Value Contracts
Definition
A value contract is a legal agreement with a customer that contains the materials and services that the customer receives within a specified time period, and for a value up to a specified target value. A value contract can contain certain materials or a group of materials (product hierarchy, assortment module).
Use
The value contract contains rules that specify the kind of release orders that are allowed. You can define restrictions on customers and materials. In addition to the sold-to party, you can specify the other partners who are authorized to release against the contract by assigning the partner function AA to them. You can also define additional ship-to parties for release orders using the partner function AW. For further information, see
Authorized Partners for Release Orders.In the value contract you can refer to lists of materials that have already been defined. This list could be a product hierarchy or a assortment module (for more information, see
Assortment Module for Value Contracts). However you also create a value contract for only one material (for example, a configurable material).To fulfill both these requirements, two types of value contracts are offered in the standard system:
You can specify a product hierarchy or a assortment module for value contracts with contract type WK 1. The system will always propose this type of contract, if you want to create a contract for several materials or a certain group of materials. All the materials in the relevant assortment, or belonging to the specified product hierarchy are then relevant for release.
You can create contracts for one material (usually configurable) with this type of value contract. A software company is an example of where this kind of contract is often used. There, a contract for the value of $500,000 is made with the customer for one specific software product.
You can also agree on the length of the contract for this type. The contract duration can be agreed at item level and can be different from the contract duration specified at header level.
You can store special price agreements for the value contract. These price agreements can then be used at any level. For example, a value contract can contain prices for individual materials, or discounts that are valid for every released material.
Release Orders
The customer fulfills a contract by issuing orders against the contract. The contract does not contain any exact dates for deliveries, so you need to create a sales order to release against a value contract.
When a release order is created for the contract, the system automatically updates the released values in the contract. The release order value is calculated from the total of the open order and delivery values, plus the value that has already been billed to the value contract.
The system also updates the released value for subsequent changes (for example, overdelivery of contract release, price changes in the billing document, partial deliveries, returns, rejection of order items, cancellation or reversal of orders, deliveries or billing documents).
You can create a release order in any currency. The system automatically converts this currency into the one agreed upon in the value contract on the pricing date for the contract release order.
Billing
You can bill the value contract either directly, or per release order. If you want to bill the value contract directly, you have to create a billing plan for the value contract. This enables you to bill the value contract for several dates, and for partial values. If you change the value of an item in the value contract, the system automatically adjusts the open billing dates so that the complete value is billed.
Document Flow
You can use the document flow to display all the subsequent documents that arise from a value contract (for example, sales orders, deliveries, billing documents).
Completing value contracts
A value contract is complete when you enter a reason for rejection. You can define how the system reacts when you have reached the target value in Customizing for value contracts (item category).(You define the following reactions: a warning, an error message or no reaction.)
Constraints
A value contract that has not been completely released is not automatically billed. When you work with the billing plan which has dates that have already been billed and you then reduce the target value in the value contract, the system does not check whether too much has been billed. In this case, you have to create a credit memo for the difference.
Quantity and value contract items cannot be processed together in one document.