We are buying a complete part from our vendor. The material costs are volatile. Because of this, our customer wants to pay for the material upfront.
We want to bill our customer for the material and pay our vendor for the material upfront, but we will never hold the material in our inventory. The vendor keeps the material and creates parts for the blanket order.
We transacted it as a charge but we’re wondering if that was the right move or not?
Our concern is - if there is no cost on the order for the material, is the cost of this material being accounted for in Cetec? Would you recommend this be handled in a different way? If so, your recommendations would be appreciated. Thank you!
~Sherri
To clarify, the Vendor retains the material and creates parts for the blanket order - do you all receive those created parts at some point related to blanket order?
Yes, the vendor retains the material and creates parts for the blanket order from that material. We receive monthly releases of these finished parts. Thank you for requesting the clarification.
Ah, okay, you are receiving the finished parts at some point…then shipping final product to customer…BUT the Order has a line for the raw material that you won’t receive (classified as Non-Inventory, but Non-Inventory items get received as well…) with cost that Customer is PrePaying on the Order (at Resale) and presumably you all are essentially PrePaying Vendor for that raw material at cost, receiving the finished parts later down the road. Are those finished parts already on the PQuote or PO awaiting receipt? I am inferring that the Vendor is going to Invoice you all for the finished parts at a price that includes the cost of the original raw materials component. This has the feel to me that it maybe would be only a PrePayment from Customer in, and a PrePayment to Vendor out, without creating an Order line for the raw material and perhaps include a Progress Billing to Customer on the Order. That said, I am going to escalate this forum ticket up the chain to production support for possible scenarios to consider…tricky little situation! We will send advice and instructions once best path is determined.
We will get back to you on this as quickly as possible so as not to cause a delay in the AR-AP processes on this Order.
process a progress billing invoice on the sales order (Cetec ERP) to bill your customer upfront… or if you are taking cash payment from them, just do a prepayment on the sales order instead of a progress invoice.
receive the parts against the PO per normal receiving process (this will credit accrued purchases and debit inventory)
pick the parts against the sales order (STOCK transaction code) and ship the parts (this will credit inventory and also hit COGS by the amount of the part (which we originally received into stock) picked/issued/shipped on the sales order.
Update to the steps sent in reply this morning…you will need to first UnInvoice the Invoice to the Customer for the raw materials (as of this morning the Invoice is still unpaid, so less to unravel there) and remove the line on the PO for the raw materials…then proceed to the steps in previous reply this morning …If you have further questions, just reply again to let us know how we can better help you get this resolved.