Velocity Global Contractor Management's deduction features allow you to deduct garnishments, advances, fees, and more from your contractor payments. You can manually or automatically create deductions associated with each contractor, which will automatically apply when your contractors are paid.
Types of Deductions
Pre-Payment Deductions
Pre-payment deductions are taken out of a payable subtotal prior to the payment and added as a negative line item to invoices.
For example, when you pay a $200 invoice with a $20 pre-payment deduction, your account will be debited $180.
Post-Payment Deductions
Post-payment deductions are deductions that are applied after your payment to contractors.
For example, when you pay a $200 invoice with a $20 post-payment deduction, your account will be debited $200 and your contractor will receive $180. Post-payment deductions are commonly used for garnishments, and can be routed to state or federal tax authorities.
Creating Deductions
Create a One-Off Deduction For a Contractor
To create a one-off deduction, navigate to the Send Payments section in the left-hand panel and select Payables. Select the All Deductions tab and click the Add deduction button:
Select the contractor's name from the Contractor drop-down. Enter a Deduction name, Deduction amount, and choose a Start date for the deduction. Scheduled deductions will be subtracted from upcoming invoices when they are paid for payables due after the deduction start date:
Partial Deductions
If a contractor's payment is insufficient to cover the full amount of a deduction, we will partially apply the deduction based on the available payment amount.
For example, if you create a deduction of $100 and the contractor's payment for the current pay period is only $75, we will deduct $75 from their payment. The remaining $25 will be deducted from the contractor's next payment. This process will continue until the full deduction amount has been applied.
Create an Ongoing Deduction
Velocity Global Contractor Management can also create ongoing automatic deductions based on custom parameters. For example, we can automatically deduct and forward a portion of income to state tax authorities for contractors residing in Massachusetts. Contact your account manager to set up ongoing deductions.
Bulk Upload Deductions
Multiple pre-payment deductions can be imported from a spreadsheet via bulk payable upload. Line items with a negative amount will automatically be imported as deductions, as shown below:
Contractor ID | Line Item Title | Amount |
ZBA-111 | Garnishment Order | -100.50 |
JCE-821 | Tool Fee | -25 |
Note: Any imported deductions will be immediately applied to future payments.
Deductions and the Payroll Lifecycle
To learn more about Velocity Global Contractor Management's Payroll features, visit our dedicated guide to Using Payroll.
Detailed Workflow
Setting the Deduction Start Date:
To ensure deductions are included in a payroll cycle, their start dates must be scheduled on or before the expected pay date. This scheduling allows the payroll system to recognize and apply these deductions during the processing phase.
Processing the Payroll:
Payroll is processed on a set date, and during this phase, the system incorporates all deductions that are active as of that date. If the payroll processing date is before the expected pay date but the scheduled start date of a deduction is on the expected pay date, it will still be included because the system prepares the final payment calculations for the upcoming expected pay date.
Issuing Payments:
Payments issued on the expected pay date will include all deductions that were valid as of the payroll processing date. This ensures that the amount disbursed to contractors is after all applicable deductions have been accounted for.
Example Scenario
Deduction Scheduled Start Date: May 15, 2024
Payroll Processing Date: May 13, 2024
Expected Pay Date: May 15, 2024
In this scenario, the payroll is processed on May 13th. However, because the deduction start date and the expected pay date both occur on May 15th, the deduction is applied to this payroll cycle. The payroll system recognizes that the expected pay date matches the deduction start date, thus including the deduction in the calculations for payments issued on May 15th.
For questions about deductions, please contact our Support Team.