Our fully-automated accrual engine is a huge time saver for companies who have policies where time off is earned via periodic accruals. No more creating complicated and unreliable spreadsheet tools to try to generate and track accruals! And employees now have full visibility into how much they've earned and how much they will earn in the future.

In order to ensure accurate time off accounting it's important to understand how the accrual engine works. Let's consider an example scenario for Acme, Inc. to help illustrate the important aspects of the accrual engine:

Acme, Inc. has a vacation policy where employees earn 80 hours per year, accrued monthly on the 1st of each month (note that we also support weekly, biweekly, and bimonthly accruals in addition to annual lump sums). The Built for Teams accrual engine will automatically divide the annual amount by the correct number of accrual periods to arrive at the monthly accrual amount. Here's how that will be calculated in our example scenario:

80 hours annually / 12 accrual periods = 6.6667 hours per accrual

So, each month on the 1st the system will run an accrual for every employee, adding 6.6667 hours to their vacation account balance. By the end of the year, each employee will have earned exactly 80 hours (the system will handle all of the decimals/rounding to ensure an exact annual amount).

The most important thing to understand about this whole process is that accruals are actually events that happen on a schedule you define, kind of like how payroll is an event that happens. Once payroll is done and you've paid your employees, payroll is over and you have a record of what happened! Accruals are the same. 

A few questions commonly arise in relation to accruals, so let's address those here so that you know what to expect:

Question: How do I change the amount of an accrual that has already happened? 

To change an accrual, first delete the accrual transaction and then do a balance modification to manually add the desired amount to the account.

Question: How is the accrual calculated for someone hired between accrual events?

It depends on what you'd like to happen! Built for Teams can either pro-rate the person's first accrual based on their hire date, or it can give the person a full first accrual. It depends largely on whether you consider your accruals to be time off earned by time already worked or time off granted in advance.

The choice is yours, and this article explains how to configure that setting.

Question: What happens if an employee is added to Built for Teams after an accrual event but they really should have been added before?

This scenario is a bit like realizing that you forgot to include a new hire's information in your payroll batch. It's not ideal but it does happen and Built for Teams makes it super easy to fix! 

Because the scheduled accrual already happened, you'll just need to manually account for the missed accrual by doing a one-time balance modification to add the missed hours to the employee's account (just like you would to manually pay the employee who was missed during payroll).

To continue learning about accruals, read more about setting up a scheduled accrual time off policy.

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