VMS Fee Calculations in 1Staff
1Staff has focused on customer needs for a more flexible approach to calculating Vendor Management Software (VMS) fees. These fees are seen as a reduction fee applied to their Total Bill Amount. The VMS Fee functionality came about to allow 1Staff customers to track the effects of VMS Fees on gross margins and ensure a smooth receivable cash apply process, amongst other customer needs.
Previous Calculation Methods
In the past, 1Staff only offered one specific way of calculating the VMS fee. The VMS Expense Percentage was applied after the tax calculations. Though this method of calculating the VMS fee fit some customers, others wanted more flexibility. Some 1Staff customers tracked the VMS Fee calculation by reducing the bill amount on the assignment. Reducing the bill amount rather than tracking the actual VMS expense has a few drawbacks including:
- The inability for the staffing agency to properly track the actual VMS expense
- Revenue Miscalculation (With a bill amount of $100 and a $2 VMS fee, should the actual generated revenue be $98 or $100?)
- If a VMS Fee does change the staffing company would need to edit the bill rate on every assignment rather than changing a single VMS Fee ID
Four New Options for Calculating VMS Fees
Thankfully, these drawbacks can be avoided in newer versions of 1Staff which provide staffing firms four options for calculating their VMS Fee:
- Fee + Tax – Discount
- Fee + Tax
- Fee – Discount
- Fee
The VMS fee will be correctly applied to the customer invoice and will match the cash received on that invoice. It can also be tracked in a GL account to include in financial statements or includes in SmartLists or 1Staff Analytics for more detailed gross margin reporting.
VMS = Vendor Management Software
VMS Fee = From a Customer perspective, the VMS Fee, is seen as a reduction fee applied to their Total Bill Amount
VMS Expense = From the Staffing Agency perspective, the VMS expense is an expense which reduces the Staffing Agency gross margin
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