Set Up a Financial Cost and Rate Matrix

A financial cost and rate matrix is composed of general properties to describe the matrix, and columns that identify the criteria that is used to match the rates and costs to transactions. You can define a rate matrix that is used during financial transaction processing to determine costs and billing or charge rates. You can create cost and rate matrices for labor, materials, equipment, and expense resource types.
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A financial cost and rate matrix is composed of general properties to describe the matrix, and columns that identify the criteria that is used to match the rates and costs to transactions. You can define a rate matrix that is used during financial transaction processing to determine costs and billing or charge rates. You can create cost and rate matrices for labor, materials, equipment, and expense resource types.
You can establish default matrices at the system level, entity level, and investment level. The product looks for and applies matrices first at the investment level, then at the entity level, and finally at the system level. You can set default rate locations at either the entity level or system level. If a matrix cannot be matched, you can enter costs and rates manually when you create transactions.
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Example: Set Up a Cost/Rate Matrix Based on Resource Class
The Document Management Company captures costs in the financial system using the resource class and the input type code of the resources that are assigned to their investments. The company has four different resource classes that are assigned to two different input type codes. The resource classes and input type codes have different costs that are associated with them.
For example, billable labor has an actual cost of $100 whereas non-billable labor has no associated cost. The cost for non-labor resource classes is calculated as $1.00 × quantity.
To meet the corporate requirements, the financial manager sets up a cost/rate matrix with five different rows. One row represents each resource class (labor and non-labor) and input type code combination. The manager populates the row with the appropriate cost. The matrix rows define the criteria for applying costs to resources for transaction processing. The following table shows the matrix rows:
From Date
To Date
Resource Class
Input Type Code
Actual Cost
1/1/2019
12/31/2019
Labor
Billable
$100.00
1/1/2019
12/31/2019
Labor
Non-Billable
$0.00
1/1/2019
12/31/2019
Expense
*
$1.00
1/1/2019
12/31/2019
Materials
*
$1.00
1/1/2019
12/31/2019
Equipment
*
$1.00
Verify the Prerequisites
Before you set up a cost/rate matrix, complete these prerequisites:
  1. Verify that you understand the following financial management concepts:
    • Cost planning versus actuals, fiscal calendar cycles, fiscal time periods and how they are defined in your organization.
    • The desired outcomes for any type of configuration. After you start using the configured data to create instance data, you cannot change the configuration. For example, you cannot delete fiscal time periods, department or location OBS units, or financial classifications that the application is using.
    • How you want to set up your organizational structure using entity, and the location and department organizational breakdown structure (OBS) units. Organization is important because when you use the application or you generate reports, information groups by the outcome desired.
    • How your configurations, classifications, and definitions affect the data flow to your third-party integrations and chargebacks processing.
  2. Verify that you have created and set up a financial entity as described in
    How to Set Up a Financial Entity
    .
  3. Verify that you have previously set up a currency.
  4. Verify that you have the gathered the following information that is required to plan for your matrix:
    1. Determine whether the matrix is based on the resource role, resource, input type code, or charge code, and so on. If it is based on investments or resources, verify that they are financially enabled.
    2. Establish a naming convention for the matrix.
    3. Verify and activate the currency that is required for the matrix.
    4. Determine if the matrix must be marked private. If so, determine who must have access to it.
    5. Create any data to be used in the matrix before the matrix is established. For example, you cannot add the resource manager role to the matrix until it is added in Resource Management.
    6. (Optional) Set up cost plus codes to use them for marking up actual or standard costs in the cost/rate matrix.
Create a Cost and Rate Matrix
As a financial manager, you can ensure that standard costs and rates apply to all detailed financial plans and transactions for investments. Create a standard cost/rate matrix that provides default values from a centralized rate matrix in the financial system. The standardized default information eliminates the need for defining costs and rates for different financial plans and transactions individually.
Populate the matrix with the following types of financial values:
  • Planned costs for investments for use in detailed financial plans.
  • Billing rates for financial transactions that are processed against the investments.
A rate matrix governs the rate structure that covers all of your pricing models. Depending on your needs, create one or more matrices. For example, set up one rate matrix for
external
projects and another one for
internal
projects. We recommend that you include labor, materials, equipment, and expense resource types in your matrix. You can then define costs and rates for labor and non-labor resources for cost planning and financial transaction processing. We also recommend that you use charge codes to help define costs and rates.
Copying a cost or rate matrix adds a new matrix using the defined properties of the existing matrix.
Follow these steps:
  1. Click
    Administration
    ,
    Finance
    ,
    Manage Matrix
    .
  2. Click
    New
    and complete the following fields:
    • Matrix Name
      Enter the unique name to identify this matrix.
    • Matrix Type
      The default
      Cost/Rate
      type is selected.
    • Matrix Default Currency
      Defines the default currency for this matrix. This field appears only when multi-currency is enabled.
    • Location
      Defines the location OBS related to an entity. Rates and costs are applied to transactions only when there is a match for either the investment, resource, or the entity location OBS. We recommend that you leave this field blank because it can result in no rates being applied.
    • Entity
      Defines the financial entity that is associated with the matrix. Rates and costs are applied to transactions only when there is a match for either the investment, resource, or the entity. We recommend that you leave this field blank because it can result in no rates being applied.
    • Private
      Specifies whether this matrix is restricted to particular users.
  3. Click
    Save and Continue
    . Skip to Step 3 in the next procedure.
Assign Columns to the Matrix
Decide which columns are needed in the matrix. For example, to allow investment managers to show a breakdown of their actual capital and operating expenses in the cost plans, assign Cost Type as a column in the matrix.
Determine the column order of the matrix so that evaluation of the transaction is performed correctly. To set up the conditions under which rates are applied, assign up to ten columns to the cost/rate matrix. Transactions are processed using the matrix columns to determine the rates and costs.
The order of the columns determines the weighting and filtering driving the costs and rates. Transaction processing reads the columns from left to right. For example, if the first column is Client and the second is Project only projects that are associated with the client run against this matrix.
Follow these steps:
  1. Click
    Administration
    ,
    Finance
    ,
    Manage Matrix
    .
  2. In the
    Matrix Name
    column, select a matrix.
  3. Select a column from the
    Available
    list of columns and click
    Add
    .
    The column or field appears in the
    Selected
    list.
  4. Change the order of selected columns by moving them up or down in the list. Click the up or down arrows. Up corresponds to left and down corresponds to right in the matrix.
  5. Click
    Save and Continue
    . Skip to Step 3 in the next procedure.
Add Rows to the Matrix
Complete your cost/rate matrix definition by adding rows of specific values for the matrix columns. For example, if you assigned Resource Role and Transaction Class as matrix columns, create rows by selecting unique combinations of roles and transaction classes.
Note
: Verify that each matrix row is unique and the dates do not overlap.
The matrix rows let you define the criteria for applying rates and costs to investments and resources for transaction processing. The sample matrix in the following table rows define the cost and rate for the Business Analyst role for two different transaction classes.
From Date
To Date
Resource Role
Transaction Class
Rate
Standard Cost
Actual Cost
Currency
1/1/13
12/31/13
Business Analyst
Employee
90
90
100
USD
1/1/13
12/31/13
Business Analyst
Contract
100
100
90
USD
Follow these steps:
  1. Click
    Administration
    ,
    Finance
    ,
    Manage Matrix
    .
  2. Select a matrix.
  3. Click
    Edit Matrix Rows
    .
  4. Click
    New
    .
  5. Complete the two required date fields:
    • From Date
      Defines the beginning of the effective date range for this row. Any transaction that is processed within the range is applied the rates/costs from this matrix.
    • To Date
      Defines the end of the effective date range for this row.
  6. Enter values for any matrix columns that you added.
  7. Complete the following standard fields for your matrix rows:
    • Rate
      Defines the billing rate to apply to a transaction for the row. A value of at least 0.00 is required. For equipment, materials, and expenses, rate is equal to the quantity. For example, if the cost of a single server is $1,000.00, then the rate is 1.
    • Standard Cost
      The standard cost associated with any transaction matching the criteria established in the rate matrix. This attribute is generally not used elsewhere in the product but may be used in developing user-defined cost reporting.
    • Actual Cost
      Defines the actual cost that is associated with any transaction matching the criteria established in the matrix. Actual Cost can be used in custom reporting.
    • Currency
      Specifies the currency for the row in the matrix. This value can be different for each row in the matrix and is assigned when a transaction match occurs.
      This field appears only when multi-currency is enabled.
    • Cost Plus Code
      Specifies the cost plus code to use when a transaction matches the criteria that is established in the matrix.
  8. Click
    Save and Return
    .
After completing these three tasks, you have successfully set up a cost/rate matrix. The matrix applies standard costs and rates to all financial transactions from a centralized cost/rate table.
Increase the Rate for Cost/Rate Matrices
A rate increase affects the entire matrix. At least one matrix row must exist for you to complete these steps.
Follow these steps:
  1. Click 
    Administration
    Finance
    Manage Matrix
    .
  2. Select a matrix.
    The
    Edit Matrix Rows
    tabbed page appears.
  3. Select the check box for a row.
  4. Click
    Rate Increase
    .
  5. Change any of the following entries:
    • Rate %
      Defines the percent increase to apply to the rate for the period specified.
    • Standard Cost %
      Defines the percent increase to apply to the standard cost for the period specified.
    • Actual Cost %
      Defines the percent increase to apply to the actual cost for the period specified.
    • Source Date From
      Defines the beginning of the date range for the matrix rows affected by the rate change.
    • Source Date To
      Defines the end of the date range for the matrix rows affected by the rate change.
    • New Date From
      Defines the beginning of the effective date range for the new matrix row.
    • New Date To
      Defines the end of the effective date range for the new matrix row.
  6. Click
    Preview
    and test the matrix.
Unlock Matrices
Matrices that are currently being viewed or changed are locked and therefore other user cannot view or change them.
Follow these steps:
  1. Click 
    Administration
    Finance
    Manage Matrix
    .
  2. Click
    Locked Matrices
    .
  3. Select the matrix that you want to unlock.
  4. Click
    Unlock
    .