Payment Schedule Creation in Contracts and Invoices for the Purchase Order

There is a new feature introduced from Maximo 7.5 which allows users to schedule payments. You can use the Contract Line Items tab in the Contracts application to create a schedule of payments for the contract line items. I am going to present some scenarios where this feature can be useful and how the invoice is created for the same.

Points of Consideration and Scenarios for Payment Schedule functionality:

1. Payment Schedule can be created for each contract line.
2. Before you can create a payment schedule, you must select the Payment Schedule check box on the Properties tab.
3. Out of the box payment schedule can be used to create Invoice on PO Approval and Receipt of Materials:
• Payment Percent should be selected such that line cost of each milestone do not exceed total line cost.
• For Example: A contract line has total line cost as 1000,
• Payment % for action POAPPR= 10, line cost=10% of 1000=100
• Payment % for action RECEIPT=90, line cost=90% of 1000=900
4. Scenario 1: Contract Line with Qty=10, Unit Cost=100, Line Cost=1000,
• Payment Schedule 1: Action=POAPPR, Payment Percent=10, Line Cost=100
• Payment Schedule 2: Action=RECEIPT, Payment Percent=90, Line Cost=900
• On PO approval, one invoice is created as: Invoice Qty=Ordered Qty=10, Unit Cost=10% of 100=10, Invoice Line Cost=100
• On partial receipt of 6 items, one invoice is created as: Invoice Qty=90% of Received Qty=90% of 6=5.4, Unit Cost=100, Invoice Line Cost=540
• On receipt of remaining 4 items, one invoice is created as: Invoice Qty=90% of Received Qty=90% of 4=3.6, Unit Cost=100, Invoice Line Cost=360
5. Scenario 2: Contract Line with Qty=10, Unit Cost=50, Line Cost=500
• Payment Schedule 1: Action=RECEIPT, Payment Percent=100, Line Cost=500
• On Partial Receipt of 5 items, one invoice is created as: Invoice Qty=100% of Received Qty=100% of 5=5, Unit Cost=50, Invoice Line Cost=250
• On Partial receipt of 3 more items, one invoice is created as: Invoice Qty=100% of Received Qty=100% of 3=3, Unit Cost=50, Invoice Line Cost=150
• On receipt of remaining 2 items, one invoice is created as: Invoice Qty=100% of Received Qty=100% of 2=2, Unit Cost=50, Invoice Line Cost=100
6. Scenario 3: Contract Line with Qty=10, Unit Cost=100, Line Cost=1000
• Payment Schedule 1: Action=RECEIPT, Payment Percent=20, Line Cost=200, Days Interval=7
• Payment Schedule 2: Action=RECEIPT, Payment Percent=80, Line Cost=800, Days Interval=7
• On partial receipt of 5 items, two invoices are created as:
• Invoice Date=7 days after receipt, Invoice qty=20% of Received Qty=20% of 5=1, Unit Cost=100, Invoice Line Cost=100
• Invoice Date=30 days after receipt, Invoice qty=80% of Received Qty=80% of 5=4, Unit Cost=100, Invoice Line Cost=400
• On partial receipt of 2 more items, two invoices are created as:
• Invoice Date=7 days after receipt, Invoice qty=20% of Received Qty=20% of 2=0.4, Unit Cost=100, Invoice Line Cost=40
• Invoice Date=30 days after receipt, Invoice qty=80% of Received Qty=80% of 2=1.6, Unit Cost=100, Invoice Line Cost=160
• On receipt of remaining 3 items, two invoices are created as:
• Invoice Date=7 days after receipt, Invoice qty=20% of Received Qty=20% of 3=0.6, Unit Cost=100, Invoice Line Cost=60
• Invoice Date=30 days after receipt, Invoice qty=80% of Received Qty=80% of 3=2.4, Unit Cost=100, Invoice Line Cost=240

Example for Scenario 1

1. Created one Purchase Contract with one contract line with payment schedule as below:

• OrderQty=10, Unit Cost=100, Line Cost=1000
• Payment%=10, Action=POAPPR, Line Cost=100
• Payment%=90, Action=RECEIPT, Line Cost=900 
2. PO created for the above contract and approved as below: 
   
   
   
   
   
3. On PO approval, an invoice is created as below with Pretax Total = 10% of 1000 = 100 USD:
                                           Check the values in Total Cost and Uninvoiced Total fields. Also, check the Invoice Line details as below: Qty=10, Unit Cost=10% of OrderQty=10, Invoice Line Cost=100
4. Receiving 6 items out of 10 ordered for Partial Receipt as below: 
                                                          
5. One invoice is created for the above partial receipt as below: 
   Uninvoiced Total = 376.20                                           Check the Invoice Line details as: Unit Cost=100, Invoice Qty = 90% of Received Qty =    (90x6)/100 = 5.4, Line Cost = 540
6. Receiving 2 more items as below: 
   
7. Invoice created for above receipt as below: 
   
   
                                        Check the Invoice Line details as: Unit Cost=100, Invoice Qty = 90% of Received Qty =    (90x2)/100 = 1.8, Line Cost = 180.
8. Receiving remaining 2 items as below: 
   
9. Invoice Created for above receipt as below: 
                                                 Note that Receipt is now Complete and Uninvoiced Total=0. 
                                                  Also, check Invoice Line details as:  Unit Cost=100, Invoice Qty = 90% of Received Qty =    (90x2)/100 = 1.8, Line Cost = 180.

I hope this blog will help people in understanding how this feature works. Please feel free to share your comments.

Reversed Invoice and cost adjustments to line item

I would like to explain about one scenario where a PO gets closed when the invoice goes to paid status, but then there is a requirement to make changes in the PO Line item cost and invoice needs to be changed accordingly.

The checkbox to close the PO was checked on changing the invoice status to PAID in the maximo Invoice application. So, the status of the PO gets changed from APPR to CLOSE when invoice status is changed to PAID. Now there we came across a situation where we created a PO with one PO line item with incorrect tax code but we realized the error when the invoice for this PO was already paid. We did not want to revise the PO and go through the approval process again. So here is a solution to reverse the invoice and make changes to the PO Line item or Invoice Line item as described below.

The first step would involve the reversal of the paid invoice. As discussed in my previous blog, from the paid invoice record, you need to choose the option Reverse Invoice from the select action menu and select autonumber to create a new invoice in pending reversal status, with reversal reason, G/L posting date, etc. A new invoice is created with status as PENDREV and negative entry in the cost fields and with a reference of the original invoice number. When you change the status of the new invoice to APPR, the status of the old invoice gets changed from PAID to REVERSED.

The second step would be to create a new invoice with the same PO number and site details. You need to go to the Invoice Lines tab, and you can check the uninvoiced quatity for the line item when you select the Copy Lines button. Select the line item accordingly and make the necessary changes to the tax code.

You can verify that in the Invoice tab that invoice total and total base cost has been changed accordingly. You can also verify that total cost of the PO is not changed and it is as per the original invoice.

Now the process of changing Invoice status to approved and then to paid remains the same. This way you are saved of PO revision and approval process and changes or adjustments can be made at the Invoice application only as per your requirements.