Rounding: Following Industry Standards |
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This section contains the following subtopics: Are Time Logger's Calculations Correct? Decimal Time Versus Decimal Numbers Decimal Time to Monetary Value with 2 Decimals Following Industry Standards and Best Practices Tips and Ways to Minimize Rounding Issues
Are Time Logger's Calculations Correct? You may have been directed here after reporting that you belive Time Logger's calculations are incorrect. This kind of result is not a defect or a problem with Time Logger's calculations, and we'll show you why with examples below. Imagine that you charge $100 per hour, and you worked on three tasks for twenty minutes each. Here's what your time record list might look like: Start Date Start Time Rate Duration Fee 11/20/06 11:46 AM 100.00 20 min 33.33 11/20/06 11:57 AM 100.00 20 min 33.33 11/20/06 12:06 PM 100.00 20 min 33.33 Because 20 minutes is one third of an hour, the fee for each record comes out to $33.3333333… This must be rounded to the nearest penny on each time record, and the result is $33.33 per each 20-minute record. We add up those three fees, and we get a total of $99.99, and that's what shows in the summary and invoice. If you don't understand the decimal math that takes place on a computer (see below), it looks like an error. When we round each record and then add them, the differences between the true value and the rounded value accumulate and the expected result of $100 is not achieved. You may think that Time Logger shouldn't round fees on individual time records before adding them. That way, in the above example, 3 times 33.33333333… would equal 100.00, and everything would come out right. However, if you don't round first, the individual Fees when displayed as dollar values don't add up to the final Total Fee. For the above example, the problem is that the three time records would show individual Fees of 33.33, and a total of 100.00. This too would appear to be a math error: 33.33 + 33.33 + 33.33 = 100.00 Looks like a math error! If we do not round each Time Record fee, then the sum total of the fees will appear wrong. Read more about rounding and decimal math for time fractions below and learn how Time Logger is really following industry standards.
Decimal Time Versus Decimal Numbers Another thing to understand is that when you have the Duration Format set to a decimal expression (all of the options to the left on the Duration Format window), Time Logger will be calculating numbers like the examples below:
As you can see, when you express time as decimal hours, you get decimal values which must be rounded. This is because fractions like 20/60 (1/3) equals .33333333333333333333... as a decimal and 40/60 (2/3) equals .6666666666666666666666... as a decimal.
Decimal Time to Monetary Value with 2 Decimals
Besides having to round time expressed as a decimal, this decimal then must be expressed as a monetary value to two decimal places on each time record. Because of this, different Rates per hour will yield Fee values like this:
Following Industry Standards and Best Practices You can assure your clients that Time Logger's method of rounding each time record's fee to the nearest cent, then adding those fees to get the total fee is the industry standard. In most cases the rounding differences that cause the total to be larger balance out those that make it smaller, and the inaccuracy is negligible. You can even print this help documentation and give it to them if you wish.
Tips and Ways to Minimize Rounding Issues TIP 1: Set your Duration Format to one that displays hours and minutes, instead of a decimal value of hours. See Rounding of Durations and User Options Window/Duration Format Tab. Tip 2: If you charge $100 an hour, consider using our Minimum Duration and Duration Increment feature and set them each to 6 minutes (.1 of an hour) or 15 minutes (.25 of an hour). Thus, you'd always be billing in increments of $10 or $25 for each time record. If you or your client are concerned about having multiple time records billing for the exact same task, you can use our Combine Time Records for Same Task Automatically… feature. Tip 3: If you don't bill at $100, you might find a suitable Minimum Duration and Duration Increment by entering a time record of 1 minute and then increasing the Minimum Duration and Duration Increment to a number of minutes that divides equally into sixty (2, 3, 5, 6, 10, 12 and 15 minutes) and see if one yields a suitable Fee amount based on your Rate. To make it easy to enter these minute values, set your Duration Format to one of the Hour and Minute displays on the right of that window. If you or your client are concerned about having multiple time records billing for the exact same task, you can use our Combine Time Records for Same Task Automatically… feature. Tip 4: Also, verify that you are NOT forcing Responsive Time Logger to round the calculations to two decimal places. This is an option that most users should not use. To do this, look at the menu choice: Global Options Window/General Tab and verify "Round time record durations to two decimal places" is NOT checked. More: |