Generating adjustable schedules and financial commitments
In a subcontractor contract, you can allow for flexible payment schedules to suit the requirements of the service provider and the subcontractor.
You can make settings to enable payment flexibility upon adding an Outsourced assignment contract line, in the following fields:
• Adjustable payment schedule?
• Regular payment frequency?
For more information on these fields, see Outsourced assignment fields.
 | This feature is only available for an Outsourced assignment contract line type. |
Procedure
1. Go to Subcontractor contracts and select the relevant subcontractor and contract.
2. Go to Contract lines and click Add Outsourced assignment contract lines.
3. On the data panel, enter the required data for the contract line.
For information on these fields, see Contract line data fields. For fields specific to Outsourced assignment, see Outsourced assignment fields.
4. Set Adjustable payment schedule? field to Yes.
| | Setting this field to No means that you cannot use the Generate schedules and commitments action that is required to create flexible payments. |
5. Additionally, set Regular payment frequency? field to Yes or No as required. The implications of either selection are discussed below.
6. Click Save.
Now, click the Generate schedules and commitments action to create the schedules and commitments at the Financial commitments and Adjustable payment schedules steps on the Contract line details level.
Implications:
1. If Regular payment frequency? is set to Yes: both schedules and commitments are generated.
- On the Adjustable payment schedules step, schedules are created based on Amount per, Date effective and End date fields on the contract line. The total period is divided into 12 months per schedule. For example, if the start date is 1/1/2020 and the end date is 31/12/2022, 3 schedules are created.
| | The selection of Year in Amount per field and month in Payment frequency field is the only combination allowed. |
- On the Financial commitments step, commitments are generated, but the Amount field is set to zero, enabling you to freely adjust the amounts. The amounts entered on all commitments related to a schedule must add up to the value in the Amount field on the schedule. You can only set the contract line to Active if the total amounts on all the schedules tally.
2. If the Regular payment frequency? is No: only schedules are generated.
- Here, the schedules are also created based on the Amount per, Date effective and End date fields on the contract line, but the Payment frequency field will be automatically populated with the same value as in the Amount per field.
- On the Financial commitments step, you must manually create the financial commitments by adding the Adjustable cash flows. When adding the cash flows, you must enter the Payment date, End date of commitment and Amount fields to define your own flexible payments. The Start date of commitment will already be filled in for you. Make sure that when you fill the end date, the commitments are consecutive. There should not be any gaps between the commitments. Based on this, the commitments will be automatically linked to the schedule. So, the commitments created must always be between the Start date and End date of a schedule and also should add up to the Amount on the schedule. For example, if the start date is 1/1/2020 and the end date is 31/12/2022, the Amount is 2000 and Amount per is year, 3 schedules are created with the following start dates and end dates:
Schedule dates | Amount |
1/1/2020 to 31/12/2020 | 2000 |
1/1/2021 to 31/12/2021 | 2000 |
1/1/2022 to 31/12/2022 | 2000 |
Per schedule, in this time frame, you can create any number of commitments provided they are consecutive and the total of the amounts match the amount on the schedule.
| | After generating schedules and commitments, if you change any value on the contract line that can affect the schedules, the schedules become Not validated. In that case, the contract line cannot be activated and you must Generate schedules and commitments once more. |