How costs are calculated

This page explains how Flowstate turns salaries, rates and time into cost. It's the only page that gives the formulas, so start here if a number on screen isn't what you expected.

Flowstate works out cost in two ways:

• The forecast is what people are planned to cost, from their salaries, rates and allocations to teams and projects.
• Actuals are what the work people reported cost, from their effort (a percentage of each day) and their salary or rate on that day.

Both start from the same day rate, then spread it differently. See Why the forecast and actuals can differ.

The day rate

Every cost starts as the cost of one working day.

Who	Day rate
Employee	annual salary ÷ 260 × (1 + overhead % ÷ 100)
Contractor, hourly rate	hourly rate × 8
Contractor, daily rate	daily rate
Contractor, monthly rate	monthly rate × 12 ÷ 260
Contractor, annual rate	annual rate ÷ 260
Vacancy	salary ÷ 260 × (1 + overhead % ÷ 100)

• 260 working days a year (52 weeks × 5 days) applies to everyone. Where a person is based, and their country's public holidays, don't change their day rate.
• Overhead is the extra employer cost on top of salary. It comes from the person's or vacancy's resource type, as a percentage: 20 means 20%. No resource type means no overhead. Contractors never carry overhead.
• Pay changes apply from their date. Flowstate uses the salary or rate in effect on each date, so a raise counts from its effective date onwards. Days before someone's first salary record use that first salary.
• No salary means no cost. An employee with no salary, or a contractor with no rate, costs nothing.
• Effort is never in hours. The only place hours appear is turning an hourly contractor rate into a day rate.

Exchange rates

Salaries, rates and bonuses in other currencies are converted to your reporting currency before anything else.

• Salaries and contractor rates use the latest rate that's in effect today. That one rate is used for every month, past and future, in both the forecast and actuals. So adding a new rate changes past months too.
• Bonuses use the latest rate in effect on the bonus date.
• Rates work one way. Flowstate looks for a rate from the salary's currency to your reporting currency.
• A currency with no rate isn't converted. Its amounts are counted as if they were already in your reporting currency. For example, a salary of 50,000 euros with no euro rate counts as 50,000 in your reporting currency. Add rates before you rely on totals that include other currencies.

Add rates in Organisation basics.

The forecast

One allocation in one month

For each person's allocation to a team or project, for each calendar month:

cost = FTE × day rate × 260 ÷ 12 × (days the allocation covers in the month ÷ days in the month)

• A full month at 1.0 FTE costs the annual salary ÷ 12, plus overhead. A part month is shared out by calendar days.
• An allocation only counts between its own start and end dates, and while the person works for you.

Contractors on the working-days method

Your organisation can choose to cost contractors by the weekdays in each month instead. You set this in Settings → Finance → Frameworks & Fiscal Year, under Contractor Cost Reporting. For those contractors:

cost = FTE × day rate × weekdays (Monday to Friday) the allocation covers in the month

Public holidays still count as weekdays. Months have between 20 and 23 weekdays, so a contractor's cost changes from month to month with this method.

Time that flows through a team

A person's time can reach a project in two ways, and both count:

• Directly: the person is allocated to the project.
• Through a team: the person's FTE on the team × the team's FTE on the project. For example, someone at 0.5 FTE on a team that puts 0.5 FTE on a project gives that project 0.25 FTE.

Any time that isn't allocated to a team shows under No team. That way, the teams plus No team always add up to your whole payroll.

Vacancies

A vacancy is costed with the same formula, using its salary, its FTE and its allocations. It counts from its start date or today, whichever is later, and stops at its end date if it has one. Vacancies never add cost to past months.

A cancelled vacancy costs nothing. So does a filled vacancy that's linked to the person who filled it, because that person's own record now carries the cost.

Bonuses

A bonus is added in full to the month of its effective date. It isn't split by FTE and carries no overhead. Bonuses appear in the forecast, not in actuals.

Agents

An AI agent's monthly cost is shared out across the month by calendar days, the same way a part month is for a person.

Functional groups

In a functional group, everyone filling a position is costed month by month with the forecast formula, including the working-days method for contractors. There are two differences:

• Pay changes apply from the day they happen. If someone's pay changes mid-month, the days before the change use the old rate and the days after use the new one. The forecast uses one rate for the whole month.
• A vacancy is costed for the dates it fills the position. A cancelled vacancy, or a filled one linked to the person who filled it, costs nothing.

A month with no salary or rate to use shows no cost.

Scenarios

A scenario is costed with exactly the same rules, using your live data with the scenario's changes on top. The difference shown is the scenario's figure minus the live figure. See Live data and scenarios.

Totals add up

A quarter always equals its three months, and a parent row always equals the rows beneath it. The forecast table shows whole currency units, and the months you see add up to the total you see.

Actuals

Actuals come from effort: the share of each working day a person spent on each project.

cost of one effort entry = effort % ÷ 100 × day rate on that day

• Employees use their day rate with overhead. Contractors use their day rate.
• Only weekdays count.
• An employee's day can't go over 100%. If someone's entries for a day add up to more than 100%, each one is scaled down in proportion so the day totals 100%. Contractors aren't capped.
• Screens that show actuals let you choose which effort to count:
  • Effort submissions counts only effort in weeks that have been signed off.
  • Flowstate estimate counts submitted effort, plus effort in weeks nobody has signed off yet.

Weekly, monthly and project totals of actuals always agree with each other.

Why the forecast and actuals can differ

They're built on different bases, on purpose.

	Forecast	Actuals
Spreads cost by	Calendar days: a full month is annual salary ÷ 12	Reported weekdays: each day is annual salary ÷ 260
Includes bonuses	Yes	No
Includes vacancies	Yes, from today onwards	No, because vacancies don't report effort

A month has between 20 and 23 weekdays. Someone who reports 100% on every weekday of a 23-weekday month costs more in actuals than in their forecast month. In a 20-weekday month, they cost less. Over a full year, the two come together.

What is not in the calculation

• Location. Where someone is based doesn't change their cost.
• Public holidays. No day rate or forecast month takes public holidays off.
• Hours. Apart from turning an hourly contractor rate into a day rate, nothing is worked out in hours.