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Oracle Lease and Finance Management User's Guide
Release 12.1
Part Number E13583-05
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Contract Terminations

This chapter covers the following topics:

Overview

When a lease or loan contract reaches the end of its term, a concurrent process automatically terminates the contract unless the contract was originally flagged as evergreen. In the case with evergreen contracts, the contract does not terminate and the billing continues beyond the contract's specified term. You can search for a terminated contract and view all of the undertaken steps.

Contract Termination with Outstanding Amounts

When your customers make their payment to terminate a contract, you might have some differences between what your customers pay you and what your records indicate is due.

The OKL Small Balance Write-Off Tolerance rule determines whether or not to write-off or retain in Receivables any amounts due. The system administrator specified these profile option values during implementation.

The rule in the OKL Small Balance Write-Off Tolerance terminates the contract and:

Methods of Contract Terminations

Methods of contract terminations include:

The topics in this section include:

Search for Terminated Contracts

Use this procedure to locate contract terminations where the termination applies to the entire contract. This procedure locates ad hoc contract terminations. You can search for a terminated contract to view the status, check the progression of steps in the termination process, and check and resolve any error and omission messages.

Prerequisites

None

Steps

Perform the following steps:

  1. On the Termination Transactions page, enter one or more search criteria for the terminated contract:

  2. Click the Go button.

    In the Results area are the matching contracts.

  3. Select the contract and click the termination transaction details of contract on the Termination Transaction page.

    The Termination Transaction page shows you the contract number, contract status, start date, end date, transaction status, transaction date, termination reason, comments (that you can edit), steps of the termination process, and messages. You should review and resolve any error or omission messages.

    The steps of termination process indicates the statuses of:

Request Termination

Use this procedure to select a contract for termination.

Supported Contract Statuses for Request Termination Process

Certain processes--such as termination quote, restructure quote, request termination, and contract expiration batches--are based the contract status.

The following table shows supported combinations of the request termination process and contract statuses.

Supported Contract Statuses for Request Termination Process
Contract Status Process: Request Termination
Booked Yes (Contract should have expired or be after quote acceptance.)
Evergreen Yes
Under Revision No
Abandoned No
Complete No
Incomplete No
New No
Passed No
Bankruptcy Hold No
Litigation Hold No
Termination Hold No
Approved No
Pending Approval No
Amended No
Reversed No
Terminated No

Prerequisites

None

Steps

Perform the following steps using the Request Termination page:

  1. In the Search area, specify any of the following search criteria to locate the contract that you want to terminate:

  2. Click the Go button.

    In the Results area, matching contracts appear.

  3. In the Select column, select one or more contracts that you want to terminate.

  4. Click the Terminate button.

    You can verify the progress and status of the terminated contract by searching for it.

    See Search for Terminated Contracts.

Batch Process Contract Termination

The person with Lease Administrator login responsibility runs a batch process that searches for contracts that are ready for termination to formally terminate them. The batch process looks for termination dates up to the current date. Whereas some lessors might run this batch process daily, other lessors with smaller portfolios might run this batch weekly or less frequently.

Supported Contract Statuses for Batch Process Contract Termination

Certain processes--such as termination quote, restructure quote, request termination, and contract expiration batches--are based the contract status.

The following table shows supported combinations of the batch process contract termination and contract statuses.

Supported Contract Statuses for Batch Process Contract Termination
Contract Status Process: Contract Expiration (Batch)
Booked Yes
Evergreen No
Under Revision No
Abandoned No
Complete No
Incomplete No
New No
Passed No
Bankruptcy Hold No
Litigation Hold No
Termination Hold No
Approved No
Pending Approval No
Amended No
Reversed No
Terminated No

To run the batch for processing contract termination, the Lease Administrator accesses the Submit Request area.

Processing the Fixed Purchase Option

The fixed purchase option is applicable to those lease scenarios where the contract runs its full life and the lessee opts to purchase the equipment for $1 or for a mutually agreed upon price when the contract terminates. Consequently, when you select the Automatically Process the Fixed Purchase Option check box in the End of Term Purchase Option region of the Terms and Conditions page, the following occurs when you run the Terminate Expired Contracts concurrent program:

  1. The expired contract is automatically terminated.

  2. An invoice transaction is automatically generated in Lease and Finance Management for the fixed price purchase option.

  3. The equipment (asset) is sold to the lessee.

    Fixed Assets is updated with the proceeds from the sale of the equipment, that is, the purchase option amount.

  4. The asset is retired from Fixed Assets.

Terminating Linked Contracts

When you terminate an Oracle Lease and Finance Management lease or loan contract that is linked to a service contract in Oracle Service Contracts, the service contract is not automatically terminated. The linked service contract continues to be billed through Oracle Lease and Finance Management using the billing process defined in Consolidated Billing.

Terminate the service contract manually in Oracle Service Contracts.

When you terminate a service contract (in Oracle Service Contracts) that is linked to an Oracle Lease and Finance Management lease or loan contract, manually terminate the Oracle Lease and Finance Management lease or loan contract, if required.