How to Work with Service Contracts and Service Contract Quotes

You can create a service contract either manually or from a service contract quote. You can use a service contract quote as a forerunner of a service contract, in which your company makes an offer to the customer and obtains customer approval before you can convert it to a service contract. The procedures for creating either a service contract or service contract quote are similar.

To create a service contract or service contract quote

1. Choose the icon, enter Service Contracts or Service Contract Quotes,and then choose the related link.
2. Create a new service contract or service contract quote.
3. Fill in the No. field. A dialog box opens, asking whether you want to fill it with the common data from a contract template. If you want to create such a service contract or service contract quote, choose the Yes button. The Service Contract Template List window opens.
4. Select the appropriate template, and then choose OK to use it to create the service contract or service contract quote.
5. In the Customer No. field, choose the customer.
6. If you do not want an annual amount difference to be distributed automatically, choose the Allow Unbalanced Amounts check box. The values in the Annual Amount and Calcd. Annual Amount fields are not automatically equalized. If you want the program to do automatically distribute any annual amount difference that might occur from a change in the service contract, leave the Allow Unbalanced Amounts check box clear.
7. Add contract lines to the service contract or service contract quote.
8. Fill in the rest of the fields as necessary.

To convert a service contract quote to service contract

When a customer has accepted a service contract quote, you convert it to a service contract. At the same time, you can create a service invoice for the starting period of the contract if the starting date of the contract is before the beginning of the next invoice period.

After you complete the following steps, a service contract is created with the status Signed. If a service invoice is created for the starting period of the contract, the invoiced amount is calculated in the following way, depending on whether the contract is detailed or not.

For detailed contracts, the invoiced amount is calculated as follows:

• Invoiced amount = sum of the invoiced amount for each contract line.
• Invoiced amount for each contract line = ((quote value ÷ 12) × number of months in the starting period) + ((quote value ÷ number of days in the year) × number of days left in the starting period).
• If the contract line expires before the starting period ends, the expiration date becomes the ending date of the starting period for the line.

For contracts that are not detailed, the invoiced amount is calculated as follows:

• Invoiced amount = (annual amount ÷ number of days in the year) × number of days in the starting period.
• If the contract expires before the starting period ends, the expiration date becomes the ending date of the starting period.

1. Choose the icon, enter Service Contract Quotes, and then choose the related link.
2. Open the service contract quote you want to convert to a service contract.
3. Choose the Make Contract action.

4. If the starting date of the contract is before the beginning of the next invoice period, you are asked if you want to create an invoice for the starting period of the contract. Choose Yes.

   The service invoice is posted to the service account of the contract, even if the contract is prepaid.

To create contract service credit memos

You can use a contract service credit memo when a customer cancels a prepaid service contract or removes a service item from a prepaid contract. You can also use it to correct an erroneous service invoice.

1. Choose the icon, enter Service Credit Memos, and then choose the related link.
2. Create a new service credit memo.
3. Fill in the No. field.

4. In the Customer No. field, enter the number of the customer in the service contract.

   The Invoicing FastTab shows information copied from the Customer card. If you want to post the credit memo to a different customer than the one specified on the General FastTab, enter the number of that customer in the Bill-to Customer No. field.

   NOTE

   You can compare the credit memo to the original posted document in the Posted Service Invoices window. Choose the icon, enter Posted Service Invoices, and then choose the related link.

5. Fill in the Posting Date and Document Date fields.

6. On the credit memo lines, enter information about the items that have been returned or removed, or the allowance that will be sent. You can also use the Get Prepaid Contract Entries batch job.

   To automatically create a credit memo when contract lines are removed from a service contract, in the Service Contract window, on the Invoice Details FastTab, select the Automatic Credit Memos check box.

   To manually create a credit memo when contract lines are removed from a service contract, in the Service Contract window, on the Actions tab, in the Functions group, choose Credit Memo.

Updating and evaluating contracts

Sometimes you have to change the terms of a contract after it has been created. In most cases, you open the relevant contract in the Service Contract window, and change it as necessary.

You can change the status of the contract, initially set to Locked, add and remove contract lines, and cancel a contract. If you want to see how your business is doing as measured by gain and loss, you can do quick business analysis using the contract trendscape feature.

To add a contract line to a service contract or contract quote

When a customer purchases a new item and wants to include it in the existing service contract or contract quote, you can register the item as a service item and then add it as a new contract line to the contract or contract quote.

1. Choose the icon, enter Service Contracts, and then choose the related link.
2. Open the relevant service contract or service contract quote that you want to add a new contract line for.
3. Choose the Open Contract action to open the service contract or service contract quote for editing.
4. On the Invoice Details FastTab, select the Allow Unbalanced Amounts field if you want to change the annual amount and distribute the annual amount difference manually on the contract lines. Otherwise, clear the check box in the Allow Unbalanced Amounts field. This will distribute the annual amount difference automatically on the contract lines after you change the annual amount.
5. On the Lines FastTab, add a service item or item, or text description, on each contract line. Alternatively, you can add contract quote lines. Note that you can create multiple contracts per service item to have it included in different service contracts or contract quotes at the same time.
6. Verify and correct the numbers in the Line Discount %, Line Discount Amount, Response Time, Service Period, and other fields as needed.

To remove contract lines

You may need to remove contract lines from the service contract as you remove corresponding service items from the service contract. Usually you remove a contract line that is expired or corresponds to the service item that has broken down.

1. Choose the icon, enter Service Contracts, and then choose the related link.
2. Open the service contract from which you want to remove contract lines.
3. Choose the Open Contract action to open the service contract for editing.
4. Choose the contract line you want to remove. Fill in the Contract Expiration Date field with the date as of which you want to remove the line. For example, you could enter the date when the service item broke down.
5. Choose the Remove Contract Lines action. The Remove Lines from Contract window opens.
6. Fill in the default filters: Contract No., Service Item No., and Contract Type. If needed, you can apply more filters or change the existing ones.
7. Fill in the fields on the Options FastTab. In the Action field, select Delete Lines.

Service Line Cost and Value

On a service contract lines, the amounts in the Line Cost and Line Value are calculated as described in the following tables.

To add a contract discount to service contract quotes

You can add contract discounts on services for contract quotes and service contracts. The discounts can be on spare parts in particular service item groups, on resource hours for resources in particular resource groups, and on particular service costs.

1. Choose the icon, enter Service Contract Quotes, and choose the related link.
2. Choose the quote to add discounts for.
3. Choose the Service Discounts action. The Contract/Service Discounts window opens.
4. To create a new contract discount, choose the New action.
5. Fill in the fields on the line as necessary. Choose a field to read a short description of the field or link to more information. .

To change the owner of a service contract

You may need to change the owner of a service contract. If a service item in a service contract is registered in noncanceled multiple contracts owned by the same customer, then the owner of all service contracts that include this service item and of all other service items included in these contracts is updated automatically.

1. Choose the icon, enter Service Contracts, and then choose the related link. Open the relevant service contract whose owner you want to change.
2. Choose the Open Contract action to open the contract for editing.
3. Choose the Change Customer action. The Change Customer in Contract window opens.
4. In the Contract No. and Service Item No. fields you can see the numbers of the contract and service item owned by the selected customer. If the customer owns more than one contract with more than one service item included, then the value of these fields will be Multiple. To see the list of related contracts or service items, select these field values.
5. In the New Customer No. field, choose the new customer.
6. In the New Ship-to Code field, choose the address.
7. Choose OK to change the customer and ship-to code of the service contracts.
8. Choose the Lock Contract action to lock the contract and to make sure that the changes will be part of the contracts.

To update a service contract price

You can update the prices on service contracts by specifying a price update percentage.

1. Choose the icon, enter Update Service Contract Prices, and then choose the related link.
2. Choose the service contract.
3. In the Update to Date field, enter a date. The batch job will update prices for contracts with next price update dates on or before this date.
4. In the Price Update % field, enter the percentage that you want to update the prices by.
5. In the Action field, select Update Contract Prices.

To post prepaid contract entries

If you work with prepaid service contracts, you must regularly post prepaid contract entries, thereby transferring the prepaid payments from the prepaid contract accounts to the regular contract accounts.

Before you can post prepaid contract entries, you must specify a number series in the Prepaid Posting Document Nos. field in the Service Mgt. Setup window.

1. Choose the icon, enter Post Prepaid Contract Entries, and then choose the related link.
2. In the Post until Date field, enter a date. The batch job posts prepaid service ledger entries with posting dates up to this date.
3. In the Posting Date field, enter the date you want to use as the posting date on the general journal line.
4. In the Action field, choose Post Prepaid Transactions.
5. Choose OK to post the entries.

Changing the Service Contract Status

After the service contract is signed, the Change Status field value is automatically set to Locked. If you want to modify information in the service contract or service contract quote, first you have to change the status of the contract or contract quote from Locked to Open. Note that you cannot create service invoices for the service contract with the Open change status. After the contract or contract quote is modified, you have to change the status back to Locked to make it possible to create service invoices and ledger entries for the service contract, which includes the changes that you made to it.

To cancel a service contract

You may need to cancel a service contract when the contract has expired or has been canceled by you or the customer.

1. Choose the icon, enter Service Contracts, and then choose the related link.
2. Open the relevant service contract to cancel.
3. Choose the Open Contract action to open the service contract for editing.

4. In the Cancel Reason Code field, choose the relevant reason code. To add more reason codes, choose the Advanced action.

   If the check box in the Use Contract Cancel Reason field in the Service Mgt. Setup window is selected, you must specify a cancel reason code when canceling contracts.

5. In the Status field, choose Canceled.

6. If there are unposted invoices, credit memos, or opened prepaid entries for the contract, a confirmation message will appear. In the message box, choose No to return to the contract and post the documents, or Yes to continue the cancellation process.

Filing a service contract or contract quote

You can file service contracts and contract quotes at any time to record and archive a copy of the contract or contract quote. Dynamics NAV files service contracts automatically when you convert contract quotes to service contracts or cancel service contracts. You can file a contract or quote yourself by choosing the File Contract action on the Service Contracts or Service Contract Quotes pages. If you want to view your archived contracts of quotes by searching for Filed Contracts.

See Also

How to: Set Up Service Contracts
Service Management
How to: Convert Service Contracts that Include VAT Amounts

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