Exercise 13: Contract Billing
In this exercise you release a contract to invoicing. After the pending invoice is created, you discover a problem with the contract that affects the billing. You execute Billing Reversal Maintenance, then correct the contract, and release it to billing a second time. You will then recognize the revenue for the first month of the contract.
Release a Contract to Invoicing
1 Go to Contract Maintenance (11.5.13.1).
3 Navigate through Contract Maintenance until your cursor is in the Hold Contract field. Record the Next Bill Date below.
Next Bill Date: _____________________________________
Notice that the Next Bill Date is the first day of the month because Bill Arrears is set to No.
4 Complete the contract and return to the menu.
5 Go to Billing Release to Invoice (11.5.18.13).
6 Enter the following data in the appropriate fields.
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Field
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Value
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Contracts Due Until
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Enter the Next Bill Date you wrote down in step 3.
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Service Contract and To
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Enter the contract you created earlier in Exercise 12.
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Update
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Yes
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Print Report
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Yes
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7 Record the Next Sales Order number below. (It is in middle of screen) Then click Next.
Next Sales Order: _____________________________________
8 When the Printer Options frame displays, direct the output to Page and press Enter. Review the output of the program.
Notice that four lines have been generated on the invoice, two for each item covered and two for the additional charge items.
9 Return to the menu.
Review Effect of Invoicing
1 Go to Contract Maintenance (11.5.13.1) and enter the number of the contract you just released.
2 To validate the change in billing dates, navigate again through Contract Maintenance until your cursor is in the Hold Contract field. the second header frame displays. Record the Next Bill Date below.
Next Bill Date: _____________________________________
Has it changed from the value recorded in step 3 of the previous task? It should show a date for next year.
3 Return to the menu.
4 Go to Transactions Detail Inquiry (3.21.1).
Review the last four entries by using the next/previous keys. Notice that there is both an ORD-SO and an ISS-SO transaction type generated for each sales order line on the contract invoice.
At this point, no GL transactions have been created, since the invoice has not been posted.
5 Return to menu
6 Go to Sales Order Maintenance (7.1.1).
7 Enter the contract sales order number in the Order field, and click Next.
The following error should display:
ERROR: This is a service contract. Use Contract Maint for updates. Please re-enter.
Contract invoices cannot be updated with sales order programs. The original contract must be modified and the invoice regenerated. Return to menu.
Reverse the Contract Billing
Let’s consider that the billing you released did not include a special discount promised the customer, and as a result, was for the wrong amount. This task shows how to reverse the billing. In this example the invoice has not yet been printed or posted.
1 Go to Billing Reversal Maintenance (11.5.18.18).
2 Enter the following data in the appropriate fields and click Next.
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Field
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Value
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Contracts Billed
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Leave default of today’s date.
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Service Contract and To
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Enter the contract you released earlier.
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Update
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Yes
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Report
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Yes
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3 Review the output for confirmation that the contract billing has been reversed and the sales order deleted. Return to the menu.
Correct the Billing Date
1 Go to Billing Date Correction (11.5.18.19) and enter the number of the contract you just reversed.
2 Click Next and verify that the date in Next Bill frame is set to one year earlier (so that it is reset to the original Next Bill Date) and click Next to save.
3 Click Back to return to the menu.
Modify and Re-Release the Contract
Make the change required on the contract and re-release it for billing.
1 Go to Contract Maintenance (11.5.13.1).
2 Enter the number of the contract you released to billing.
3 Click Next until your cursor is in the Hold Contract field.
Notice that the Next Bill Date has been reset to its original value.
4 Click Next to reach the Coverage Limits frame.
5 Click Back to the End User field in the End User Default frame.
6 Using the drop down menu, select the first new end user you created entered on the contract.
7 Click Next until you reach the Coverage Limits frame.
8 Click Back.
You should be at the End User Item Detail frame.
9 Enter 1 and click Next until you are in the Net Price field.
10 Change the $1,000.00 in the Net Price field to $900.00 and click Next.
Notice how the system calculates and displays this as a 10% discount in the Disc Pct field. Click Next until you reach the Coverage Limits frame.
11 Continue on until you reach the trailer frame. Click Next. The contract total should reflect the adjustment in coverage price. Click Next again to complete the contract; return to the menu.
12 Go to Billing Release to Invoice (11.5.18.13).
Enter the following data in the appropriate fields.
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Field
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Value
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Contracts Due Until
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Enter the Next Bill Date you wrote down in step 3.
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Service Contract and To
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Enter the contract you created earlier in Exercise 12.
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Update
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Yes
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Print Report
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Yes
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Record the Next Sales Order number below. (It is in middle of screen) Then click Next.
Next Sales Order: _____________________________________
Post and Print the Invoice
1 Go to Invoice Post and Print (7.13.4).
Enter the sales order number you recorded in step 12 of the previous task in the Sales Order and To fields. Leave the default values in all other fields; then click Next.
2 In the Printer Options frame, direct the output to the Page. Press Enter to print the invoice. Review the output and write down the number of the invoice created here.
Invoice Number: _____________________________________
Posting the invoice:
• Creates updated AR records
• Creates updated GL unposted transaction records (a debit to AR and a credit to Sales, at a minimum)
• Updates salesperson commission records, where appropriate
• Creates updated invoice history records
• Deletes the sales order related records
3 Review the invoice; return to the menu.
Deferred Revenue and Revenue Recognition
You invoiced the customer for a year’s contract coverage. You are not able to recognize all the revenue at this time. The first month’s revenue was recognized; the remaining 11 months were deferred. In this task you will review the report showing this. You will then check what the second month’s revenue would be.
1 Go to Deferred/Accrued Revenue Report (11.5.18.22). Enter the contract number that you just invoiced in the Service Contract and To fields. Change Revenue Type to Deferred. Click Next and output to Page.
Check what next month’s revenue recognition would be.
2 Go to Revenue Recognition (11.5.18.21) and enter the contract number in the From and To fields.
3 Change the GL Effective Date to the first day of next month.
4 Leave Update to No and click Next twice.
Notice in the report the transactions which would occur to recognize another month’s of revenue. Return to the menu.