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Installment Billing Best Practices?

  • 1.  Installment Billing Best Practices?

    Posted Mar 11, 2020 12:25 PM
    Hey all...Nav 17 here and a NAV newbie so advance warning if i have no idea what im talking about!

    Backstory: We have a remote monitoring service program we're offering to clients that can be paid either as a monthly service or the upfront annual cost. The issue we're running into is when we provide and install equipment. Currently there are 2 options that involve monthly installments for the service AND equipment, the customer either pays up front for the hardware (which is the easy part) or they pay over time until paid off. If we receive 1 item into NAV, our concern is how to handle inventory since that item is, essentially, going to be sold 6x over the next six months. For the sake of the customer we're trying to streamline the billing as much as possible and not inundate them with a service AND a sales invoice. One thought that floated around was creating and receiving a singular item equivalent to the quantity of the payment installments....however im not a huge fan of that idea and feel there must be an easier way. Based on info provided, could a blanket order w/ monthly invoices work with hardware?

    If anyone handles monthly installments, curious how (OF IF) they handle sales as well as service. I believe i read that on previous versions of NAV, it wasn't possible but didn't know if there was an update or workaround or customization anyone can recommend.

    Thanks

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    Jeremy Banks
    Gustavo Preston
    Chelmsford MA
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    Academy - Online Interactive Learning from Experts


  • 2.  RE: Installment Billing Best Practices?

    TOP CONTRIBUTOR
    Posted Mar 12, 2020 10:21 AM
    Have you looked at NAV Service Contracts? They provide the ability to bill monthly or annually--against the contract.
    On the Service Contract you should be able to have 2 lines--one for monitoring, one for hardware.
    If they're paying up-front for hardware, then set the ending date of that line for 1 month into the contract and only the first invoice from the contract will include that charge--all future bills will just be for the monitoring service.
    The Service Contract takes care of all revenue issues, thus freeing up your accounting team to handle the inventory quantity and cost however they like. For example a $0 Service Order posted against the contract would remove the quantity and cost from inventory all at once. If that was undesirable, they could then create some recurring Journal Entries to accrue/recognize the cost in future periods.

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    Greg Enns
    ERP Coordinator
    Technical Prospects
    Kaukauna WI
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    Academy - Online Interactive Learning from Experts


  • 3.  RE: Installment Billing Best Practices?

    Posted Mar 12, 2020 10:55 AM
    Thanks...we'll look into that.
    Sounds ideal when they pay up front for hardware. Sorry, if i don't completely understand but the service contract WOULD work, from an inventory standpoint, if one item was to be paid off over a certain time period, not just for an upfront purchase?



    ------------------------------
    Jeremy Banks
    Gustavo Preston
    Chelmsford MA
    ------------------------------

    Academy - Online Interactive Learning from Experts


  • 4.  RE: Installment Billing Best Practices?

    TOP CONTRIBUTOR
    Posted Mar 12, 2020 11:46 AM
    The Service Invoices created from the service contract will simply be GL lines with whichever Revenue Account is specified in Serv. Contract Account Groups.
    So this does not take care of inventory qty or cost. You can really handle that however you want. I was suggesting the $0 Service Order because I think it's the best way to link the cost with the Service Contract. You would have the Item line on the Service Order but with no "Line Amount" and have the Service Contract listed in the header of the Service Order. This would allow you to remove the quantity and the cost from inventory AND have it associated with the Service Contract (for reporting purposes). If you don't care about linking the cost to the Service Contract, you could do the same thing with a $0 Sales Order.
    If you don't want all the cost to be recognized when that Service Order (or Sales Order) is posted, you could use Journal Entries to reverse the cost entries posted by the Service Order and recognize the cost as appropriate.

    ------------------------------
    Greg Enns
    ERP Coordinator
    Technical Prospects
    Kaukauna WI
    ------------------------------

    Academy - Online Interactive Learning from Experts


  • 5.  RE: Installment Billing Best Practices?

    Posted Mar 13, 2020 09:44 AM

    I'd also suggest checking out the Recurring Sales Lines functionality in the sales area.  It's quite robust and doesn't require as much additional setup as the Service Contracts/Invoices.  The feature allows to you generate periodic invoices to customers based on the setup of the standard sales lines attached to the customer by running the 'Create Recurring Sales Invoices' function.

    If you access to a Cronus DB, there are a few setup.  You can go to a customer card > Navigate > Recurring Sales Lines (on the Sales tab).

    You have 2 cases, correct? 1) customer pays for equipment upfront and pays installments on services over time or 2) everything paid in installments.

    The trick will be relieving inventory when the item is shipped and properly accounting for it. You can't use the item in the recurring sales process or you'll keep pulling the Item out of inventory.  You can use Resources and G/L accounts on the sales lines setup so you could leverage those areas for the inventory installments.

    One important note:  There is a licensing impact to using Service vs. Sales Lines in the current version of NAV (Business Central, cloud-based subscription).  The Service Mgmt area is under a different license structure that will increase license costs by $30/month/user.  

    Give the features a look.  I've used it at several clients that generate thousands of invoices per month.​

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    Mark Daugherty
    Director of Presales
    DSWi
    Sugar Land TX
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    Academy - Online Interactive Learning from Experts


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