Amendment Example — Amount Based Contract Line
To demonstrate calculations made by the system to adjust amount based contract lines, an example is provided. In this example:
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The contract separates billing and revenue on amount-based contract lines.
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An amendment is processed increasing the contract line billing amount by 500 USD and the contract line revenue amount by 1000 USD. For purposes of this example, assume the adjustment to the contract line revenue amount was calculated programmatically via an allocation, but it does not impact the example either way, manual or automated allocation.
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The amendment is applied retroactively for revenue, but not for billing.
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The billing plan and revenue plans have a method of Milestone using the percent functionality for the events.
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Billing events and revenue events are associated with the contract line. The first event on each has been processed to completion and the remaining event is in pending status.
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For billing, as part of the amendment process, the system updates the billing plan status to Action Required since the change in the line amount impacts future events and these events must be updated online. The system automatically updates the percentage on events already processed based on the new contract line billing and revenue amounts if retroactive options are not selected.
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For revenue, the system creates an amendment event on events already processed and adjusts the amounts for the future revenue events in pending status. Percentages in effect prior to the amendment are used for calculating the amendment events and amounts on events not yet processed.
New contract line amounts after amendment.
| Contract Line BillingAmount | Contract Line Revenue Amount | Billing Plan | Revenue Plan |
|---|---|---|---|
|
1000.00 USD (increased by 500) |
2000.00 USD (increased by 1000) |
Milestone |
Milestone |
See below for billing plan events before processing the amendment.
| Event | Amount | Percent | Status | Notes |
|---|---|---|---|---|
|
001 |
250.00 USD |
50 |
Complete |
|
|
002 |
250.00 USD |
50 |
Ready |
See below for billing plan events after processing the amendment with Adjust Billing Retroactively not selected. Bill plan status automatically updated from In-Progress to Action Required. Billing plan events must be updated to total the new billing amount on the contract line.
| Event | Amount | Percent | Status | Notes |
|---|---|---|---|---|
|
001 |
250.00 USD |
25 |
Complete |
No change to the event amount since it was already processed and retroactive was not selected. As a percent of the total line amount, event 001 does change from 50 to 25 percent (250/1000). |
|
002 |
750.00 USD |
75 |
Ready |
Adjustment entered online to increase the percent from 50 to 75 percent on the event not yet processed. Event amount is updated as well. |
See below for revenue plan events before processing the amendment.
| Event | Amount | Percent | Status | Notes |
|---|---|---|---|---|
|
001 |
500.00 USD |
50 |
Complete |
- |
|
002 |
500.00 USD |
50 |
Pending |
- |
See below for revenue plan events after processing the amendment with Adjust Revenue Retroactively selected. Revenue plan status remains In-Progress. System programmatically applies the change in the revenue amount to events already processed and events not yet processed.
| Event | Amount | Percent | Status | Amendment Event | Notes |
|---|---|---|---|---|---|
|
001 |
500.00 USD |
50 |
Complete |
500.00 |
An amendment event was programmatically generated on this event since it was already processed and retroactive was selected. Percent not recalculated, rather is used to create the amendment amount. |
|
002 |
1000.00 USD |
50 |
Pending |
- |
Amount on the pending event is programmatically updated based on the percentage in effect at time of the amendment and the new revenue line amount. The amount is programmatically updated only if events are created by Percentage. If events are created by Amount then user has to manually allocate the remaining amount to pending events. |
Note:
When the amendment is processed, the system sets the billing plan status and/or revenue plan status to Action Required if the total of the events do not equal the total plan amount. You must review the events and reallocate amounts after the amendment is processed. Once you have reviewed the plan and made any necessary changes, click the Reviewed button to rebuild the schedule of events and to signify to the system that the plan is ready to continue with processing. Then, the system updates the billing plan or revenue plan status from Action Required to In Progress and processing can continue.