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Managing Contracts, Service Objects and Services Commitments

Contracts, Service Objects and Services are required to perform recurring billing.

Service Commitments describe the monetary content of agreements with customers and suppliers, as well as termination dates. They can only be created in a Service Object. The Service Object defines the essential information about the End User and the actual content, which is to be billed on a recurring basis.

Contracts​

Contracts are used to organize Service Commitments for billing to customers and suppliers. If something is to be invoiced via a separate invoice, this can be set up via a separate contract. Service Commitments have as Partners either Customer or Vendor. Services Commitments set up as Customer will go into Customer Contracts, services set up as Vendor will go into Vendor Contracts.

Bundle​

Several contract lines can be combined to a Bundle. A bundle is like an independent product that consists of several components. For example, a bundle can be used to combine a transfer fee and the ancillary costs (maintenance) into one bundle product. The bundle can only be used in Customer Contracts and sales documents (e.g. Sales Quotes / Sales Orders).

Overview of the fields in the Service Commitments / Contract lines​

  • The Service Start Date describes the date from which the Service Commitment is valid and can be invoiced. *The Service End Date is the date the Service Commitments ends and can no longer be billed. The date can be entered manually when a Service Commitments is terminated.
  • Planned Service Commitments exist shows that a Contract Renewal has been performed for this Service Commitment, but the renewal is not yet valid because the Service Commitment has not yet been fully invoiced.
  • The Next Billing Date indicates the due date of the next billing. The date is automatically recalculated during the billing run. The date is grayed out if invoiced to Service End Date.
  • The Calculation Base Amount is the basis of valuation of the Service Commitments. When selling an item with additional recurring Service Commitments, the Calculation Base Amount is the value of the item.
  • The Billing Rhythm specifies the Dateformula for rhythm in which the service is invoiced. Using a Dateformula rhythm can be, for example, a monthly, a quarterly or a yearly invoicing.
  • The Calculation Base % is the percentage from the Calculation Base Amount which is used to price the Service Commitment.
  • The Price is calculated from the Calculation Base Amount and the Calculation Base %. It is always valid for the entire Calculation Base Amount. I.e. it is an annual price if a year is entered in Calculation Base Period and a monthly price if a month is entered in Calculation Base Period.
  • The Discount % indicates the percentage discount for the Service Commitments.
  • The Discount Amount indicates the discount applied to the Service Commitments.
  • The Service Amount is the result of the Price, Discount, and Quantity of the Service Object.
  • The Calculation Base Period indicates the period to which the Service Amount applies. For example, enter 1M if the amount refers to one month or 12M if the amount refers to one year. Invoicing via specifies whether the service is charged recurrently or only stores information about the sale (e.g. for warranty extensions). Service Commitments with the Contract option can be called into contracts and billed recurring. *The Partner specifies whether the Service Commitments are in Accounts Receivable or Accounts Payable. Accordingly, Service Commitments can be called into Customer/Vendor Contracts and invoiced via A/P or Sales Invoices.
  • The Contract indicates the contract through which the Service Commitments will be billed.
  • The Initial Term indicates the minimum term of the Service Commitments. If the Initial Term is filled and no Subsequent Term is entered, the Service End Date is automatically set to the end of the Initial Term. *The Subsequent Term specifies the duration of the automatic extension after the Initial Term. In addition, it determines the rhythm of updating Cancellation Possible Until and Term Until. If the field is blank and either the Initial Term or the Notice Period is set at the same time, the Service End Date is automatically set to the expiration date of the Initial Term or the Notice Period.
  • Cancellation Possible Until indicates the last date for timely cancellation. The date is determined by the Initial Term, the Subsequent Term, and the Cancellation Period. A 12 month Initial Term with a 3 month notice period means that the due date for termination is 9 months. A Subsequent Term of 12 months postpones the deadline by 12 months when the Cancellation Possible Until date is reached.

Invoice discounts​

It is possible - permanently or for a limited period - to grant a flat discount (invoice discount) for the entire contract. This can be used, for example, if the customer changes the license model or if a permanent discount on the Service Commitment is subsequently agreed.
The discount can only be defined in the Service Commitment Templates and the Service Commitment Packages. Amounts for Service Commitment Package Lines that are marked as Discount=Yes will act as discounts in billing. The process of creating a Service Object and billing is identical to the established processes. When creating the Billing Proposal via Recurring Billing, billing lines created for contract lines with discounts are created with a negative quantity and therefore a negative Service Amount. This discount amount is subsequently taken into account when posting documents are created.

Service Commitment Package with invoice discount

A Service Commitment Package in which an invoice discount is defined can only be assigned to items with Service Commitment Option=Service Commitment Item.

Invoice discounts are applicable to both Customer and Vendor Contracts. They are also taken into regards in Credit Memos and in Contract Deferrals.