Service Contract (tsctm3600m000)

Field Information

Service Contract

The code of the service contract.

Contract Status

The status of the service contract.

Allowed values

Free

This is the initial state. You are free to modify the service contract.

Active

The service contract is frozen and changes cannot be made via the contract renewal procedure.

Expired

The contract's expiry date is in the past.

Canceled

The service contract is canceled for the reasons mentioned in the cancel reason.

Closed

The service contract is financially processed and can be moved to history.

Business Partner

The sold-to business partner.

Description

The description or name of the code.

Contact

The contact linked to the business partner role.

Full Name

The contact's first, middle, and last name.

Duration

The time period for which the contract is active.

Period Unit of Contract Duration

The unit of time that defines the duration for which the contract is active . Following are the available units of time:

Allowed values

Week

The duration of the usage registration is a week or a day.

Month

The duration of the usage registration is a month, week, or a day.

Quarter

Year

The duration of the usage registration is a year, month, week, or day.

Day

The duration of the usage registration is at least a day.

Effective Date

The effective date.

Expiry Date

The expiry date.

Tax Country

The tax country of the business partner.

Description

The description of the business partner's tax country

Identification Number

The tax number of the business partner.

Business Partner

The pay-by business partner.

Address

The address code.

Search Argument

The search argument.

Contract Quote

The contract quotation.

Description

The description or name of the code.

Overtime

If this check box is selected, you can use overtime in the service contract's implementation.

Contract Renewal

If this checkbox is selected, you can renew a service contract with Active or an Expired status.

If you clear this checkbox the Renewal Period field is disabled.

Note: To perform indexation and renewal simultaneously, select both the Price Indexation and Contract Renewal check box.

Contract Type

The contract type.

Renewal Period

The time period for which the contract is active.

Period Unit

The unit of time that defines the duration for which the contract is active.

Allowed values

Week

The duration of the usage registration is a week or a day.

Month

The duration of the usage registration is a month, week, or a day.

Quarter

Year

The duration of the usage registration is a year, month, week, or day.

Day

The duration of the usage registration is at least a day.

Marked for Expiry

If this check box is selected, this contract will be ignored during a global renewal process.

Price Indexation

If this check box is selected, you can apply indexation to the service contract price. Indexation enables you to lower or raise the price of the service contract at given intervals.

Note: To perform indexation and renewal simultaneously, select both the Price Indexation and Contract Renewal check box.

Indexation Start Date

The effective date for the indexation.

Indexation Interval

The period after which indexation is carried out.

Example

If the service-contract duration is two (2) years and the indexation period is six months, indexation is carried out four times.

Period Unit

The period unit of the indexation period.

Indexation Template

The template used to define the percentage by which the contract amount must be indexed.

Description

The description or name of the code.

Incidental Changes

If this check box is selected, you can make incidental changes to this service contract.

Description

The description or name of the code.

Penalty

If incidental changes are carried out on an active service contract, you can enter here a penalty amount that the sold-to business partner must pay.

Revenue Recognition

Recognize Revenue

Indicates the method in which revenue is recognized.

Allowed values

Direct by installment

Interactive

Based on

The value based on which the revenue is recognized.

Allowed values

Number of days per period

The basis of revenue recognition per period is by the number of days per fiscal period. The number of days the contract is live in the fiscal period determines the amount that needs to be recognized for that fiscal period. The contract duration in days, based on the start date and end date of the contract, forms the basis of the contract price per day. The following formulas are used:

amount to be recognized = (net contract amount / total days of contract) * number of days	contract or configuration belong to the fiscal	period

net contract amount = (total contract sales amount) * (100 – p)%

Where 'p' is the percentage specified in the Provision field of the contract header. If 'p' is zero, the net contract amount is the current total contract sales amount.

Cumulative days

The number of days elapsed since the last recognition for the contract forms the basis to calculate the amount to be recognized. The creation date of the contract revenue is considered and the fiscal period to which the creation date belongs will be the fiscal period in which the amount will be recognized. The following formulas are used:

amount to be recognized = ((net contract amount / total days of contract * cumulative number of days to date) – cumulative recognized revenue until date)

net contract amount = (total contract sales amount) * (100 – p)%

Where 'p' is the percentage specified in the Provision field of the contract header.

Earned Revenue Factor (Cost per Period)

When from Service Order Control , Call Management or Maintenance Sales Control , the material, labor and other lines are costed, the cost incurred for the contract is transferred to Contract Management and stored against the fiscal period in which the costing occurred. The following formulas are used:

ERF = total contract sales amount/ total estimated costs amount to be recognized = (cost incurred for the period * ERF)

net contract amount = (total contract sales amount) * (100 – p)%

net	configuration amount = (total configuration sales amount) * (100 – p)%

Earned Revenue Factor (Cumulative Cost)

The cost incurred since the last recognition for the contract forms the basis to calculate the amount to be recognized. The creation date of the contract revenue is considered, and the fiscal period to which the creation date belongs, will be the fiscal period in which the amount will be recognized. The following formulas are used:

ERF = total contract sales amount/ total estimated costs amount to be recognized = (lesser of A or B) – cumulative recognized revenue until date

A = cumulative cost incurred to date * ERF

B = net contract amount

net contract amount = (total contract sales amount) * (100 – p)%

If recognition is at the configuration level:

ERF = contract configuration	sales amount / estimated costs for configuration amount to be recognized = (lesser of A or B) – cumulative recognized revenue until date

A = cumulative cost incurred to date * ERF

B = net contract configuration amount

net contract configuration amount = (total contract configuration sales amount) * (100 – p)%

Not Applicable

Recognize Revenue per Configuration

If this check box is selected, revenue is recognized for each configuration of the contract. This provides additional information about how much each configuration linked to the contract is contributing to the total revenue.

Note: If this check box is cleared, revenue recognition is performed for the contract.

Recognize Revenue per Contract Renewal

If this check box is selected, contract revenue is calculated for each contract renewal period, based on the actual cost incurred in the contract period only.

Note: 

• This value is defaulted from the Contract Management Parameters (tsctm0100m000) session.
• This field is enabled only if:
  • The Based on field is set to Earned Revenue Factor (Cost per Period) or Earned Revenue Factor (Cumulative Cost).
  • The Contract Status is set to Free.

Provision

This is a percentage value by which a portion of the total contract amount can be kept without recognizing till the end of the period. When the contract period is over, the provision amount can be recognized. This provision helps to manage any contingences like cancellations, closure or changes to contract that can affect the revenue to be recognized. To prevent over-recognition of the amount, and based on the buffer that the company deems to be necessary, provision percentage is defined.

Service Office

The service department or sales office responsible for the service contract or service-contract quotation.

Note: The service office determines the home currency and the financial company.

Description

The description or name of the code.

Internal Sales Representative

The sales representative.

Name

The description or name of the code.

Installment Template

The code that identifies the installment template.

Note: 

• This field is visible and mandatory if the Define Installment Template per Configuration check box is cleared in the Contract Management Parameters (tsctm0100m000) session.
• The value in this field is defaulted from the Contract Management Parameters (tsctm0100m000) session.

Define Installment Template per Configuration

If this check box is selected, the installment template is specified for every configuration line that has coverage terms linked.

Note: When you create the service contract, the value in this field is defaulted from the Contract Management Parameters (tsctm0100m000) session.

Currency

The currency, which is specified in the service contract.

Description

The description or name of the code.

Total Sales Amount

The total sales amount and the currency of the contract quotation.

Pricing Method

The pricing method indicating how the contract price is determined.

Allowed values

Sales Value of Configuration

The price is calculated as a percentage of the sales prices of the valid items that are linked to the cluster. This cluster can be specified in the service contract or the contract quotation. The percentage is usually based on history, experience, market, and competitor prices.

Note: The Sales Value of Configuration option is not available for service-order quotations.

Budgeted Service Costs

The price is the total sales amount of all defined terms and coverage terms.

Installation/Item Pricing

The contract price for the covered configuration is based on the recommended sales prices for the combination of item, contract template, and duration. These prices are maintained in the Contract Item Price Lists (tsctm0115m000) session.

Percentage of Sales Value

If the pricing method used is Sales Value of Configuration, a percentage value is required.

Note: This percentage value must be greater than zero.

First Invoice Reference

A reference field for extra information to be printed on various service-contract documents and lists.

Second Invoice Reference

This is a reference field for extra information to be printed on various service-contract documents and lists.

Line of Business

The line of business.

Description

The description or name of the code.

Sales Price List

The sales price list.

Description

The description or name of the code.