid time to see a breakdown of time across appointments.

Sales example

Another example for construction customers involves sales commissions. For sales commissions you can create custom reports or use pre-built reporting options such as the Opportunity and Estimate Follow Up report. This report can be used to identify sold project estimates and opportunities because the report uses the Estimates dataset. To run the report to identify sold estimates:

1. Go to the navigation bar and click Reports.

2. Search for and click the Opportunity and Estimate Follow Up report. 

3. Click the Date Type dropdown to select Sold On. The Sold On date is the date the estimate was sold. By running the report on the Sold On date, the data will reflect only the estimates that have been sold because unsold estimates do not have a Sold On date. 

4. Click the From - To field to set date filters. Since you are running the report by the Sold On date, the From - To fields will include and isolate estimates that have a sold on date within the From - To dates.

5. Click the Business Unit dropdown and select the business units (BUs) you want to report on. By default, the report runs for all BUs. You can filter your report by your construction business unit to further isolate your sold construction estimates.

6. When you're finished setting your filters, click Run Report. 

7. With the results loaded, you'll see only sold estimates under the selected business unit. In this example, we know this is a construction opportunity because it is within the construction business unit and because the parent job number is null, indicating that the estimate was made on a customer or location record instead of a job record.        

   Once you have identified opportunities where sales commission needs to be included in ServiceTitan, the next step is to add the payroll adjustment to an invoice associated with the project.

Add a payroll adjustment to a project invoice

1. Search for the project you want to add the adjustment to then open the project.

2. On the project's left-hand navigation click into the Financials tab and scroll to the invoices section. 

3. Click the row to open the invoice that you would like to add a payroll adjustment to.        

   Note: Invoices that are connected to Applications for Payment display a number in the App. for Pmt # column. Invoices from jobs will have a job number shown in the Job # column.

            

   Tip: By adding the payroll adjustment to a job invoice associated with the project, you can use the Adjust Splits section on the invoice to categorize the payroll adjustment amount with a project label.

4. On the invoice screen, click Add a payroll adjustment. 

5. Enter the payroll adjustment information:        

   1. Employee—Name of employee receiving the adjustment

   2. Type—Select one of the following:                

      1. Direct—Adjustment is directly earned by the employee                        

         Note: This is the most common type of payroll adjustment and best practice for construction customers. If you use Configurable Payroll, you can only add direct payroll adjustments.

      2. Commission Base—Adjustment is based on the technician's commission rate. For example, if the adjustment amount is $200 and the technician has a 10% commission rate in his payroll settings, the technician receives $20.                        

         Note: The commissionable base is reduced by the adjustment amount for other technicians on the invoice.

      3. Labor—For contractors and laborers. Counts as a cost on the invoice, reducing the commissionable base.

      4. Advance—When technician is paid before the job is added to payroll. Amount is deducted from the technician's gross pay when the job is included in payroll reports.

      5. Sold Advance—When technician receives Sold by credit and is paid before the job is added to payroll. The sold by percentage is applied to the adjustment amount. The total is deducted from the technician's gross pay when the job is included in payroll reports.

   3. Posted On—Date you want the payroll adjustment to show as posted                

      Note: The commissionable base is reduced by the adjustment amount for other technicians on the invoice.

   4. Rate—Base amount of the payroll adjustment                 

      Tip: To make a payroll deduction, enter a negative value.

   5. Quantity—Amount to multiply the Rate by                

      Note: For typical payroll workflows, enter 1.

   6. Amount—Payroll adjustment as calculated by Rate * Quantity                

      Note: You can view the net total of a commission base payroll adjustment in the Payroll Detail report.

   7. Memo—Details or notes about the adjustment

6. When you're finished, click Save.

The saved adjustment appears in the Payroll Adjustments section of the invoice.

Create payroll adjustments in bulk

You can make bulk payroll adjustments to make wage corrections or to account for paid activities outside of ServiceTitan when calculating job costing. The Payroll Adjustment Template allows you to make adjustments for multiple employees and pay periods at once, saving you time.

Download the template

To upload payroll adjustments in bulk you will first need to download the payroll adjustment template.

1. Go to the navigation bar and click Settings.

2. In the side panel, go to Tools > Import / Export Data. Import or Export Data opens.

3. From the Import tab, click the Data File Type dropdown and select Payroll Adjustment Template. 

4. Click Export Template. 

5. The template downloads as an XLSX file to your computer. 

Note: If you use earnings codes, the Payroll Adjustment Template includes a column to enter earnings code names. Use the PayrollActivityCodeNameReference tab for a list of earnings codes. The earnings code feature requires account configuration, please contact your success or implementation manager for details.

Fill out the template

With the payroll adjustment template downloaded you can begin to fill out the template.

1. Open the Payroll Adjustment Template in a spreadsheet application like Microsoft Excel or Google Sheets.        

   Note: The spreadsheet includes two tabs: PayrollAdjustment and idNameReference. Enter all adjustments in the PayrollAdjustment tab. Use the idNameReference tab to find employee names and ID numbers.

        

2. Enter the payroll adjustment details into the spreadsheet columns:        

   • EmployeeId—Employee identification number                

     Tip: Click the idNameReference tab in the spreadsheet for a list of employee IDs.

   • EmployeeName—Name of the technician or office employee receiving the adjustment

   • InvoiceNumber—If the adjustment is tied to an invoice, enter the invoice number

   • Type—Enter one of the following:

   • Direct—Adjustment is directly earned by the employee                

     Note: This is the most common type of payroll adjustment and best practice for construction. If you use Configurable Payroll, you can only add direct payroll adjustments.

   • PostedOn—Date you want the payroll adjustment to show as posted

   • Rate—Base amount of the payroll adjustment                

     Tip: To make a payroll deduction, enter a negative value.

   • Quantity—Amount to multiply the Rate by                

     Note: For typical payroll workflows, enter 1.

   • Memo—Details or notes about the adjustment 

3. Save the spreadsheet to your computer as an XLSX file.

Import Template

With the payroll adjustment template filled out and saved, you can now upload it back into ServiceTitan and increase operational efficiency by taking bulk actions.

1. Go to the navigation bar and click Settings .

2. In the side panel, go to Tools > Import / Export Data. Import or Export Data opens.

3. From the Import tab, click the Data File Type dropdown and select Payroll Adjustment Template. 

4. Click Upload. 

5. Select the XLSX file from your computer. 

6. Click Import. 

A notification appears indicating that the import was successful.

By following the workflow of adding payroll adjustments to your projects you increase visibility into additional costs that may exist outside of ServiceTitan and maintain more accurate profitability insights inside your account as a result.

Want to learn more?

• See Use project status alerts

• See Upload and edit estimates to use as templates for project management projects

• See Use service tasks to budget for varying labor types and costs