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Projects:Contract Management/Functional Specification

Warning.png   This document is still a work in progress. It may contain inaccuracies or errors.

Contents

Introduction

This document contains the functional specifications for the Contract Management functionality, which is intended to deliver capabilities to systematically and efficiently manage contract creation, execution and analysis for the purpose of maximizing financial and operational performance.

Contract

A contract is an agreement entered into voluntarily by two parties or more with the intention of creating a legal obligation (each party acquires rights and duties).

A promise becomes an enforceable contract when there is an offer by one party, normally called an offeror that it accepted by the other party (offeree) with the exchange of legally sufficient consideration. It commits the offeree to pay or give other consideration in return for actual performance during a certain period of time.

The existence of a contract requires finding the following factual elements:

Contract in Openbravo

A contract describes the exchange of goods or services (it may be renewable) from vendor to buyer for an agreed upon value in money during a period of time.

In Openbravo a contract is a project subtype (c_project table). Not all the projects are contracts but a contract is always a project. The contract can be either a sales or purchase contract.

The legal document signed between parties will contain all the relevant information of the contract and it could be attached to the contract document inside Openbravo.

The renewal conditions/terms are configured on the contract. It is common for clients to ask a contractor to extend their existing contract and continue to supply goods/services for them. When a contract is extended there is the opportunity of renegotiating the contract (modify terms).

Contract header

Contract Header tab mockup

* mandatory fields: only Organization, Name, Search Key, Business Partner, Partner Address and Start/End date fields are mandatory.

Contract Lines

The contract can be composed by lines providing information about the type of exchanged product or service, approximate quantities and amounts.

Contract Lines tab mockup

Invoicing Plan

The invoicing plan permits extensive automation of the process of creating invoices for items covering materials or services independently of the actual receipt of the goods or actual performance of the services. It lists the dates on which you wish to create and then pay the invoices.

The invoicing plan is defined at contract line level. For each contract line you can configure the invoicing plan, it could be slightly different depending on the kind of business process you are carrying out. The application proposes two different types of invoicing:

The user will generate the invoicing plan using a button available at line level.

Invoice Plan tab mockup

Invoicing Plan Configuration

Revenue Recognition

As an accounting general rule the revenue should be recorded only when the revenue generation process has been substantially completed, and an exchange has taken place.

This rule in Openbravo can be restated as follows: the revenue always comes from invoices.

There is one exception, the other revenue source in Openbravo is handled using a new document (contracted, served and not invoiced). It represents performed services or delivered goods (the agreements for invoicing are meet) but not yet invoiced.

The revenue recognition is not included in the contract. You can either prepare a recognition plan at invoice level or attach it to the product.

Revenue recognition could happen at different stages:

User Stories

Service Contract

US1

Header

Line1

Line2

Invoice Plan

John, as RoadRunner service company’s financial officer, wants to create the invoice plan for a contract. John should push a button called Create Invoice Plan for this purpose. The parameters that John should have available, are:

US1

The contract John is editing has

When creating the invoice plan, John will select:

Then, the process will create the 10 invoice plan items all with invoice date the ending date of the month. Note that if the total amount of the invoice plan items (summed) exceed from the contract net amount, the system should show a warning to John stating the fact.

US2

The contract John is editing has

When creating the invoice plan, John will select:

Then, the process will create the 20 invoice plan items all with invoice dates the 15th and the ending date of the month.

Note that if the total amount of the invoice plan items (summed) exceed from the contract net amount, the system should show a warning to John stating the fact.

US3

The contract John is editing has

When creating the invoice plan, John will select:

Then, the process will create the 10 invoice plan items all with invoice dates the 15th and the ending date of the month. The first invoice plan item, which goes from 20th of January to 31st of January, should have the amount of 33€ (100€ in 31 days, then 33€ in 10 days).

Note that if the total amount of the invoice plan items (summed) exceed from the contract net amount, the system should show a warning to John stating the fact.

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