Creating Contracts with Customers

A customer contract identifies the agreement used for settlements with a customer. Sales terms determine whether an order requires a contract; review those terms before creating the order.

Before you start

Prepare the customer and its legal counterparty, contract description and number, date, validity period, settlement currency and company account. Agree how debt and advances should be tracked before selecting a settlement method.

Create a contract from a sales order

1. Open Sales > Sales orders > Create.
2. Select the customer and review the sales terms. If the terms require Contract, open that field with F4.
3. In Contracts, check whether the appropriate contract already exists. To add one, choose More actions > Create.
4. Set Scope to Sales and check the inherited customer and legal counterparty.
5. Enter the description, contract number and date. Set the start date and any applicable end date. Use Valid when the contract is ready to use.
6. Select the company's account in the agreed currency.
7. Open AR/AP settings and review AR/AP item, the settlement currency and the other settlement settings.

Choose the settlement detail

Choose the method that matches the agreement. A preselected value is a starting value, not a recommendation for every customer.

AR/AP item option	How debt and advances are tracked
Contract for debt and prepayment	Both debt and advances are tracked by contract.
Order for debt and prepayment	Both debt and advances are tracked by order.
Invoice for debt, Contract for prepayment	Debt is tracked by invoice; advances are tracked by contract.
Invoice for debt, Order for prepayment	Debt is tracked by invoice; advances are tracked by order.
Invoice for debt, Payment for prepayment	Debt is tracked by invoice; advances retain payment-level detail. Review the allocation of payments to invoices for this method.

These choices define the settlement objects to review in orders, invoices and payments. Check the currency and applicable document settings separately.

Save and select the contract

Choose Save and close, then select the saved contract in the order. Check that Contract contains the intended record before continuing.

Reopen the contract if necessary and verify the parties, company account, currency, validity dates, Valid status and AR/AP item.

If the contract cannot be used

Check the customer and legal counterparty, the selected sales terms and the contract's dates and status. If the order does not require a contract, review its terms rather than assuming every sales order must contain one.

Continue with creating a sales order. See also sales terms and partner and legal counterparty.