Receivable bonuses

[Former Member]

Hello,

Please consider a situation. A company has a contract with a customer to supply, install and comission machinery. The contract value is $ 1 million. There is a bonus of $100,000 above the contract price if the project is completed within 18 months. How is this handled in the sales order and billing?

Anil

[jignesh_mehta3 · Accepted solution]

Hello Anil,

How is the Billing done? I mean is there a Milestone Billing or only one time billing when the Machine is commissioned?

If there is single one time Billing , you can have a Discount/Surcharge condition with Plus/Minus set as Positive and with validity date as 18 months from start of contract. Also maintain the required re-Pricing indicator in Copy Control records so that the Discount/Surcharge condition is re-determined (based on Billing date, which is generally service rendered date)

This will ensure that when the Invoice is created within the validity period (18 months) in this case, the Bonus will be applicable.

If you have milestone / periodic billing, please explain the process here to provide relevant suggestions.

Thanks,

Jignesh Mehta

[Former Member · Accepted solution]

Thanks Jignesh. And how about milestone billing? The 3 milistones are delivery of machinery, installation and successful comissioning.

Anil

[jignesh_mehta3 · Accepted solution]

Hello Anil,

That is exactly what you need to explain here. I mean what is the business requirement?

The Bonus of $100,000 will be paid to your company in lumpsum at the time of Commissioning Invoice (if it is done with 18 months) or the Bonus are paid in part right from Delivery of Machine and if the Commissioning is not done in time, the already charged amount of partial Bonus is to be adjusted back?

Thanks,

Jignesh Mehta

[Former Member · Accepted solution]

The entire bonus is to be paid (or not paid) against the comissioning invoice.

[jignesh_mehta3 · Accepted solution]

Hello Anil,

Interesting, and how is the Commissioning Invoice is identified in your system? I mean is there some object based on which we can identity a Commissioning Invoice?

Thanks,

Jignesh Mehta