May 2009

Pay when Paid

AX2009 SP1 USER GUIDE UPDATE

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Overview
Pay when Paid (PwP) is used to assure customer acceptance of subcontracted work and also to manage project cash flow. This is accomplished by not paying the subcontractor until payment for their work is received by the end customer. Manually keeping track of which subcontract invoice is related to which customer invoice and selecting the appropriate subcontractor invoices for payment can be a very laborious task. The PwP feature within PSA automates both the relationship of customer to subcontractor invoice as well as the subcontract invoice selection process. PwP processing can be activated at either the vendor or the project/task level. The activation value can also be defined at the Vendor Group and Project Contracts, and then default into the related vendor and project.

Setup
The following section details the steps that are required to setup the Pay when Paid functionality.

I. Parameter setup 1. PSA Parameters PSA Menu Setup PSA Parameters Project - Activity tab a. Default Pwp setting Since both the project and the employee master files have a PwP flag, the system needs a way to determine which setting has priority over the other. The value of the Default Pwp setting determines which master file setting has priority. If the setting is set to Project Activity, then the default setting for the Override Vendor Pwp on the project (shown below) will be checked. This means that the PwP setting on the project has priority. If the value is set to Vendor, then the default setting for the Override Vendor Pwp on the project will be unchecked. This means that the PwP setting on the vendor has priority.

b. Fully paid threshold amount this amount defines the threshold that will constitute a full payment by the customer and will therefore release payments for the related invoices to the subcontractors. Usually this setting will be set to a value greater than 0.00 so that vendor payments are not held up because of a very small short payment by the customer. c. Fully paid threshold percent the percent defines the threshold that will constitute a full payment by the customer and will therefore release payments for the related invoices to the subcontractors. Usually this setting will be set to a value greater than 0.00 so that vendor payments are not held up because of a very small short payment by the customer.

d. Override employee expenses checking this field will allow employee expense reports to bypass the PwP process and get paid regardless of customer payment.

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II. Vendor setup 1. Vendor Group Accounts Payable Menu Setup Vendor groups Pay when paid The value of this field, which activates PwP functionality, will default to all of the vendors who are part of the vendor group. Changing the value of this field will not update the PwP field on the related vendors within the Group; it will only be applied to new vendors.

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Vendor group on the vendor form:

2. Vendor master Accounts Payable Menu Vendor Payment (tab) Pay when paid The value of this field identifies whether or not a vendor is subject to PwP processing. It will be defaulted from the related Vendor group when the vendor is initially created, but can be subsequently changed.

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III. Project setup 1. Project contract PSA Menu Project contracts Pay when paid The value of this field identifies whether or not projects within this contract are subject to PwP processing. This will be the default setting for all projects created under this contract. .

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2. Project PSA Menu Project details Finance (tab)

Project PwP activation setting Pay when paid The value of this field identifies whether or not a project is subject to PwP processing. It will be defaulted from the related Project Contract, but can be changed at the project level. The value of this field will default to related sub-projects and tasks, where it can be overridden. Override Vendor PwP setting Override Vendor Pwp this value is defaulted from the setting of the Default Pwp setting field in the Parameters, discussed earlier. When checked, the value of the PWP field on the Project is used. If unchecked, the value of the PWP field on the Vendor is used.

Purchase Order processing

I. Create a purchase order 1. Create a PO for the project PSA Menu Project details Item (button) Purchase order a. Create a PO in the same fashion as is currently done b. Review the Pay when Paid value on the POs Price/Discount tab. The value can be changed on the PO.

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2. Invoice the purchase order:

II. Review purchase order-related Vendor Invoice 3. Go to Vendor Account Accounts Payable Vendor details Transactions (button) a. Highlight the vendor invoice b. Select the payment tab c. The Pay when paid checkbox value is set based on the PwP values on the Project or the Vendor

d. The related project/task is presented

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Expense Journal processing

I. Create an Expense in the Exp Journal 1. Create an Expense Journal batch header PSA Menu Journals Expense Journal a. Create an Expense Journal header in the same fashion as is currently done.

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Pay when Paid 2. Create the Expense Journal lines as is currently done: a. Click on the Lines button

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b. Add lines for Journal lines. Notes: A vendor must be entered in the Offset account field on the General tab, as that is the entity that the expense transaction will be written against, and therefore, is the entity that has the PwP designation. The Employee designation is optional. However, if an employee is entered in the Employee field on the overview tab, the related Vendor account may default into the previously mentioned offset account. This depends on the designation of a related vendor on the employee record. Also, if the Employee field is populated, the system will check the value of the Override Employee Expenses box in the Parameters. If this box is checked, the employee-related voucher will not be flagged as a PwP transaction, regardless of any other settings at the Project or Vendor level. There must be an invoice number in the Invoice field on the Overview tab.

c.

Post the Journal lines.

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Pay when Paid II. Review expense-related Vendor Invoice 3. Go to Vendor Account Accounts Payable Vendor details Transactions (button) a. Highlight the vendor invoice b. Select the payment tab c.

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The Pay when paid checkbox value is set based on the PwP values on the Project or the Vendor

d. The related project/task is presented

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Customer invoicing and payment

Once the vendor invoices have been entered, they can be invoiced to the customer. As part of the pay-when-paid process, the system needs to cross-reference the vendor invoice to the related customer invoice on which is appears. This is so when the customer payment is subsequently received, the related vendor invoices can be updated so they can be selected for payment in Accounts Payable. I. Create Invoice Proposal and the Invoice to the customer 1. Create an invoice for the customer PSA Menu Project details Invoice (button) Invoice processing a. Create a customer invoice in the same fashion as is currently done. b. Post the invoice

2. Review the customer invoice information on the vendor invoice - PwP section Accounts Payable Vendor details Transactions (button) a. Highlight the vendor invoice b. Select the payment tab c. Notice that the customer invoice number is now associated with the vendor invoice i. This cross reference will be used to ultimately link the customer payment of the customer invoice to the vendor invoice.

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Pay when Paid II. Manage PwP vendor invoices 1. Review the vendor invoice that are subject to PwP PSA Menu Inquiries Invoices for Pay when paid

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a. Notice that the customer invoice number is now associated with the vendor invoice b. The Pay when paid checkbox provides filtering on vendor invoices that are subject to PwP (checked) or all invoices (unchecked).

c.

The Status field provides filtering to see all vendor invoices, only those that are associated to unpaid (open) customer invoices or only those that are associated to paid customer invoices.

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d. The Account type value defines the Account field. Filtering can be done by vendor, customer or project contract

2. Manually release a PwP vendor invoice to allow for payment PSA Menu Inquiries Invoices for Pay when paid a. If a vendor invoice is flagged as PwP and payment needs to be made to the vendor before full payment is received from the customer, the vendor invoice can be removed from PwP by clearing the Pwp flag on the record

III. Receive customer payment 1. Enter a payment from the customer Accounts receivable Journals Payments Payment journals a. Create a customer payment in the same fashion as is currently done.

b. Post the payment (in this case we present a payment that is below the Fully paid threshold amount/percentage setting in the Parameters).

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Pay when Paid c.

May 2009 Review the impact of a partial payment in the Invoices for Pay when paid form.

d. Post the payment (in this case we present a payment that is above the Fully paid threshold amount/percentage setting in the Parameters). e. Review the impact of a partial payment in the Invoices for Pay when paid form.

IV. Vendor payment 1. Enter a payment for a vendor Accounts payable Journals Payments Payment journals a. Create a customer payment in the same fashion as is currently done. b. Review the vendor payment in the Invoices for Pay when paid form.

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Pay when Paid V. Adjustments 1. Changing the PwP status for a vendor invoice PSA Menu Inquiries Invoices for Pay when paid

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When a vendor invoice is on hold due to its PwP status and the vendor needs to be paid before payment is received by the customer, the vendor invoice can be manually removed from PwP processing. This adjustment is available until the customer invoice is fully paid at which point, the vendors invoices are available for payment, regardless of their PwP status.

a. Check or uncheck the Pwp flag for the appropriate purchase order or expense transaction. b. Process A/P payments as usual.

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