From time to time we get asked questions that we have to stop and think about, so I figured I’d take a minute to document one such occasion. What happens on the GL when you log time on that “Internal Only Service Technician Labor Page” of a service ticket?
So buckle up and lets get started.
1) In Settings-> Invoicing-> Defaults, you will see a section labeled Cost / Expense / Inventory Accounts. In this section you will see 2 accounts specified, one for Labor Cost and the other for Payroll Expense.
2) When you create a service ticket and specify that Bob worked on it and you’ve told Lizzy that Bob makes $15/hr, Lizzy will hit the Labor Cost account for $15 for 1 hour of work and will offset that hit with an opposite hit for Payroll Expense. We store this negative side in payroll expense until you cut payroll.
3) Now lets say you pay this technician $40. When the paycheck is hit, the payroll expense account hits for $40, but remember we had a $15 negative hit from the service ticket. This results in a net payroll expense of $25 and would represent broom time or unaccountable time.
So now our P&L will show the cost of labor on service tickets and the expense of payroll for a combined total. Also keep in mind that when you setup payroll you have the option of specifying different accounts for different departments, so you want to be sure you choose the service department expense account and not some other department. By default, all of this is setup, so unless you’re making changes it should already be good to go.
I hope that helps you to understand what happens on the books when you’re working with service techs in Lizzy.
Until next time…