Discount on REFX Contract

[Former Member]

Hi Experts,

I have a requirement like customer and company will get into the contract for 2 years say 01.01.2015 to 01.01.2017 for commercial space.

But the Customer asks for some grace period for 3 months to occupy the place for which they don't pay the rent .

Actual speaking contract is for 01.01.2015 to 01.01.2017 the customer will occupy the place on 01.04.2015 which means 3 months as a grace period which they can do the fit outs and decoration .

actually customer pay the rent for 1 year 9 months and for which 3 months is loss for the company .

But company does not wanted to show it as a loss or vacancy cost instead wanted to show as a  revenue otherwise show it as a discount .

Please suggest any solution for this .

Regards,

Murali Mohan

[rajnikant_verma · Accepted solution]

Hi Murali,

Is customer paying advance rent for entire period?If yes, then you can distribute the revenue equally via deferral. So that system distribute the revenue of 21 month equally into 24 month. It is applicable if customer paying 6 month or annually advance rent.

                                                                      Or

You can create a new condition by name "discount in rent" as a credit flow type with reference to your revenue condition type. In discount condition type you can put some or 100% as discount and give the validity as 3 month. So when you the periodic posting initial for 3 month the it will post the discounted amount only.

                    Please be frank to ask any further query. Thanks

[Former Member · Accepted solution]

Hi Rajnikanth,

This answer is very much helpful to me for my scenario.

But I have small query ,when I want to see the report plan vs actual I mean for management report it has to show that plan was this much and after discount this much amount .

and also it should affect the first quarter/year .

and it should not affect the next year suppose if the contract is for 5 years.

Please share any report available for this.

Regards,

Murali MOhan

[Former Member · Accepted solution]

Hi All,

How can we apportion the contract value for the free periods.

Example :

contract start date is 1.1.2015 and it is for 1 year  value is 12000 and due to the free period for 2 months then contract end date shifted to 28.2.2016 for which January and February is free in 2015 period .

but the rent value should calculate for 14 months instead of 12 months like below :

12000/14=857.14

Please suggest .

REgards,

Murali

[sudhirkumar_tomar]

Hi Anwar,

In your case contract term is 24 months including three month of rent free period and your customer wants to show the fit-out rent free period amount as revenue or discount.

Contract Term

Contact start date                            01.01.2015

Contact end date                             01.01.2017

Rent start date is                              01.01.2015

Fit-out Rent free period                      3 months

Actual rent start date                         01.04.2015

To book the rent free period amount as revenue/discount in books of customer:-

1.     Add condition with following parameters

       Condition start date 01.01.2015 end date 01.01.2017

       Cash flow start date 01.01.2015 & first posting from 01.01.2015

       Condition Purpose- Actual Rent

          FI posting 

          Customer account Dr. (3months rent)

                     Revenue account Cr.      (3months rent)

2.     Add discount condition with following parameters

       Create a new condition of discount in credit view

       Condition start date 01.01.2015 end date 31.03.2015

       Condition Purpose- Actual Rent

          FI posting 

          Discount-GL account Dr. (3months rent)

                Customer account Cr.    (3months rent)

To store the rent free period amount as revenue for informational purpose only:-

1.     Add condition with following parameters

       Condition start date 01.01.2015 end date 01.01.2017

       Cash flow start date 01.01.2015 & first posting from 01.04.2015

       Condition Purpose- Actual Rent

Remark: cash flow generate from 1^st Jan but the actual posting will be allow only from 01^st Apr

2.     Add 1^st condition with following parameters

       Condition start date 01.01.2015 end date 31.03.2016

       Condition purpose- Statistical

      Add 2^nd condition with following parameters

      Cash flow start date 01.04.2015 & first posting from 01.04.2015

      Condition purpose- Actual Rent

Remark: 1^st condition only for informational purpose and 2^nd condition for actual posting in customer account.

Hope above scenarios solve your issue.

Best Regards

Sudhir

[Former Member]

Dear Sudhir,

Thank you very much for your valuable reply.

But here my scenario is different .

Contract period is 12 months and 1 month is free.

suppose start date :1/1/2016 and end date is 31/12/2016.

but as part of free period of 1 month contract end date is 31/1/2017 instaed of 31/12/2016.

so the rent is annual of 12000 and  per month it is 1000 1;e 12000/12=1000

how ever in this scenario the value should come like 12000/12=923.07 month and it should show the cash flow for 13 months instaed of 12 months.

Please suggest any alternative way.

REgards,

Murali MOhan

[Former Member]

Hi Murali,

to me it looks like you want to have a contract start date by 01/01/2015, but all conditions will start by 04/01/2015.

So your contract will occupy all objetcs by it's start date - no vacancy. And also you can see the 3 month rent free period.

Did I miss something?

Best regards

Norbert