Time & material – Prepaid hours

For knowledge companies and, in particular, the IT industry, we offer a Prepaid hours contract. The customer purchases a pool of hours at a discount. The customer then spends some or all of these hours (like a voucher) on projects he needs carried out and then buys a new pool of hours, if needed.

There are a number of challenges with this type of contract:

• The customer wants to use certain parts of the prepaid hours for a project.
• The customer requires senior and junior services, which are priced fundamentally.
• The customer wants to pay for travel expenses using the prepaid hours.
• The supplier ends up spending more hours than purchased and must ask the customer for new hours afterwards.
• The auditor requests reports on work in progress based on these prepaid hours contracts.
• The customer wants a monthly report on the remaining amount of prepaid hours.

Although these contracts indicate the use of hours, financially speaking it is just a prepayment which is depreciated as the debt to the customer is settled.

In TimeLog
In TimeLog, the Prepaid hours contract covers this scenario. TimeLog regards prepaid hours as an advance invoicing of an amount – not hours as such.

Prepaid-hour contracts can be based on fixed hourly rates or variable hourly rates. For fixed hourly rates, the number of hours on the contract are closely tied to its monetary budget. If not, the hourly rate for each allocation determines the amount of money deducted from the prepaid hours per registered hour.

Like all other types of contract, the user can configure it to send an email if a certain percentage of the total contract amount is exceeded. This is useful in case you want to inform the customer before expiration and sell additional hours.