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Best Practices for National Account Contracts (contracts paid for by vendor credits)

Use this post if you get paid and this post if you get a credit.

It seems a lot of people don't bill a National Contract through EA for different reasons. Not billing the contract through EA creates difficulties with tracking whether the proper credits were received for these contracts. This is a suggested best practice to help track and reconcile these types of accounts within EA.

Setup the contract just like you would a normal contract in EA. The main customer on the contract should be the actual customer that has the equipment. Your base rate, cpc, covered copies, etc. should be set at exactly what the agreement is with the vendor.

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On the Billing/Contact tab of the contract, set the Bill To as the Vendor that will be issuing credits for this contract. (You will have to create a Customer Record for that Vendor if you don't have them setup as a Customer already). Make sure you have the box checked to Bill Contract. Let the contract bill just like any other contract.

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The Contract Invoices will show in the Receivables Console under the Vendor Customer Record. Notice that in the Customer Number field it shows the actual Customer for this Contract. It also shows the Contract Number in the Description field. This helps you track which invoices are for for which National Account.

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#1) Once you receive the credit from the vendor for this contract, create a AR Miscellaneous Charge Credit Memo for the Vendor Customer of this contract. #2) In the description field, input the Vendor Credit Memo Number that the Vendor referenced on their Credit Memo to you. This allows for easy tracking from AR to AP Credit Memos. You can match the Description field to the AP Vendor Credit Memo number for reconciliation if needed in the future. #3) Click add and input the amount of the Credit Memo in the Charge Amount field. #4) In the Revenue Account field, input a GL PassThru account that you have created for this. This is just a wash account for the transactions and should always zero out on the financials. You can call it Pass Thru if you would like. #5) Make sure to set the Tax As flag to None. This way EA doesn't try and calculate taxes on this transaction. #6) In the Apply To field, input the Invoice Number you want to apply this credit towards. If your Credit Memo pays for more than one Invoice then see this forum post on how to apply an AR Credit Memo to multiple invoices. https://support.ceojuice.com/entries/26553310-How-to-Apply-an-AR-Credit-Memo-to-Multiple-Invoices This completes the payment of the Contract Invoice that you billed through EA.

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Next you need to record the Credit Memo on the AP side so you can use it to deduct off what you owe the Vendor. #1) Create a Vendor Credit Memo and input the Credit Memo # in the Vendor Memo field. This is the same number you put in the Description field of the Customer Miscellaneous Charge Credit Memo. #2) After clicking Add, in the Description field input the Invoice Number that this Credit Memo paid on the AR side. You can even reference the Customer Name for added information. #3) Enter the amount of the Credit Memo in the Amount field. #4) In the Account field, select the same GL Account you used on the AR Miscellaneous Credit Memo. Applying the AR Credit Memo and the AP Credit Memo to the same account makes this a wash. It's just used as a transaction Pass Thru Account. #5) Make sure to check the box to Exclude From Terms Discount so that your normal terms discount that you get from that Vendor is not applied to this Credit Memo. You do not have to associated the Customer, Contract or Equipment to this Credit Memo. You only associate Customers, Contracts or Equipment to AP Invoices when you are actually paying another dealer to service equipment for you. If you associated a Credit from a Vendor to a Customer, Contract or Equipment you are reducing your costs on that Contract and it will not reflect correct Profitability for that Customer, Contract and Equipment.

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Now you have billed the Contract, paid the Contract Invoice and deducted the Vendor Credit Memo from what you owe that Vendor all within EA. Billing the Contract through EA this way gives you the ability to easily see which Contracts the Vendor still owes you credit for, how far behind the Vendor is on issuing you these Credits and gives you accurate profitability on National Account Contracts.

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    Barbara Isert

    This is excellent and extremely helpful - thank you so much for sharing!

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