Defining Conditional Charge Plans for Agreement Line Items (End User)

After administrators set up conditional charge plans in the Conditional Charge Plan view of the Administration - Contracts screen, users can select the appropriate conditional charge plans for agreement line items. For more information, see Setting Up Conditional Charge Plans.

For example, the administrator creates a conditional charge plan named Termination Plan. This plan specifies that if a customer cancels an agreement early, then the customer must pay 8.33% of a penalty charge for each remaining month in the agreement period. A user sets up a photocopier maintenance agreement for a customer and associates the Termination Plan with the photocopier agreement line item. The user specifies that a total penalty of $150 applies to this line item if the customer cancels the agreement before the 12-month term of the agreement expires.

The customer cancels the agreement after just 6 months. According to the Termination Plan, the customer must pay 8.33% of the total cancellation fee for each of the remaining 6 months. The customer must pay $74.97 (8.33% * $150 * 6 months).

Note: The day that a customer terminates an agreement is the day that the conditional charge is created. Also, if no conditional charge plan is associated with the agreement line item, then a penalty is charged.

This task is a step in Process of Managing Agreements.

To define a conditional charge plan for an agreement line item

1. Navigate to the Agreements screen, then the List view.

2. Drill down on the Name field for a selected agreement.

3. On the link bar of the Line Items view, click Conditional Charges.

4. In the Conditional Charges list, create a new conditional charge record, and complete the fields as appropriate.

   Some fields are described in the following table.

   Field	Comments
   Type	Select the type of conditional charge. Value include Penalty and Refund.
   Start Date	Select the date the conditional charge starts unless you specify an effective date.
   End Date	Select the date the conditional charge ends. For example, cancellation fees apply only if the customer cancels the agreement before a 12-month period elapses. After this period, the company cannot charge for customer cancellation.
   Effective Date	Select the date the conditional charge is effective.
   Plan	Select the conditional charge plan that controls the conditional charge.
   Amount	Type the total amount that the customer must pay for the conditional charge.
   Reason	Type a description of the reason for creating the charge.

5. In the Advance To field at the start of the Conditional Charges view, select a date that is after the specified effective date and before the specified end date.

   The date in this field represents the time remaining for the agreement.

6. Click Charge.

   The total charges to apply to the customer (in accordance with the conditional charge values) are calculated. For example, if the customer cancels a 12-month agreement after just 6 months, then the customer must pay 50% of the cancellation fee over the next 6 months.

7. (Optional) On the link bar, click Charges to view the calculated charges for the line item.