Understanding Rates Within Matters.Cloud

Understanding Rates Within Matters.Cloud

Introduction

For legal and professional service firm understanding and applying hourly rates is critical for both internal reporting and when raising invoices to clients. Properly configured hourly rates ensure precise billing, managing to client budgets, and financial reporting. This guide will help you navigate the setup and application of hourly rates within Matters.Cloud, providing clarity and efficiency in your financial operations.

Key Concepts

Rate Hierarchy

The concept of a rate hierarchy in Matters.Cloud refers to a structured system for determining which rate to apply when logging time, based on a predefined order of precedence. This hierarchy ensures that the most specific and relevant rate is used in situations where multiple rates could apply.

Firms commonly use Rate classes to manage standard billing rates across groups of users, while User rates can be used where an individual user requires a specific rate. More specific rates, such as Client, Matter, Activity Code, or Time Entry rates, can override the default rate where configured.

The rate hierarchy, from lowest to highest priority, is as follows:
  1. Rate Class Rate: This is a default rate assigned to users through their Rate Class. Rate Classes allow firms to group users with similar billing rates, such as Partners, Associates, or Administrative Staff, making rates easier to manage.
  2. User Rate: A specific rate assigned to an individual user. This overrides the Rate Class rate where configured.
  3. Client Rate: Overrides the Rate class and User rates. This rate automatically applies to time entries for the selected Client/User combination and can be configured for either all users or a specific user.
  4. Matter Rate: Overrides the Rate class, User, and Client rates. This rate is automatically applied to time entries recorded against the selected matter and can be configured for all users, rate class, specific user, or an activity code.
  5. Activity Code Rate. Overrides the Rate class, User, Client, and Matter rates. This rate is automatically applied when the associated activity is selected.
  6. Time Entry Rate. Users can override the assigned rate directly during the time entry process.

Rate Classes

Allow firms to manage billing rates for groups of users with the same billing structure. Users can be assigned to a Rate Class, allowing rates to be maintained centrally rather than individually. Examples include Partners, Associates, Solicitors, and Administrative Staff.

The Rate class rate is applied by default when time is recorded, unless a higher-priority rate exists in the rate hierarchy. This simplifies rate management and reduces the need for individual User rates.
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Rate Classes can be configured by navigating to Setup > Time > Rate Classes.

Multiple Currencies

When assigning rates to time entries, the system selects the most appropriate rate from the rate hierarchy based on the currency assigned to the matter, exchange rates are not applied as part of the calculation. If no rates are set within the hierarchy, the system defaults the rate to 0.

Rate Types

In Matters.Cloud, firms have the flexibility to configure multiple rate types to cater to various legal work categories or pre-agreed discount arrangements. This allows for a tailored approach to billing that reflects the diverse nature of legal services provided. For example, a firm might establish rate types such as Standard, Discount, and Custom rates, each with predefined rates that correspond to different service levels or client agreements.

This setup simplifies the process of assigning appropriate rates to matters, as each matter can automatically inherit the configured rates associated with its assigned rate type. This not only streamlines the billing process but also ensures consistency and accuracy in how rates are applied across different cases and clients. By leveraging rate types, firms can effectively manage their billing strategies and maintain clear, organised financial records.
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Note: When using rate types, you need to create associated rates for each level within the hierarchy that you wish to apply.

Billable and Non-Billable

In Matters.Cloud, time entries can be categorised as either billable or non-billable, each serving distinct purposes within a firm's operations.
  1. Billable. refers to hours worked on tasks or projects that are directly chargeable to clients, contributing to the firm's revenue
  2. Non-billable. refers to activities that are necessary for the firm's operations but do not directly generate revenue, such as administrative tasks, training, and internal meetings. 

Setting Up Rates

Step-by-Step Process

  1. Navigate to the Rates Section:

    • Go to the Setup> Time > Rates menu.

  2. Create a New Rate:

    • Click on the "New Rate" button.

  3. Define Rate Details:

    • Related to: Specify whether the rate applies to a Rate class, User, Client, Matter, or Activity code.
    • Start date: Specify the date the rate should be effective from.
    • Resource type: Specify whether the rate applies to all users, rate class, specific user, or an activity code (applies to client and matter rates only).
    • Rate: Enter the hourly rate that applies.
    • Apply rate percentage: Specify if the rate should be adjusted to include a rate percentage if this has been specified on the matter.
    • Rounding: Specify if the rate should round to the nearest integer value when applying a rate percentage.
    • Currency: Specify the currency that applies to this rate.


Managing Rates

Updating Existing Rates

To update an existing rate:

  • Go to the "Setup > Time > Rates" menu.
  • Select the rate you wish to update.
  • Make the necessary changes and save.
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Note: When updating a rate, consider first whether a new rate should be added with a different start date. Updating a rate will automatically re-value any applicable time entries that are not yet included on a draft or final invoice.

Matter Rates View 

When creating a rate in the Matter, it is important to consider the Source of the rate, such as User (All Users or a Specific User), Rate Class, or Activity Code. Multiple rates can be configured within the system, depending on the selected source type. For example, a user may have multiple rates assigned across different sources, allowing billing rates to be tailored to specific clients, matters, activities, or billing scenarios.


How to Assign a Rate Class to a User

To assign a Rate Class to a user:

  1. Navigate to Setup > Users.
  2. Locate the user and click the drop-down arrow next to their name.
  3. Select Edit User Profile.
  4. Update the Rate Class field with the appropriate rate class.
  5. Click Submit to save your changes.

The selected Rate Class will be applied as the user's default billing rate unless overridden by a higher-priority rate in the rate hierarchy.



Deleting Rates

To delete a rate:
  • Ensure the rate is not currently in use within any active project or rate card.
  • Select the rate and click on the "Delete" button.
  • Confirm the deletion.
InfoNote: When a rate is deleted any existing time that was calculated using that rate will remain with the rate that has been applied, unless you manually edit the time entries or perform a rate re-calculation using the time transfer function.

Changes That Do Not Automatically Recalculate Rates on Existing Time Entries

Certain changes related to matters and billing arrangements do not trigger an automatic recalculation of rates on existing time entries. These include:
  1. Changing the rate type assigned to a matter.
  2. Changing the billing arrangement on a matter.
  3. Changing the rate percentage assigned to a matter.
  4. Changing the rate class assigned to a user.
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Note: These changes will apply to new time entries moving forward but will not update rates on existing time entries automatically. To apply the updated rates to existing entries, you can either:
- Transfer the existing entries back to the same matter using the Recalculate rates option, or
- Edit each time entry individually and manually adjust the rate where required.

Summary

Effectively managing rates in Matters.Cloud is crucial for accurate financial management and client satisfaction. By understanding the different types of rates, how to set them up, and best practices for managing them, you can ensure that your organisation's financial operations run smoothly and transparently. If you have any further questions or need assistance, please contact our support team.


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