Cost Attribution

Cost attribution is the process by which Flowstate traces every dollar of workforce spend from an individual employee or contractor through teams, projects, and cost centres. Understanding this chain is essential for interpreting forecasts, validating budgets, and configuring the system correctly.

The Cost Calculation Chain

Every employee cost in Flowstate passes through a multi-step pipeline. Each step transforms or allocates the cost before it reaches its final destination.

Employee Salary (in local currency)
  --> Currency Conversion (normalize to reporting currency)
    --> Working Days Proration (account for partial periods)
      --> FTE Allocation (split across teams and projects)
        --> Overhead Multiplier (add work-type-specific overhead %)
          --> Bonuses (add fixed bonus amounts)
            = Total Employee Cost

The order matters. Currency conversion happens first so that all downstream calculations operate in a single currency. Working days proration happens before FTE allocation so that partial-period employees are correctly weighted. Overhead is applied after FTE allocation so that it scales with the prorated cost, not the full salary.

WARNING

If exchange rates or work types are not configured, cost calculations will be incomplete. Flowstate will still compute what it can, but the results may understate actual costs. Check the Exchange Rates and Work Types guides to ensure your configuration is complete.

Employee Cost Formula

For a given period (typically a month or quarter), the cost of an employee allocated to a team or project is:

Base Cost = Annual Salary / Total Working Days in Year x Working Days in Period x FTE Allocation
Overhead  = Base Cost x (Overhead Percentage / 100)
Total     = Base Cost + Overhead + Bonuses

Where:

Variable	Source
Annual Salary	Employee's current salary, converted to reporting currency
Total Working Days in Year	From the employee's geography (region-specific)
Working Days in Period	Business days in the period, adjusted for start/end dates
FTE Allocation	The employee's FTE allocation to the team or project
Overhead Percentage	From the employee's work type (e.g., 30% for full-time)
Bonuses	Fixed amounts added on top, not prorated by FTE

TIP

Bonuses are added after FTE allocation and overhead calculation, but they are not prorated by FTE. A bonus is a fixed cost that lands on the team or project where the employee is allocated, regardless of their FTE fraction.

Contractor Cost Formula

Contractors follow a simpler path. Their rates are assumed to be fully loaded -- meaning the rate already includes the contractor's taxes, benefits, equipment, and margin. No overhead multiplier is applied.

Contractor Cost = Rate x Working Days in Period x FTE Allocation

Variable	Source
Rate	Contractor's daily/hourly/monthly rate, converted to reporting currency
Working Days in Period	Business days in the period, adjusted for engagement dates
FTE Allocation	The contractor's FTE allocation to the team or project

This distinction between employee and contractor costing is one of the most important design decisions in Flowstate. It reflects the real-world difference between an employee (where the company bears additional costs on top of salary) and a contractor (where the rate is all-inclusive).

Currency Conversion

All costs are converted to the organization's reporting currency before any calculations are performed. This ensures that when you sum up costs across a globally distributed team, the numbers are directly comparable.

The conversion uses the most recent exchange rate effective before the calculation date. See the Exchange Rates guide for details on how rates are configured and applied.

Working Days and Geography

Working days are not a fixed number. They vary by geography due to different public holiday calendars, and they can be further modified by work type.

Each employee and contractor has a geography that determines their working day calendar. Flowstate uses this to calculate the exact number of business days in any given period for that individual.

Some work types set excludeHolidays to true, meaning public holidays are subtracted from the working day count. Others (such as certain contractor arrangements) may use all business days regardless of holidays.

See Geographies configuration for setting up regional calendars.

Cost Centres

Cost centres are financial categories that projects belong to. They allow you to classify costs according to your finance team's chart of accounts.

Field	Type	Description
name	string	Display name (e.g., "Engineering CapEx")
code	string	Short code for financial systems (e.g., "ENG-CAPEX")
description	string	What this cost centre covers
costCategory	string	High-level category (e.g., "CapEx", "OpEx")
color	string	Hex color for UI display

Common cost centre structures include:

• CapEx vs OpEx -- Separating capitalizable development from operational expenses
• By department -- Engineering, Product, Design, QA
• By product line -- Payments, Growth, Platform, Data

Project-Cost-Centre Bindings

A single project can span multiple cost centres through bindings. Each binding specifies what percentage of the project's cost should be attributed to a given cost centre.

For example, the "Billing V2" project might be split:

Cost Centre	Percentage	Meaning
Engineering CapEx	70%	New feature development (capitalizable)
Engineering OpEx	30%	Maintenance and bug fixes (operational)

These percentages are applied to the project's total cost to produce cost-centre-level financial reports.

TIP

If a project has no cost centre bindings, its costs will still be calculated but will not appear in cost-centre-filtered views. Assign cost centres early to keep financial reporting complete.

Overhead

Overhead is an additional percentage applied on top of base salary costs to account for the true cost of employment. This includes employer-side taxes, health insurance, retirement contributions, equipment, office space, and other benefits.

The overhead percentage is defined on the work type assigned to each employee. Different employment classifications carry different overhead burdens:

Work Type	Typical Overhead	Rationale
Full-time permanent	25-35%	Full benefits, equipment, office costs
Part-time	15-25%	Reduced benefits, proportional costs
Fixed-term contract	10-20%	Limited benefits, shorter commitment
Intern	5-10%	Minimal benefits, equipment only

These percentages are configurable per organization. See the Work Types guide for setup details.

Contractors do not have overhead applied. Their rates are treated as fully loaded.

Cost Roll-Up Summary

Here is how costs aggregate from individual resources up through the organizational structure:

Level	Formula
Employee	dailyRate x workingDays x FTE x (1 + overhead%) + bonuses
Contractor	rate x workingDays x FTE
Team	Sum(employee costs) + Sum(contractor costs) + Sum(vacancy costs)
Project	Sum(team allocations x team cost%) + Sum(direct allocations)
Cost Centre	Sum(project costs x cost-centre binding%)

This chain produces a fully attributed view of workforce spend, from individual salaries all the way to financial reporting categories.

Cost Breakdown Views

Flowstate provides multiple perspectives on the same underlying cost data:

• By team -- How much does each team cost, and what drives that cost?
• By project -- How much is each project consuming in resources?
• By cost centre -- How are costs distributed across financial categories?
• By individual -- What is the fully loaded cost of each employee or contractor?

All views draw from the same calculation chain, ensuring consistency across reports.

Next Steps

• Cost Centres configuration -- Set up financial categories
• Work Types -- Configure overhead percentages
• Exchange Rates -- Set up currency conversion rates
• Employees -- Understand employee salary data and allocations
• Teams -- Learn how team costs are calculated
• Projects -- See how project costs are attributed