Create and Manage Leasing Agreement Using EQM with Funder

Outcome

• An EQM quote is created and completed in status '80'. The EQM quote triggers these actions:
  • If the equipment is placed in a sales warehouse and must be delivered from a rental warehouse, a customer order (CO) is created to remove from stock on the sales warehouse. A positive transaction ID 90 with reference to the CO is created to put in stock on the rental warehouse.
  • A CO is created to sell equipment to the funder.
  • A leasing agreement line is created with attributes, additional charges, and curves according to the configuration done in the EQM quote. If the IRR leasing method is used, cash flow components are also created.
• A financial agreement line is created and activated for the equipment. This agreement is between funder and leasing company.
• The CO to funder is invoiced.
• The equipment is delivered to the customer using the leasing line.

Before you start

Verify these settings before you start:

• Set the system calendar in 'System Calendar. Open' (CRS900) to cover the leasing period as a minimum.
• Create a financing record with type '3' or '4' in 'Quotation. Add Financing' (QUS116) to use as the financing option on the quote in EQM. If financing type '4' is used, connect an agreement order type with leasing method set to 1-'IRR' to the financing record.
• To connect leasing charges automatically using attribute functionality on the leasing line, the contract item for the leasing charge must exist in 'Contract Item. Open' (SAS450). This charge ID must match an attribute value connected to the attribute model for this item number in 'Item. Open' (MMS001). Activate the charge ID to create a leasing charge through the 'Auto-create ch' setting in (SAS450).

  To create leasing charges in 'Quotation. Add Miscellaneous Costs' (QUS118), set the leasing method to 0-'Additional charge'. You can add leasing charges to the quotation line manually using related option 18='Add Miscellaneous' in 'Quotation. Open Lines' (QUS101), or automatically by activating 'Default record' on (QUS118/E). If 'Default record' is activated, the leasing charge is automatically added to the quotation line if a financing record type '3' or '4' is added.

• If financing record type '4' is used, set up cash flow component records in (QUS118). Cash flow components are created in (QUS118) by setting leasing method to 1-'IRR'. Cash flow component prices are managed through 'Cash Flow Price List. Open' (STS137), accessed through related option 17 in 'Rental Price List. Open' (STS017). The cash flow component amount can differ depending on the item, financing record, or maintenance agreement that is used for the leasing agreement. Therefore, you can create multiple records for the same cash flow component in (STS137), using different items, financing records, or maintenance agreements. The cash flow components are then added to the quotation line either manually by using related option 18='Add Miscellaneous' in (QUS101) or automatically by activating 'Default record' on (QUS118/E). If 'Default record' is activated, the cash flow component is automatically added to the quotation line if a financing record type '4' is added.

• To add the EQM quotation line to an existing rental agreement, activate 'Conn to rental' in (QUS020). (STS085) opens when 'Create order' is selected from the EQM header or EQM details, and you can specify an existing rental agreement.

Create leasing line through EQM for sales warehouse

Follow these steps if the equipment is placed on, or is sourced to, a sales warehouse and is funded by an external funder.

1. Open 'Financial Agreement. Open' (AGS100) and create a financial agreement according to your agreement with the funder.
2. Connect a line to the financial agreement in 'Financial Agreement. Open Lines' (AGS101), using related option 11='Agreement Lines'. If the equipment is not yet known, leave the item and serial number blank. Use the correct fixed asset type for right-of-use (ROU) asset.

   You can perform this step later in the flow.

3. Open EQM to create the quote according to the agreement with your customer.
4. In EQM, select the quote to be leased by the customer. Click 'Details' to display EQM details.
5. Select the line to be leased. Use related option 16 ='Add Financing' and select a suitable financing option, including funder in the setup in 'Quotation. Add Financing' (QUS116). Ensure the financing type is 3-'Leasing' or 4-'IRR'. If needed, you can add new financing options using the plus icon.
6. From the EQM header or EQM details, click 'Create order' to trigger the creation of leasing lines and a CO for internal movement.

   The leasing line is created on a temporary rental agreement according to the settings in (QUS116).

   The CO for internal movement is created with zero sales price, if equipment needs to be moved. This depends on the rental depot in 'Quotation Type. Open' (QUS020). If this is not the same as where the equipment is placed (sales warehouse), a CO is created to move the equipment. The receipt at the rental warehouse is done with transaction ID '90'.

   If equipment is configured on the quote, a work order (WO) is created that is connected to the CO to make the equipment ready according to the configuration.

   You can find the orders related to the quote using the Fulfillment tab in EQM.

7. Open (AGS100). Use related option 11='Agreement Lines' to open (AGS101). Update the existing line in (AGS101) when the item and serial number is known.

   If no financial agreement has been created yet, this must be done first. See step 1.

8. If a work order exists, report it using standard procedures.
9. Report the customer order using standard procedures to move the equipment to the correct warehouse.

   If a serial number is set at quote creation but is no longer correct, you must change the serial number when you report the CO. This change updates the connected leasing line.

10. Use the automatically created CO to sell the equipment to the funder. This action does not affect the stock balance. Invoice the CO according to the agreement with the funder.
11. Open (AGS100). Use related option 11='Agreement Lines' to open (AGS101). If a proposal does not exist, create one using related option 6= 'Create proposal', and activate the line with related option 9='Activate' in (AGS101). The asset is automatically created and activated in 'Fixed Asset. Open' (FAS001) classified as right-of-use (ROU). The serial number is updated in 'Equipment/Serialized Item. Open' (MMS240).
12. Report the delivery of the equipment to the customer through the rental agreement or leasing line using standard procedures in 'Rental Logistics Toolbox. Open' (STS140) or Rental Counter.
13. During the lifetime of the leasing agreement, the customer is invoiced through the rental agreement, using standard procedures in 'Rental Invoice Proposal. Create' (STS800) and 'Rental Invoice Proposal. Update' (STS810).

Create leasing line through EQM for rental warehouse

Follow these steps if the equipment is placed on a rental warehouse and to be funded by an external funder:

1. Check if a financial agreement exists in (AGS100) and (AGS101) for this equipment and if it is still valid.
   1. If active financial agreement exists, the asset must exist in (FAS001) with the correct FA type for the right-of-use asset.
   2. If no financial agreement exists, but the equipment is placed in (FAS001), this financial asset must be disposed of using 'Fixed Asset. Dispose' (FAS145).
   3. If financial agreement is missing, probably because the equipment has not been funded before, create a financial agreement using (AGS100) and (AGS101). A right-of-use asset is created when the financial agreement is activated.
2. Open EQM to create the quote according to the agreement with the customer.
3. In EQM, select the quote to be leased by the customer. Click 'Details' to display EQM details.
4. Select the line to be leased. Use related option 16 ='Add Financing' and select a suitable financing option. It is important that the financing type is 3-'Leasing' or 4-'IRR'. If needed, you can add new financing options using the plus icon.
5. From the EQM header or details, click 'Create order' to trigger the creation of leasing lines. The leasing line is created on a temporary rental agreement according to the settings in (QUS116).

   No CO for internal movement is created in this scenario. Since that CO is the trigger for the funder CO, no funder CO is created even if a funder is set in (QUS116). If the equipment should be sold to funder and has not been funded before, create the funder CO manually. Use the same CO type as the one connected in (OIS278).

   You can find the rental agreement related to the quote through the Fulfillment tab in EQM.

6. If not already done in step 1, activate the financial agreement through (AGS100). Use related option 11='Agreement Lines' to open (AGS101). Create a proposal for the line with option 6='Create proposal' in (AGS101) if not already done and activate the line with option 9='Activate' in (AGS101). This action automatically creates and activates the asset in (FAS001), classified as right-of-use (ROU). This also updates the serial number in (MMS240).
7. Report the delivery to the customer through the rental agreement or leasing line, using standard procedures in (STS140) or Rental Counter.