Compare two Estonian employment proposals without mixing cost and cash

Make both proposals answer the same question

A lower service fee can still produce the higher matched bill. Before choosing, align the employee, gross salary, benefits, service scope, period and billing currency. Then compare recurring cost, one-off expense and cash held as security separately. The two proposals here are entirely fictional, are not Teamed or competitor prices, and contain no Estonian statutory-rate calculation. Their common EUR4,100 employment-cost subtotal is an assumed quote input supplied for the exercise, not a hiring estimate.

The brief is one Tallinn employee, EUR3,000 gross monthly, with the same agreed package and payroll service. Proposal A shows a EUR500 monthly service fee and includes the requested benefits administration. Proposal B shows EUR420, but the same administration costs another EUR120. Neither includes a tax or VAT line in this exercise; add applicable invoicing taxes to a real comparison.

The matched monthly answer is EUR4,600 versus EUR4,640

Proposal A: EUR4,100 employment-cost subtotal + EUR500 service = EUR4,600 each month. Proposal B: EUR4,100 + EUR420 service + EUR120 required administration = EUR4,640. On this scope, A is EUR40 lower per month even though its headline service fee is EUR80 higher.

Over 12 unchanged months, A totals EUR55,200 and B totals EUR55,680. B also has a fictional EUR300 setup expense, making its first-year expense EUR55,980: EUR780 above A's EUR55,200. This arithmetic assumes the same employee and package throughout, no annual salary change and no additional chargeable event. A real salary increase should change both proposals' common employment inputs; it should not disappear into the provider-fee comparison.

An excluded service is not automatically an overcharge. If your team can supply benefits administration and does not want to buy it, B's EUR120 falls outside that alternative scope. You have then changed the purchase, so write down the work the business takes back before declaring a saving.

The first payment answers a different question

A requires the first month's EUR4,600 plus EUR3,000 refundable security: EUR7,600 initial cash. B requires EUR4,640 plus EUR4,100 security plus EUR300 setup: EUR9,040. B therefore needs EUR1,440 more upfront cash in this example. The difference in security is EUR1,100; it is not part of the EUR780 first-year expense difference.

Record how security is calculated, when it can be used, when additional funding can be requested and what governs return. 'Refundable' alone does not give finance a return date. Keep the classification of the balance with the finance owner. For purchase comparison, the key is not to call held security a recurring fee or to omit it from cash planning.

Show conversion as its own line

Suppose EUR4,600 must be funded from sterling. At an illustrative reference rate of GBP0.86 per EUR, the starting amount is GBP3,956. If a fictional provider adds a separately calculated 1% conversion charge, that adds GBP39.56, before any bank fee. This percentage is invented to explain the method, not attributed to a competitor. A different market rate changes the base even when the markup is zero.

Teamed publishes zero FX markup on payroll currency conversion. Where you fund euro payroll from another currency, that removes a provider charge from the calculation and one fee variable from month-end reconciliation. It does not hold the market rate still. For euro-funded euro payroll, do not count a conversion saving that does not occur. Preserve the applied rate, reference rate or methodology, timestamp, amount converted and any separate bank charge with the invoice.

Sources: teamed.global

The approval note should explain the choice

The fictional note reads: 'Choose A on the matched scope: EUR4,600 recurring, EUR7,600 initial cash, EUR55,200 first-year expense under the stated assumptions. B costs EUR780 more in year one and requires EUR1,440 more initial cash. Reopen the decision if we retain benefits administration internally or the service scope changes.' That is an explanation another colleague can check.

In the acceptance tool, put the chosen proposal version in the header, the agreed monthly scope under purchased work, and the funding decision under commercial decisions. Attach the actual quotation elsewhere and reference it rather than entering bank details. Ask for a revised matched quote when a required line is missing; do not fill an unknown line with zero. A provider can be an excellent operational fit and still need to correct an incomplete proposal before finance approves it.