I’ve recently run into something that I never used. It’s a new way to use the service contract. The concept is simple, a single document that can provide a single invoice for both a deliverable product as well as the extended warranty that goes with it. I became intrigued because it’s often been something that has been fancifully wished for. Why can’t we do it on a single document?
Now, the concept is still not ideal. Here is how it works. The configuration should be relatively standard once you see the concept. You start with a service contract. You probably only need an item category for service and another with configuration (if you use VC products). You don’t explode any BOM on this contract. It’s purely to drive pricing/invoicing. Now, the work comes in building all the copy control. Because you will still need to create an order to do the shipping of the product (be sure it’s Free of Charge). You create it with reference to your original contract. The service item can work like normal.
So this works, but again, it does still require multiple contracts/orders, but at least it can be merged into a single billing plan/invoice. If you’d like more details, let me know.
Thanks for reading,
As always, thanks for reading and don't forget to check out our SAP Service Management Products at my other company JaveLLin Solutions,Mike
Had to use a solution like this myself a few years back with bundled software service agreements. One item of note to your readers. Where you need to be careful is with revenue recognition; while the contract documents can be billed out prior to shipment, you need to make sure the finance people are OK with it posting to revenue immediately – otherwise will need to setup VF44 to ensure that revenue can’t be booked until the actual hardware shipment occurs – transferring from deferred revenue to realized revenue after PGI occurs.
Obviously the extended warranty agreement would need to be recognized on a periodic (monthly) basis as well or as costs are incurred depending on the finance rules.