I am trying to figure out if there is a way to treat billable hours as inventory. Example: My client has a number of subcontractors which are assigned a PO (I set each one up as a job). Each PO has a certain number of hours and I am looking for the system to keep track of or deduct from a total of hours as the subcontractors work and are paid each payroll period. Is this possible? Each contractor also has a service item with their cost and billable rate, which is used to pay the subcontractor and bill the client for time.
Inventory is something you own, so no it can not be used for this
If you are in the US you need to be careful, subcontractors are supposed to be in business for themselves. As such they bill you and you pay the bill, make it billable to the customer. You may use payroll to send the payment. When you enter that bill, do so from the PO and enter the actual hours being billed, the PO will stay open for the remaining number of hours.
But you need that bill for your audit trail. If an auditor were to see that you paid the sub every week (as na example) and there was no bill to support that payment, it would be very easy to conclude that this sub is really an employee. If that happens you will be liable for back payroll taxes and penalties.
In the US the IRS tends to look hard at this situation, attached is the guidelines and auditor uses to decide if the person is an independent contractor or not.
Ok so inventory is not an applicable term here. Let me clarify. We are awarded jobs from our client. As the jobs are awarded, we higher contractors to complete the job. i.e. x number of hours for the job (project). As the job completes, the contractors is released. What I am looking to do are to track the number of hours we bill to the job, i.e. the number of hours the contractor has worked and how many hours remain before the job/hours are exhausted. No payroll/employee issues here, if the job or project warrants, we hire the contractor on as an full time employee with benefits. Sorry for the confusion.