We are the Facility Management Services, My question is while preparing the Invoice to our contractor should our Management Fee includes Total Mandays cost + overtime cost. i.e Management Fee 10% on total cost ( Mandays + OT). OR Management Fee 10% on total Cost (Mandays) excluding OT.
From India, Chennai
From India, Chennai
Dear Mr. Nagrajan R,
The payment to workmen (Wages for 30 days+ OT +Employer PF + Eployer ESI +Bonus+ Leave Encashment + Uniform and other consumables) are actual. All the above are to be paid to you to the workmen on receipt from your client. Therefore, you have left with no income for your establishment.
Thereby you decide what should be your service charge to make the establishment sustainable. It can be X amount on each unit of the manpower supplied by you. And to charge separately in Invoice.
From India, Mumbai
535The payment to workmen (Wages for 30 days+ OT +Employer PF + Eployer ESI +Bonus+ Leave Encashment + Uniform and other consumables) are actual. All the above are to be paid to you to the workmen on receipt from your client. Therefore, you have left with no income for your establishment.
Thereby you decide what should be your service charge to make the establishment sustainable. It can be X amount on each unit of the manpower supplied by you. And to charge separately in Invoice.
From India, Mumbai
The computation of management fees depends on the contract you have signed.
However, if you take the management fees on the standard cost, you will lose out in terms of additional billing
Also remember that you are using working capital to sustain the payments and overtime means you need to use additional working capital. That carries a cost in terms of interest or lost opportunity cost which you should be able to recover
Another point to be remembered, some companies deduct TDS of 2% on contractor bills, so you will lose 2% of OT also. if your management fees excludes OT, then you may have a cash flow problem because the refund of TDS will come to you 18 months or so down the line
Further, the fact that the workers are doing overtime also means that you are being asked to deploy lesser number of workers. if you were putting additional workers instead of paying overtime, then your billing would be higher anyway, so that is another justification for following the COST + OT method.
From India, Mumbai
However, if you take the management fees on the standard cost, you will lose out in terms of additional billing
Also remember that you are using working capital to sustain the payments and overtime means you need to use additional working capital. That carries a cost in terms of interest or lost opportunity cost which you should be able to recover
Another point to be remembered, some companies deduct TDS of 2% on contractor bills, so you will lose 2% of OT also. if your management fees excludes OT, then you may have a cash flow problem because the refund of TDS will come to you 18 months or so down the line
Further, the fact that the workers are doing overtime also means that you are being asked to deploy lesser number of workers. if you were putting additional workers instead of paying overtime, then your billing would be higher anyway, so that is another justification for following the COST + OT method.
From India, Mumbai
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