About Request Contract

A Contract serves as an agreement between service provider and a customer.

Defining a Request Contract

Contracts are normally defined per customer but is possible to extend it to cover multiple customers, by connecting additional customers.

Connecting additional customers to a Contract can serve the following purposes:

It can allow many customers to use one Contract, for example, if different departments within a company are defined as separate customers, but still allowed to use the same Contract.
It can allow you to enter a different payer, for example, if one of the departments have to be invoiced, instead of the parent company, the department can be entered as an alternative customer.

Contracts can be grouped using a contract type, where a contract type can be for example, Warranty or Preventive Maintenance.

It is possible to assign a Contract Manager to a contract, to indicate who is responsible for the contract details.

The Contract has a validity period, defined between the Valid From date, and the Expiry Date. For an evergreen contract, the expiry date can be left blank. If a contract has expired, it is possible to renew the contract, using the Renew command. This will create a new contract revision.

It is possible to "Freeze" a contract, which can be used when e.g. a customer fails to make a payment. A frozen contract can still be used on a request, but a warning message will be presented to the user logging the request, indicating that the Request Contract is frozen. A frozen contract can still be invoiced.

Statuses of a Request Contract

A Contract is controlled by status:

Planned – A new contract will always have status Planned. A Planned contract cannot be used on requests.

Active – An active contract can be used on requests and can be invoiced.

Negotiated – When a contract is being re-negotiated, the status can be set to Negotiated. The contract cannot be used on a request while in this status.

Closed – A closed contract is no longer in use.

Defining Invoice Parameters

Invoice parameters are defined in the Invoicing tab and are required in order to invoice the contract. The following invoicing parameters are required for invoicing.

Price Unit Length and Price Unit

Specifies the time period for which the periodic price to be invoiced is valid. For example, if a contact line contains a periodic price of $1200, and the customer will be invoiced every quarter, i.e. March, June, September and December, the following table shows how different price units and price unit lengths, affect the price to be invoiced:

Price Unit Length	Price Unit	Price to be Invoiced ($)				Explanation
Price Unit Length	Price Unit	March	June	September	December	Explanation
1	Month	3600	3600	3600	3600	Since the periodic price of $1200 is only valid for a month (price unit length) and invoicing is done once every 3 months, the price to be invoiced multiplied by the number of months, resulting in $3600.
3	Month	1200	1200	1200	1200	Since both the price unit length and the invoicing period are the same, i.e. 3 months, the total price to be invoiced remains the same at $1200.
1	Year	300	300	300	300	In this example, the periodic price of $1200 is valid for 12 months and therefore it should be divided across the invoicing periods, meaning the full year invoice amount of $1200, is divided by 12 months (price unit length) and then multiplied by 3 (each quarter).

Period Allocation

Period allocation is common when a customer is invoiced a fee for the contract, which will be applied for future periods. The contract allows you to distribute amounts that should be invoiced over time. When an Invoice Plan Detail Line is created, either for preview or when creating an invoice directly, a period allocation rule is automatically attached to the Invoice Plan Detail Line. The period allocation method used by default is Proportional, but can be changed to Even or Mixed. Your can also define the allocation method the system should use by default, by specifying the relevant method in the Object Property, PERIOD_DISTR_METHOD, found in Application Base Setup / System Setup / System Definitions / Object Properties.

Invoice Rule

Defines if invoicing should be carried out in advance i.e. the invoice due date will be set at the start of the invoice period (Prior) or if the invoicing should be carried out at the end of the invoice period i.e. the invoice due date will be set at the end of the invoice period (Post).

Periodic Invoicing

Specifies how often a contract should be invoiced. The Plan Start Date and Plan End Date defines between what dates an invoice plan should be generated. It is possible to adjust the Plan End Date, using the Extend Plan command in the contract header. The Interval defines at what interval the invoicing should be done. The invoice plan will be generated based on the interval and the interval unit. (e.g. "1, month" = every month, "3, month" = every quarter or "12, month" = once a year).

Revaluation

Determines how often and at what percentage a revaluation should be performed on the contract, if applicable. The percentage can be positive or negative, for example, a price of $100, revaluated at 5% would result in a revised price of $105. If revaluated at -5%, the revised price would be $95.

Defining Price Agreements

During the lifecycle of a contract, it is not uncommon to adjust prices from what was agreed at the time of the creation of the contract. Instead of revising the contract, a Customer Agreement can be connected to the contract. The price agreements connected to a contract are used explicitly for the contract, meaning that the agreement will be selected over any other price agreements with the same customer and that the prices defined in the customer agreement overrides the prices defined on the contract.

Create Recurring Service Program from a Request Contract

A Recurring Service Program can be created from a Request Contract and the Recurring Scopes of the program are eligible to use the Request Contract Lines where relevant. Connecting a contract line provides user the ability to select All Objects or a Selected Object only from the corresponding contract line when creating recurring scopes and the service objects are filtered by the contract line.

For Recurring Scopes associated with a Contract Line, the SLA Template and Pricing Rule on the Contract Line will be applied on Request scopes on the generated Recurring Service Requests. The Request Contract should be in Active state to generate Requests from contract connected Recurring Service Programs.

Recurring Service Program can be created using Request Contracts in Planned, Active, Negotiated status. When a recurring service program is connected to a request contract, the program validity is set to the Valid From and Expiry Date of the request contract, but can be edited on the program.

Service Notes

Service notes are free-text comments, that can be used to provide and capture pertinent information relevant to the lifecycle of the Request Contract. You can use Note Types to categorize service notes and it is possible to use pre-defined Template Texts to populate the text.

When a contract is associated with a Request, it is possible to see the associated Service Notes from the Contract on the Request as well as on the task. More details about the Service Notes are covered in Add Service Notes

Defining Request Contract Lines

When creating contract lines, it is possible to define the validity period, a price rule, whether or not the line forms part of perioding invoicing through an invoice plan, the service(s) covered under the contract line and the models and equipment covered. Once the line has been created, it's possible to further define it as described below.

Services on Contract Lines

Is it possible to define one or many services that are covered by a specific contract line. When a Request is created and a service is selected, the contract line will be applied automatically if only one match exists, otherwise the list of applicable contract lines will be filtered based on the Contract, Customer, Object, Service Organization and Service.

Coverage for a Contract Line

It is possible to define which objects and/or models that are covered by a contract line. If the object specified on the contract line has a structure, it is possible to include all object in the structure that are below the object specified on the line. This is done by setting Use Line on Structure to Yes. It is possible to view the covered structure by using command Object Structure, and to include/exclude individual objects if required. The option Include Objects added to Structure will ensure that any new objects added to the equipment structure are automatically included in the Request Contract Line coverage as well.

Invoicing parameters on Contract Lines

Invoice Plan

Enabling the Invoice Plan option, makes it possible to invoice contract lines periodically. When periodic invoicing is used, a Sales Part should be specified to define the periodic invoicing price. A new tab Periodic Prices will appear when an Invoice Plan is used.

Periodic Prices

For Contract Lines using an Invoice Plan, one or more Periodic Price Lines exists, that will display the price that will be invoiced per Contract Line for a given period. The Periodic Price Lines can have two statuses:

Accepted – All Periodic Price Lines are created in status Accepted. As long as the status is Accepted, it is possible to invoice.
Revaluating – A Periodic Price Line receives status Revaluating when the price has been revaluated. In order for it to be invoiced, the status of the line should be set to Accepted. This can be done by using command Accept Change.

The following steps can be performed related to Periodic Price Lines:

Close: Once invoicing is done, you can close the Periodic Price Line. When closing a Periodic Price Lines, the details of, who closed the line and the date it was closed, will be recorded.
Revaluate Periodic Price: This is done through the Price Change command and is used to adjust the price of a specific line. It is possible to define from when the price change is valid by entering a Revaluation Date. The new price can either be adjusted using a percentage from the current price, or by entering a new price. It is possible to adjust the quantity as well. When a line is revaluated, the prior line Valid To date will be updated with the Revaluation Date.
Retrieve Sales Part Price: If the Sales Part on the contract line has changed, it's possible to update the price of the periodic price line by using the command Retrieve Sales Part Price.
Rollback Change: If a line has been revaluated and the change hasn't been accepted, it's possible to use the Rollback Change command, to delete the line.
Accept Change: Once a Periodic Price Line has been revaluated, it must be accepted before it can be used.

Price Rule

The Requests associated with a Contract Line, regardless of the Invoice Plan setting, can use a Price Rule to control how prices are calculated. For example, when periodic invoicing is used for a Contract Line, a Price Rule can be defined as "Free of Charge" using the Quick Setup for the Total Scope, or by setting the revenue % for Type "All Other" to 0, which means that the Requests associated with this Contract Line will be performed without a charge.

A price rule basically defines how a customer is charged for work performed on the contract line. Price rules can have multiple rule lines defined for different sales groups and cost types, as well as a default, mandatory price rule line covering all other types that haven't been explicitly defined.

It is possible to use a Quick Setup for the Total Scope which covers some of the most simple scenarios:

Total Scope Usage Based – The customer will be invoiced based on the resources that were used while performing work.
Total Scope Fixed Price – The customer will be charged a fixed price for the work performed, regardless of time spent or material used.
Total Scope Free of Charge – The customer will not be invoiced for the work performed.

Benefit Plan

Requests associated with a Contract Line can utilise a Benefit Plan to specify if a certain number of requests are included covered under the contract line. A benefit plan consists of a price rule, a number of applicable requests and the date parameters for the applicability of the benefit plan. Requests created that satisfy the parameters of the benefit plan will have their prices calculated using the price rule defined in the benefit plan, thus overriding the price rule defined on the request contract line.

SLA Template (Service Level Agreement)

The SLA Template defines the Service Level agreement applicable for a certain Contract Line. Each contract line can have a different SLA. The SLA templates can have a set of lines, with triggering events, fulfilment events and durations. The templates are defined in Service Management / Request Management / SLA Management / SLA Template.

For Request Scopes associated with a Contract Line, the SLA Template will automatically create SLA Commitments on the Request, Scope and Task (depending on setup of the template).

Urgency

The urgency can be used to change the SLA and Price Rule on a Request Scope and when specified on the Contract Line, the list of applicable Urgencies will be filtered to only show Urgencies relevant to the contract line selected. Let's assume a normal Request has a 48 hour SLA and a Normal price rule. By applying an urgency, these values can change e.g. urgency "HIGH" could be added on a request and the SLA would automatically be updated to a 12 hour SLA and the price rule would be updated to "Premium". To use Urgency, it must first be defined in Basic Data

Invoicing Contracts

A Contract can be invoiced in several ways:

Through a Request – A Contract Line can be connected to a Request Scope, when you create a new Request/Request Scope. You can invoice for work performed on Requests that are covered by the Contract, by following the normal request invoicing process of creating an Invoice Preview.

Invoicing the entire contract is done from the contract itself. From the Invoicing tab and the Invoice Period section, you can either create an Invoice Preview or choose to create an invoice. When invoicing a contract, the system checks if the invoice period falls within the valid time period of the Periodic Price Lines defined on the Contract Lines. When they do, the relevant Periodic Price of the Contract Line will be invoiced. For example:

Invoice Period	Contract Line No	Periodic Price Valid Period	Eligible for Invoicing?
01-01-2023 to 01-31-2023	1	01-01-2023 to 01-31-2023	Yes
01-01-2023 to 01-31-2023	1	02-01-2023 to 02-28-2023	No
01-01-2023 to 01-31-2023	2	01-01-2023 to 02-28-2023	Yes

A Contract Line – Instead of invoicing an entire Contract, you can opt to invoice a Contract Line. In such cases, you should first need to generate a preview of the invoice lines and then should select the Contract Lines to invoice, in the Invoice Plan Details.

If a Delivery Address is defined on the Parties tab of the Service Object covered, that Delivery Address will be selected for the customer orders created for periodic invoicing. If no delivery address is defined, the default Delivery Address of the contract customer would be automatically selected.

Create Credit Invoice Lines

Credit invoice lines can be created from the invoice period, and the system will create credit lines for each debit line that has been created in the period. It is also possible to select an Invoice Plan Detail Line and create a credit invoice.

The resulting Invoice Plan Detail Lines will contain a negative value, matching the previous debit invoice amount.

If performed on an Invoice Period, debit invoices for all Contract Lines belonging to the selected period as well as more recent invoices for the same Contract Line, will be credited, and new periodic price lines with Revaluating status will be created for each Contract Line of the Contract.

If performed on the Invoice Plan Detail Line, the selected invoice plan line as well as for more recent invoices for the same Contract Line, will be credited, and a new Periodic Price Line with Revaluating status will be created for the Contract Line.

Create One Time Invoice

One-Time Invoices can be used to:

Create a One-Time Debit Invoice. This is useful for example, when you want to debit the customer a one-time “start fee” for a service that is periodically invoiced. To create a One-Time Debit Invoice, a Periodic Price Lines should exist for the Contract Line.
Create a One-Time Credit Invoice, without automatically crediting any debit invoices on the Contract Lines Invoice Plan. This is useful for example, when a customer is credited a service where the Contract obligations have not been fulfilled during a particular invoice period. To create a One-Time Credit Invoice, Invoice Plan Detail Line should exist in Invoice Plan Details page.

Creating a One Time Invoice will create a new Invoice Plan Detail Line. This Line can be used to create the Invoice.