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Charges & Discounts Configuration ​

Define the types of charges and discounts available when creating bills.

Overview ​

Beyond billing for time tracked, you often need to add charges (fees, surcharges, premiums) or apply discounts (reductions, allowances, courtesy adjustments) to client invoices. The Charges and Discounts configuration section in Hidma lets you define all the standard charge and discount types your firm uses, making them available as options when creating bills. Rather than adding miscellaneous line items with free-text descriptions, you select from pre-configured, standardized charge and discount types that ensure consistency, enable proper tax treatment, and support meaningful financial reporting.

When you configure charge and discount types, you define not just their names but also their behavior: whether they increase or decrease invoice amounts, what tax rate automatically applies, whether they affect average charge-out rate calculations for reporting, and explanatory descriptions that guide proper usage. Out of the box, Hidma includes a few basic charge and discount types, but you can add unlimited additional types to match your firm's specific billing practices and fee structures.

Accessing Configuration ​

Navigate to Settings → Configuration → Billing Settings and locate the "Charges and Discounts Configuration" section. This interface displays all currently defined charge and discount types and provides controls for adding new types, editing existing ones, and managing the full catalog of available charges and discounts.

You'll see a list of existing types showing their names, whether they're charges or discounts, and key configuration details. This is your master list of what's available when creating bills - if a charge or discount type isn't here, users can't add it to invoices (beyond potentially free-form line items if your configuration allows them).

Creating Charge and Discount Types ​

Adding a New Type ​

Click "Add New Charge" or similar button to create a new charge or discount type. A configuration form appears with several fields:

Name - Enter the descriptive name that will appear on invoices and in selection lists when creating bills. Choose clear, professional names that clients will understand and that communicate what the charge or discount represents. Examples:

  • "Project Management Fee"
  • "Rush Service Surcharge"
  • "Disbursement Charge"
  • "Early Payment Discount"
  • "Volume Discount"
  • "First-Time Client Discount"
  • "Courtesy Adjustment"

The name should be specific enough to communicate meaning but concise enough to fit cleanly on invoices. Avoid cryptic abbreviations or internal jargon that clients might not understand.

Type: Charge or Discount - Select whether this is a charge (increases invoice value) or discount (decreases invoice value).

Charge - Adds value to the bill. Use for fees, surcharges, premiums, or additional charges you apply beyond standard time billing. When added to a bill, charges increase the total amount owed.

Discount - Reduces value of the bill. Use for price reductions, allowances, courtesy adjustments, or promotional discounts. When added to a bill, discounts decrease the total amount owed.

This fundamental distinction determines how the item affects invoice calculations and how it's presented on bills (charges as additions, discounts as subtractions).

Description (Optional) - Add explanatory text describing when and why to use this charge or discount type. This description might appear as internal guidance (perhaps in tooltips or help text when users are creating bills) helping team members understand appropriate usage.

Examples:

  • "Project Management Fee - Applied to projects requiring significant coordination across multiple team members and workstreams"
  • "Early Payment Discount - 2% discount for invoices paid within 10 days of issue"
  • "Rush Service Surcharge - Applied when client requests completion within 3 business days"

Clear descriptions ensure consistent application and help new team members understand your firm's billing practices.

Affects Charge-Out Rate - Determine whether this charge or discount should be included when calculating average effective charge-out rates for reporting purposes.

When you add charges to bills, should they be treated as additional revenue that increases the effective rate you're billing at? When you apply discounts, should they reduce the effective rate calculation? This setting controls whether the charge/discount flows into rate-based reporting and user performance metrics.

Include in Rate Calculations (Affects Charge-Out Rate: Yes) - Use for charges or discounts that represent adjustments to your actual pricing. Perhaps a "Premium Service Surcharge" increases your effective rate for that work - include it in rate calculations. Similarly, a "Volume Discount" reduces your effective rate - include it in calculations to show the actual rate achieved.

Exclude from Rate Calculations (Affects Charge-Out Rate: No) - Use for charges or discounts that aren't related to your hourly rate pricing. Perhaps "Reimbursable Expenses" are pass-through costs, not rate adjustments - exclude them from rate calculations. Or maybe "Courtesy Adjustments" are relationship management decisions unrelated to rate performance - exclude them so they don't distort rate reporting.

This setting ensures your charge-out rate reporting accurately reflects pricing performance without distortion from unrelated fees or adjustments.

Affects Project Revenue - Controls whether this charge contributes to the project's revenue figures, including the Revenue by Project standard report.

Leave the toggle on for charges that represent real fees you earn (standard service charges, project management fees, rush surcharges) so they flow through into project revenue.

Turn the toggle off for charges that are simple cost recoveries rather than earned revenue. Disbursements and reimbursable expenses are the typical example - you pass the cost through to the client but you are not "earning" anything on it, so it should not inflate project revenue numbers.

To set the toggle for an existing charge or discount type, head to Settings → Configuration → Billing Settings and scroll to Charges & Discounts. Toggle Affects Project Revenue on or off for each type.

Save Configuration - Click Save to create the charge or discount type. It immediately becomes available in the charge/discount selection interface when creating bills.

Setting Default Tax Rates ​

After creating charge and discount types, you can configure default tax rates for each type. This configuration determines what tax rate automatically applies when you add that charge or discount to a bill.

Navigate to Settings → Configuration → Billing Settings → Tax Rates, then look for "Default Tax Rate Options" section. Under "Charge and Discount Types," you'll see all your configured types. For each, select the appropriate default tax rate:

Standard Tax Rate - For charges and discounts that should be taxed at your jurisdiction's standard rate. Perhaps professional service charges are taxed like time entries at 20% VAT or 8% sales tax.

Tax Exempt (0%) - For charges and discounts that shouldn't be taxed. Perhaps:

  • Reimbursable expenses (passing through costs without markup might be tax-exempt in your jurisdiction)
  • Late payment fees (penalty charges often aren't taxed)
  • Certain charitable or nonprofit client discounts might be tax-exempt

Other Specific Rates - If you have multiple tax rates configured for different jurisdictions or service types, select the appropriate default for each charge/discount type.

When you add a charge or discount to a bill, Hidma automatically applies the configured default tax rate. You can override this default on individual bills if needed, but the default ensures correct tax treatment most of the time without manual selection, reducing errors and saving time.

Charge and Discount Value Types ​

Fixed Amount vs. Percentage ​

When you add charges or discounts to bills, you can typically specify them as either:

Fixed Currency Amount - A specific dollar/euro/pound amount. Perhaps "$500 Rush Service Fee" or "$100 First-Time Client Discount." The amount is constant regardless of the rest of the bill value.

Percentage Amount - A percentage of the bill subtotal or specific line items. Perhaps "10% Project Management Surcharge" or "5% Early Payment Discount." The amount varies based on what it's applied to.

The charge/discount type configuration defines what types you have available (Project Management Fee, Early Payment Discount, etc.), but when you actually add one to a bill, you specify whether it's a fixed amount or percentage and what the value is.

Percentage-based charges and discounts offer more flexibility when adding them to bills - you can apply them to the entire bill subtotal or to specific line items only. Fixed-amount charges/discounts apply to the overall bill.

See Discounts & Charges on Bills for details on using configured charge and discount types when creating invoices.

Managing Existing Types ​

Editing Charge and Discount Types ​

To modify an existing charge or discount type, find it in the configuration list and click Edit. You can change the name, description, charge-out rate affect setting, or convert between charge and discount (though converting types already in use on historical bills might cause confusion - typically better to create a new type).

Changes to charge and discount type configuration affect future bills created with that type. Historical bills retain their original configuration, but the behavior when viewing or regenerating historical invoices depends on your specific Hidma implementation.

Deactivating or Deleting Types ​

When a charge or discount type becomes obsolete (perhaps you no longer offer early payment discounts, or you've retired a particular surcharge), you can deactivate or delete it:

Deactivating (if available) - Hides the type from selection when creating new bills but preserves it for historical records. Bills that already include this charge or discount type continue to display correctly. This is the safer option that maintains historical data integrity.

Deleting - Permanently removes the type. Only delete types that were created in error and never actually used on bills. Deleting types that appear on historical bills might cause data issues or prevent proper bill display.

When in doubt, deactivate rather than delete.

Common Charge and Discount Types ​

Typical Charges ​

Professional services firms commonly configure these charge types:

Project Management Fee - Surcharge for projects requiring significant coordination. Might be percentage-based (10% of project value) or fixed amount ($500 per project).

Rush Service Surcharge - Premium for expedited delivery. Perhaps 25% surcharge for work completed within 3 business days.

Disbursement Charge - Cost recovery for out-of-pocket expenses. Might be tax-exempt as expense reimbursement.

Research Fee - Charge for extensive research requirements. Perhaps fixed fee per research hour or percentage of time charges.

Technology Fee - Recovery for specialized software or technology used for the engagement. Might be fixed fee per engagement or per user.

Late Payment Fee - Penalty for overdue invoices. Often tax-exempt as it's not a service charge.

Reimbursable Expenses - Pass-through of client-specific costs. Typically tax-exempt and excluded from rate calculations.

Typical Discounts ​

Common discount types include:

Early Payment Discount - Incentive for prompt payment. Perhaps 2% for payment within 10 days, 1% within 20 days.

Volume Discount - Price reduction for large engagements or multiple projects. Might be tiered (5% over $10K, 10% over $25K).

First-Time Client Discount - Promotional discount for new client relationships. Perhaps fixed amount or percentage off first engagement.

Loyalty Discount - Appreciation for long-term clients. Perhaps percentage discount after certain years or project count.

Nonprofit Discount - Reduced pricing for charitable organizations. Often significant percentage (20-30%) for qualifying nonprofits.

Courtesy Adjustment - Discretionary reduction for relationship management. Used case-by-case for client satisfaction purposes.

Referral Discount - Thank-you discount for clients who refer new business. Percentage or fixed amount as referral appreciation.

Best Practices ​

Configuration Tips

Create Standardized Types Rather than adding miscellaneous charges with varying descriptions, create standardized charge and discount types with consistent names and behaviors. "Rush Service Surcharge" applied consistently is better than sometimes "Rush Fee," sometimes "Expedited Service Charge," sometimes "Quick Turnaround Premium." Standardization enables meaningful reporting and ensures clients see consistent invoicing.

Use Descriptive Names Charge and discount names appear on client invoices. Choose professional names that clients understand. "Project Management Fee" is clear; "PMF" is cryptic. "Early Payment Discount" is explanatory; "EPD" requires explanation. Write for client comprehension, not internal convenience.

Configure Appropriate Tax Defaults Spend time setting correct default tax rates for each charge and discount type. This prevents tax errors on invoices and saves time during bill creation. If project management fees are always taxed at standard rate, configure that default so it applies automatically without manual selection every time.

Document Usage Guidelines Use description fields to document when each charge or discount should be used. Perhaps "Rush Service Surcharge - Apply when client requests delivery within 3 business days of engagement start. Typically 25% of standard fees." Clear guidelines ensure consistent application across team members.

Don't Over-Create Types More charge/discount types aren't necessarily better. Too many options create confusion about which to use when. Create types for charges and discounts you use regularly (perhaps monthly or at least quarterly). Don't create types for one-off situations - handle those as special line items if your system allows, or use a general "Miscellaneous Charge/Discount" type.

Review Annually As your business evolves, charge and discount types might become obsolete or need updates. Review configuration annually. Remove or deactivate types you're no longer using. Add new types for new fee structures or promotional programs. Update descriptions to reflect current policies.

Coordinate with Accounting Charge and discount configuration has accounting implications, particularly around tax treatment and revenue categorization. Involve your accounting team when creating charge and discount types to ensure tax defaults are correct and the types align with your accounting chart of accounts and financial reporting requirements.

Maintain Rate Calculation Consistency Be thoughtful about which charges and discounts affect charge-out rate calculations. Generally, anything that represents a true pricing adjustment (premium for rush service, discount for volume) should affect rates. Pass-through costs (reimbursable expenses) and relationship management decisions (courtesy adjustments) typically shouldn't. Consistent application ensures meaningful rate reporting.

Common Scenarios ​

Scenario: Rush Service Pricing ​

Situation: Firm wants to charge premium for expedited service completed within 3 business days.

Solution: Create charge type "Rush Service Surcharge" as a Charge (increases bill value). Description: "Applied when client requests completion within 3 business days. Typically 25% of base fees." Set default tax rate to standard rate (rushwork is taxed like normal services). Set "Affects Charge-Out Rate" to Yes (rush premiums represent increased effective billing rates). When creating bills for rush projects, add this charge at 25% of the time charges.

Scenario: Early Payment Incentive ​

Situation: Firm offers 2% discount for invoices paid within 10 days to improve cash flow.

Solution: Create discount type "Early Payment Discount - 2%" as a Discount (decreases bill value). Description: "Offered for payment within 10 days of invoice date. Applied upon receipt of prompt payment." Set default tax rate to match the invoice's rate (discount reduces taxable amount proportionally). Set "Affects Charge-Out Rate" to Yes (early payment discounts reduce effective billing rates and should reflect in rate reporting). Apply discount when clients make prompt payment.

Scenario: Expense Reimbursement ​

Situation: Firm incurs out-of-pocket expenses on behalf of clients and needs to recover costs.

Solution: Create charge type "Reimbursable Expenses" as a Charge. Description: "Out-of-pocket costs incurred for client-specific needs. Includes travel, filing fees, specialized research subscriptions, etc." Set default tax rate to Tax Exempt 0% (expense reimbursements typically aren't taxed). Set "Affects Charge-Out Rate" to No (expense recovery doesn't represent billing rate performance). When creating bills with reimbursable expenses, add this charge for the total expense amount.

Scenario: Nonprofit Discount Program ​

Situation: Firm offers 25% discount to registered nonprofit organizations as community service.

Solution: Create discount type "Nonprofit Organization Discount" as a Discount. Description: "25% discount for registered 501(c)(3) charitable organizations. Requires documentation of tax-exempt status." Set default tax rate to match invoice rate (discount proportionally reduces taxable amount). Set "Affects Charge-Out Rate" to Yes (nonprofit discounts reduce effective billing rates and should appear in rate reporting). Apply to eligible nonprofit client bills at 25% of fees.

Scenario: Project Management Surcharge ​

Situation: Complex projects requiring extensive coordination justify additional fee beyond time billing.

Solution: Create charge type "Project Management Fee" as a Charge. Description: "Applied to projects involving multiple team members, workstreams, or deliverables requiring significant coordination and oversight. Typically 10% of project fees." Set default tax rate to standard rate (taxed like professional services). Set "Affects Charge-Out Rate" to Yes (project management premiums increase effective billing rates). Add to appropriate projects at 10% of time charges.

Need Help?

Charge and discount type configuration standardizes fee structures and ensures consistent billing practices. Create types for regularly-used charges and discounts, configure appropriate tax defaults, and document usage guidelines.

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