Surcharge Management and Control

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Surcharge Processing
QAD, 2010
Business Issue
 Short and long term commodity price fluctuations force
material suppliers to attempt to recoup costs using
surcharges on items such as steel.
 Manufacturers struggle with how to track these
additional costs and ultimately recover the amounts
from their customers.
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Business Issue
Typical problems described include:
– How to capture the surcharges paid to suppliers,
and compare that with amounts invoiced and
collected from customers?
– How to simplify the invoicing process while
including a calculation of the appropriate/agreed to
surcharge for each individual shipment?
– What are the options for Pay/Charge/Absorb?
– How does timing impact my ability to match
payments with invoices/accruals?
– How do I include expected surcharge rates into
sales forecasting and margin reporting?
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Traditional Options
 Supplier side
– Record (distribute) surcharge amounts based on supplier
invoice information when vouchered in AP
• Requires manual distribution
• Not matched to any other elements of the process
 Customer Side
– Container/Line Charges
• Flat rate, not based on amount shipped
– Additional line/trailer amount added to order/invoice
• Manual process, impacts order entry and invoice processing
time/accuracy
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Solution!
SMC – “Surcharge Management and Control”
 Supplier Side
– Utilize Logistics Accounting module to accurately accrue for
surcharges payable to suppliers, based on amounts included in
item cost information, for later reconciliation with surcharges
invoiced
– Defined accounting to easily reconcile surcharges paid against
surcharges collected
 Customer Side
– Leverage existing QAD functionality (Freight Management) to
automate calculation and invoicing process based on amount
shipped and effective surcharge “rates”
– Post automatically to designated GL account for reconciliation
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Solution!
SMC - “Surcharge Management and Control”
 Features:
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Calculate surcharge by item weight, or other unit of measure
Automatic processing based on setups by customer/item
Rate maintenance based on effective date ranges
Compliant with discrete orders, customer schedules
Compliant with standard and enhanced shipping
Manual adjustment to charges where required
Warning message for “incomplete” calculation
Facilitates reporting and analysis through “effective date” of
surcharge rates
Solution!
SMC – “Surcharge Management and Control”
 Features cont’d:
– Financial
• Direct to invoice
• Recorded in specific GL Account
• Taxable or non-taxable
• Optionally discounted based on payment terms discounts
• Options for invoicing:
– Add to trailer
– Add to Item Price
– Calculate and show (no charge)
• Options for pricing:
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Base Charge
Amount per UM over Min
Amount per UM
Combined
Trailer Codes
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Surcharge Terms
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Surcharge Class
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Surcharge Zone
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Surcharge List
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Surcharge Rate
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Customer Assignment
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Item Assignment
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Order Entry (discrete)
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Order Entry (discrete)
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Order Entry (discrete)
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Order Entry (discrete)
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Order Entry (schedule)
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Standard Shipments
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Standard Shipments
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Standard Shipments
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Standard Shipments
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Enhanced Shipping
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Enhanced Shipping
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Invoicing
 Invoicing flow is not impacted by this process.
 Should manual adjustments be required to the invoice
based on errors in calculation, use Pending Invoice
Maintenance to recalculate or adjust the trailer
amounts.
 Select Calc Surcharges option in PI Maintenance to have
the system recalculate the surcharges based on the
updated List information, or manually adjust the amount
in the trailer code..
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Setup Considerations
– Trailer codes (2.9.13) for tracking surcharges to specific GL accounts
– Surcharge List (2.20.1), Class (2.20.7), Zone (2.20.4), Rates (2.20.10),
Terms (2.20.13)
– Customer linkage to List, 2.1.1
– Item linkage to class, 1.4.5
– Item ship weight and UM (pt_ship_wt and pt_ship_wt_um), can be
other than LBs for creative calculation, i.e. fuel or other surcharge
– Screen labels, menus and field name changes, change, hide, default,
configure screens and field security (Labels - 36.4.17.5, menus 36.4.4,
Message Maintenance 36.4.7, error message 669). These elements
must be considered as a part of any upgrade plans, as these
changes will not be carried into the new upgraded instance.
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Menu System Maintenance, 36.4.4
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Label Master Maintenance, 36.4.17.1
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Label Detail Maintenance, 36.4.17.5
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Message Maintenance, 36.4.7
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System Demonstration
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Questions?
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