Contract/Purchase Order Link Overview

This processing provides the ability to link a P.O. to a Contract for selected re-rental equipment, and any supporting sales parts and sub-contract services.
The order can be generated on a new or existing Purchase Order at the time the product or service is put on a Contract.
Alternatively a contract can also be linked to a product order detail when the order is entered in Purchase Orders.
Typical items and services ordered to fulfil contracts include re-rent items, fuel, transport for owned or re-rentals, and erection or dismantling of equipment such as scaffolding and temporary fencing.

Note: This processing is for Contracts and does not apply to the Counter Worksheet.
It does apply when creating a contract as well as when a worksheet, quote, or reservation is converted to a contract.

This Purchase Order Information window is suppressed in document entry and a P.O. is not created if the product has been flagged to Stop P.O. in the Make/Model and Re-Order Information (Rental Assets) or the Inventory Re-Order Information (Sales Products) window.

To use this processing the 'Inventory Received in Warehouse' feature must be activated in the Company Inventory Parameters and the operator must have Document Field Access permission to the Contract - Create Linked Purchase Order feature in Security Role Permissions.
The Contract and the Purchase Order must be for the same division and the same location.
The Contract - Change Linked P.O. Sale Cost flag in the Document Field Access controls whether the operator is able to make changes to the P.O. Cost for a sales part being ordered in the Purchase Order Information window.

GENERATING THE P.O./CONTRACT LINK:

• Contract-to-P.O. Link
  When an eligible re-rent product, sales product, or service is put on the Contract or a document is converted to a contract, the operator is always provided the option to Create Purchase Orders by selecting the product to order and capturing the P.O. details in the Purchase Order Information pop-up dialogue window.
  A new product detail is then added to the Purchase Order, whether it is a new P.O., or adding to an existing P.O., and relevant P.O. Product Notes can be entered.
  The associated contract number is displayed for reference in the header of the Purchase Order.
  The Purchase Order can be flagged as already received and ready to be invoiced in A/P Invoices by P.O., or as open and still needing to be received in Warehouse Receiving.

• P.O.-to-Contract Link
  When the link to the Contract is established from the Purchase Order on the expanded product P.O. detail record, the quantity of the product must be the same on both documents.
  The products from the contract are selected in the Selection Required window.

  Note: A P.O. can only ever be linked to one contract, but a contract can be linked to multiple Purchase Orders for various vendors.

PRODUCT SETUP:
Following are the requirements for a product or service to be eligible for this processing in Purchase Orders and in Contracts:

• Sales Merchandise:
  • Sales products must belong to a Sales Product Class that is flagged to Allow Create P.O. from Contract.
  • Serialized Sales products cannot be ordered directly from a contract.
  • Parts cannot be ordered directly from a contract if the selected vendor uses a conversion factor as defined in Inventory Re-Order Information or in Alternate Vendor Purchasing.
  • Ordering parts by location is not applied and a new order is always for the location defined on the P.O./Contract link
  • When the link to the Contract is established from the Purchase Order, the quantity of the product must be the same on both documents.
  • To make changes to the P.O. Cost for a sales part being ordered in the Purchase Order Information window, the operator must have Document Field Access permission to the Contract - Change Linked P.O. Cost in Security Role Permissions.
    

• Re-Rental Equipment:

  • Rental products (bulk or non-bulk) must belong to a Rental Product Class that is flagged as a Re-Rent Class in the Additional Options window of that class.
  • Rental products must also belong to a Rental Product Class that is flagged to Allow Create P.O. from Contract in the Additional Options window.

    When an order is generated for a re-rent product on a Contract, the rates to be paid to the supplier can be calculated based on a discount percent of the rates charged to the customer.
    This is useful if the agreement with the re-rent vendor is that he gets a percentage of the rental revenue collected.

    A P.O. is also generated on Exchanges By Contract or on Exchanges By Customer when the replacement "New Product Number" is a Re-Rent product as defined in the Rental Product Class and the Purchase Order Information screen is triggered to capture the required PO information if the operator has "Document Field Access" permission to the "Contract - Change Linked P.O." in the Security Role Permissions.
    No P.O. is created for the re-rent product if the operator does not have role permission.

    When the A/P Invoice by P.O. is entered for a re-rent item, the default cost to pay the supplier uses a percent of the rates charged to the customer as defined when the P.O. was created from the Contract in Contract to Purchase Order Information, based on the period from when the product went out on the contract or was last billed, to the date of the A/P invoice.
    This defaulted estimated cost can be over-typed if required to match the invoice from the supplier.

    The rental period prints on the Purchase Order details and is also displayed for reference with the vendor re-rent rates, when the invoice from the supplier is entered in A/P Invoices by P.O.
    The Suppress Rates on PO Print flag in the Company Customer Forms setup controls whether the product rates should or should not be printed on the Purchase Order detail line for rental products ordered from a Contract.

    When the A/P Invoice is posted in Post A/P Invoices the average cost of the re-rental is not updated and no A/P Transfer Adjustment is applied.

• Services:

  • In the Additional Options window of Service Codes the Create P.O. from Contract flag must be checked.
  • In the Additional Options window of Service Codes an associated sales product must be defined in the P.O. Product Number field.
    This associated sales product must be a "zero cost" item and cannot be ordered by location, use an order conversion, or be serialized, and it must belong to a Sales Product Class flagged to Allow Create P.O. from Contract.
  • When the link to the Contract is established from the Purchase Order, the quantity of the service must be the same on both documents.
  • To create a P.O. for a Service from a Contract, the service may be manually added to the contract or selected from the List Contract Services checkbox screen option configured in the Company Contract Parameters, and the PO is created for the associated sales part.

    When the A/P Invoice is posted in Post A/P Invoices the average cost of the associated sales part is not updated and the description for the cost on the posting journal for this item is Outside Service.

In Contract inquiries, a window is provided on the product or service detail line in the Qty field to view any associated 'Purchase Order Details'.

Re-Rent Revenue Capture

Revenue from re-rent invoicing automatically writes records to Re-Rental Transactions when the invoices are posted through Daily Close 2, and then posts to the G/L accounts defined in the Re-Rent Product Class.

Re-Rent Costs Capture

Once the warehouse receiving is complete, multiple A/P invoices from the supplier for the re-rent period can be entered in A/P Invoices by P.O.
When the re-rent is completed the P.O. is closed when the final A/P invoice is entered and the Re-Rent Balance is set to zero, and that AP invoice is posted.
The Re-Rental Information window is used to capture the billing dates and rates.

As these invoices are posted, a re-rental cost transaction is written to the Re-Rental Transactions that can be viewed in Re-Rental Inquiry/Report.

Note: When a re-rent transaction is entered using a P.O./Contract link, the A/P invoice from the re-rent supplier must be entered in A/P Invoices by P.O. (not A/P Invoices) in order to complete the P.O. link and write the re-rental transactions.

Product costs, on hand quantities, and Asset Tags are not updated in the product file for re-rental and services ordered using the P.O./Contract link.

Note: Even if the flag to Update Average Cost In Warehouse is activated in the Company Inventory Parameters, costs are NOT updated for re-rent and services ordered using the P.O./Contract link process, as these items must post through A/P Invoices by P.O. to calculate appropriate costs.

Expense Reporting and Accrual Postings

The P.O./Contract Accrual Report can be used to calculated unbilled expenses up to a cut-off date and with the option to create self-reversing accrual journals written to Standard Journals and posted to the GL through Post Standard Journals.
The report can also be run for a date in advance and together with the Unbilled Revenue Report will be useful in giving a projection of month end performance at any point during the month.

Note: The corresponding Accrual entries will be over-written the next time the P.O./Contract Accrual Report is re-run and new transactions are created, regardless of whether the posting in Post Standard Journals has been completed.