A vendor contract/account represents a special payment arrangement you have with the vendor, such as a deposit account or a commitment to a standing order. A vendor contract/account may also represent an agreement by the library to spend a certain amount of money with the vendor in exchange for a discount on purchases. You enter vendor contracts/accounts on the vendor record, and you assign contracts to purchase orders in the PO header.
You can define two types of contracts/accounts:
Vendor contracts/accounts track the funds you assign to and spend against a contract, while allowing you to use different budgets to pay for the individual items. Without this feature, the only way you could track encumbrances and expenditures by contract would be to create and use a separate budget for the contract; however, that would prevent you from using the individual budgets you would normally use to pay the items. With vendor contracts/accounts, you can track the overall on-order and spent amounts for the contract, but pay for the orders with individual budgets. As you order, receive, and record invoices for items that are assigned to a vendor contract/account, Horizon updates the amounts on both the vendor contract/account and the budgets assigned to the PO lines.
Notes
• | Horizon currently does not prevent the funds you assign to a contract from being spent on other orders. Consequently, you should review your budgets periodically to make you have sufficient funds to cover your contracts. Another option is to create a dummy PO line for the contract for the purpose of encumbering the contract amount. (For more information, see Vendor Contract/Account Work Around.) |
• | When you create a purchase order for items that are part of a vendor contract/account, you enter the contract code on the PO header. The contract you enter applies to each line you add to the purchase order. Consequently, make sure you add only lines that are part of the contract. |
• | If you enter a contract on a purchase order, a budget is required on each line you attach to the purchase order. |
• | Like other purchase orders, funds are expended for items you purchase on contract at the time you specify in the Spent Event field on the PO header. |
• | If you want to use electronic orders, responses, or invoices, you must be sure you have correctly set up your vendor contracts/accounts to work with those electronic messages. (For more information, see Electronic Orders, Responses, and Invoices.) |
As users create, receive, and invoice purchase order items, Horizon warns users when a transaction will exceed on-order (encumbrance) and spent (expenditure) limits for a vendor contract/account. You can enter the on-order and spent limits you want for each contract. If a user tries to perform a function that will increase the contract’s on-order or spent amount beyond the limit you define, Horizon warns the user. Users can override this warning only if their security settings allow it.
You can enter a limit that is less than, equal to, or greater than the contract amount. You can also change this limit periodically to ensure that funds are used evenly throughout the year. (For example, a library may enter a limit of 25% during the first quarter of the year, 50% during the second quarter, 75% during the third quarter and 100% or more during the fourth quarter.) Entering a limit that is equal to the contract amount ensures that you do not over-encumber or over-expend the contract. Entering an amount that is greater than the contract amount lets you over-encumber or over-expend the contract up to the amount you feel comfortable with. You may want to allow a certain amount of over-encumbrance since many items do not come in during the year they are ordered.
Vendor Contract/Account Work Around
Horizon currently does not prevent funds you assign to a contract from being spent on other orders. You can get around this problem by creating a “dummy” PO line for the contract for the purpose of encumbering the contract amount. As you create real orders against the contract, you can reduce the amount of the dummy line. This work around ensures that you have sufficient funds to cover your contracts.
These steps explain this work around for a standing order contract:
1 | Create a purchase order and add a PO line for the total contract amount. If a purchase order already exists for the standing order, add the line to the existing purchase order. |
2 | Enter the total contract amount in the Unit Price field of the dummy PO line. Enter the budget or budgets you want to encumber in the Distribution group. |
3 | Add PO lines for new editions as you receive them. |
4 | After you add a PO line, reduce the amount in the Unit Price field in the dummy PO line by the amount of the new line since the funds are now encumbered by the new line. |
This section contains these topics:
• | Entering a Vendor Contract/Account |
• | Editing a Vendor Contract/Account |
• | Deleting a Vendor Contract/Account |
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