Rental X-hire

This document explains how to manage supplier invoices in an X-hire workflow in M3 BE.

Supplier invoices received during a rental period can be matched to goods receipt and invoices even if no actual goods are received.

Background

X-hire agreements are used in the rental business and consist of three parties: a customer, the rental company, and its supplier.

The customer rents equipment from the rental company. If this equipment is out of stock, the rental company can in turn rent the equipment from its supplier and have it delivered directly to the customer or to the rental company. The rental company acts as an intermediary, is charged by its supplier, and in turn charges its customer.

The requirement is for a coherent solution from entering a customer rental agreement through to managing the cyclic invoices sent from the supplier according to the purchase order agreement. When the equipment is sent directly to the customer, the first knowledge of the delivery might be the supplier invoice. In that case, supplier invoices are sent to the rental company and must be matched against goods receipt and invoices each time an invoice is received. This should be done even if no actual goods are received when invoicing is performed.

Limitations

Overview

In an overall X-hire process, a customer rents equipment from a rental company. Similar to a regular rental process, a rental agreement is created between the customer and the rental company.

If the requested equipment is out of stock, the rental company turns to another rental company that will act as a supplier of the equipment. This is known as the X-hire process. The equipment is rented according to a purchase order agreement between the rental company and its supplier. This purchase order agreement is set up as an X-hire agreement, which means that the price is a rental price per period rather than a purchase price.

The supplier delivers the equipment directly to the customer or to the rental yard. During the rental period, the supplier will send invoices to the rental company for each rental period. The rental company in turn charges its customer for the equipment.

To manage the cyclic supplier invoice sent, a sub-line number is available to the purchase order. This is connected to the actual line of the rental equipment. The item on this sub-line represents the supplier invoices being sent from the supplier and the quantity on the sub-line represents the number of rental periods.

The X-hire process involves the rental, procurement, and the finance modules. To meet the requirements of the X-hire functionality, changes have been made to these three areas.

X-hire cyclic invoice item

The field 'X-hire cyclic invoice item' (XINI) is used to represent the cyclic supplier invoices and must be matched against an invoice when received. The 'X-hire cyclic invoice item' is set up in the program 'Settings - Rental Agreements' (STS699) and must be a non-inventory accounted item.

Once a purchase order is created as a result of an X-hire process, it is created with a line for the rented equipment. A sub-line is connected to this line, with the X-hire cyclic invoice item acting as a data carrier to represent the supplier invoices. The sub-line (line sub-number 700) displays the rental price per period and the number of rental periods. The X-hire cyclic invoice item is a fictive, non-inventory item which applies the accounting method 'simplified purchasing'. This means that it will be posted to the accounts once the Accounts Payable invoice is posted.

Rental agreement lines

When you specify an X-hire rental agreement line (line type 7 or 8) in the program 'Rental Agreement. Open Lines' (STS201), panel I is shown displaying information about the purchase order agreement. The fields used in the X-hire process show the details about the current PO agreement.

New rental price

In the purchase agreement setup with the supplier, the rental price is shown instead of the purchase price. This is specific for the X-hire process.

New purchase order sub-line number

When you specify an X-hire rental agreement, a purchase order in 'Purchase Order. Open Lines' (PPS201/B) is created for the rented equipment. X-hire rental lines created at the same time will be placed on the same purchase order. If an X-hire rental line is added to an existing agreement with other X-hire lines, this new line will be placed on the existing purchase order when the defined and specific details match. Otherwise, the new X-hire line will create a new purchase order.

The purchase order is created with two lines:

  1. One line for the rented equipment

  2. A second sub-line (sub-line number 700) representing the supplier invoices to be received.

This example shows a purchase order created in an X-hire process:

+ Line Sub Lst Item number Name Order qty U/M Ltp
+ 1   15 CAT315C 315C Excavator 1 PCS 1
+ 1 700 15 X-HIRE INVOICE 315C Excavator 3 WEK 1

The main line for the rented equipment shows a quantity of one piece (PCS). This equipment is delivered to the customer from the supplier (if the line type is 8) or to the rental yard (if the line type is 7). This line will never be matched to an invoice, but the goods must be received to determine which lot number (individual item) was received by goods receipt or by the customer.

The sub-line, which represents the supplier invoices, shows a quantity of three weeks (WEK). The item number used on the sub-line is the one set up in the program (STS699). The quantity (3) represents the number of rental periods, and the unit of measure (WEK) is the measurement of the rental period. The quantity is specified in the program (STS201/I) when you specify the rental agreement and the unit of measure (U/M) is retrieved from the purchase order agreement. The U/M can also be changed in the (STS201/I) program.

The main line contains a quantity of 1 PCS. No purchase price is set for the rental equipment since the rental price is defined on the sub-line instead there is a purchase price text. When goods receipt is performed here, there will be no accounting transactions.

On the F panel, the Origin field indicates the process from which the purchase order line was created. This was created from an X-hire with direct delivery to the customer.

The item on the sub-line is retrieved from the setup in the (STS699) program. The quantity on the line is the number of periods specified upon registration of the rental agreement in program (STS201).

In this example, the equipment will be rented for 3 periods (WEK) at a price of 2100 per period. This gives a line total of 6300.

+ Line Sub Lst Item number Name Order qty U/M Ltp
+ 1   15 CAT315C CAT315C Excavator 1 PCS 1
+ 1 700 15 X-HIRE INVOICE 315C Excavator 3 WEK 1
+ 2   15 CAT315C CAT315C Excavator 1 PCS 1
+ 2 700 15 X-HIRE INVOICE CAT315C Excavator 4 WEK 1

When you create a rental agreement for a serialized item, one rental line is created for each item. This results in one purchase order main line for each item to be X-hired. For each main line, a corresponding sub-line is created.

In the example above, a rental agreement has been created with two separate rental lines. This is because the item 'CAT315C' is a serialized item, and you cannot have the equipment on the same rental line. On the purchase order, there will be two main lines each with its separate sub-line.

The first sub-line shows that the item CAT315C is to be X-hired for 3 weeks. The second sub-line shows that the item CAT315C is to be X-hired for 4 weeks.

When you create a rental agreement line for a non-serialized item, only one sub-line is created. This is also the case for serialized items, but the quantity on the rental line for non-serialized items will be 'no. of rented periods' multiplied by 'quantity'.

For example, if 10 pieces of an item are rented for 5 weeks, the result is a sub-line with the quantity of 50 weeks.

Before you start

Supplier invoice settings

'Settings - Accounts Payable' (APS905) contains these settings related to the X-hire functionality:

Supplier invoice process

The program 'Supplier Invoice. Receive Goods' (APS352) is opened from invoice matching if there are purchase order lines that have not been received where the purchase order Origin values are:

Setting 370 (Goods receive from invoice matching) in (APS905) also allows goods receipt from invoice matching.

The program indicates how much has been ordered, invoiced, and what remains to be received. You can report what has been received by adding the received quantity and selecting the action 'Confirm update'. You can also access 'Purchase Order. Receive Goods' (PPS300) by using option 11='Receive goods'.

On the (PPS300/E) panel, you can edit a purchase order line, view all the details, add a lot number, for example, and perform goods receipt. You can also access 'Purchase Order. Reconcile Recd/Not Invd' (APS370) by using the action 'Rcvd not invoiced'.

Workflow - Enter supplier invoice

You receive an invoice from your supplier in the amount of 2100 within a period of 1 week. In (APS905), you stated that you want to perform goods receipt from invoice matching.

Specify an invoice in 'Supplier Invoice. Record' (APS100). When you press Enter in (APS100/F), you will automatically access 'Supplier Invoice. Goods Receive'. This applies if there are purchase order lines that have not been received where the purchase order Origin values are:

Setting 370 (Goods receive from invoice matching) in (APS905) also allows goods receipt from invoice matching.

In this case, no goods receipt has been done so far. You must receive the first line to determine the lot number of the equipment that the customer received. To add a lot number, you must edit the line.

Specify the received quantity and lot number, then press Enter. You will go back to (APS352) and receive the part that was invoiced, which was 1 week. Add 'Received quantity' one and click F14='Confirm update'. Two weeks remain to be received. Close the program to access the invoice matching.

For setting 390='Action if delivery not completed for all purchase order lines', these are the possible scenarios:

Since you only want the goods received part to be shown in (APS360), you will see the goods received line of 1 week. The item line with the lot number is not displayed because this will not be invoiced. The X-hire invoice will be recorded in the accounts using accounting event PP20 (Supplier invoice) and accounting type 903 (fictive inventory). If the invoice charges must be recorded separately, accounting exceptions can be created for the costing element.

Workflow - Add more purchase orders

If you receive an invoice with several purchase orders, you can add purchase orders in (APS360) by selecting F19 ='Select receipt'.

When you select purchase orders and click F14='Crt inv line', the (APS352) panel will be displayed if the conditions are met in (APS905) and goods receiving can be performed.

Workflow - Perform goods receiving from (APS110)

If an invoice was specified in (APS100) and connected to a purchase order that is not received, you can receive the line from (APS110). Related option F22='Goods receive' will open (APS352).

After goods receipt is performed, line type 4 (the line has been matched against a goods receipt line, goods arrived after invoice) is created in (APS360).

If the invoice was not connected to the purchase order in (APS100) but was specified in (APS110), line type 1 (the line is matched to a goods receiving line, goods arrived before invoice) will be created instead.

Note: You must delete line type 2 (the line is matched to purchase order line) to perform invoice matching against the goods receiving lines before checking the invoice.
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