How do you process a Mill Claim or a Vendor Return in BMS? This could be a due to an issue or defect with the material, material that is no longer needed and a return is approved, etc.
Claims Processing Procedures
Setup:
Accounts Receivable > Customer Maintenance - A Customer ID must be created for each Mill or Supplier. The ID should be the same as the existing Vendor ID. In the Tax Code field, enter your code for exempt sales tax if claims for replacements are not a taxable item. Use a house account code for the Sales Person field so no commissions will be calculated for claims. (If commissions are permitted to be earned on claims, the salesperson field of an order can be used to override the house account code.)
Sales Processing Setup Programs > Job Type Maintenance - A Job Type should be created for mill claims (and possibly a separate code for installer claims).
Sales Processing Setup Programs > Payment Type Code Maintenance - A Payment Type should be created for claims clearing using a Claim Clearing GL account number and toggled as a claim payment type.
Sales Processing Setup Programs > Territory Code Maintenance - Create a Territory Code for claims jobs so that you can separate these jobs out in the A/R Aging Report and enter this code in the Sales Territory field in Customer Maintenance for each Mill/Supplier ID.
Procedures:
If the material is determined to be defective, make sure to add notes to the original job. Credit memo the defective material in the original job if it has already been invoiced, but do not close the job. (This will return the defective material item to stock, whether or not it was returned, and set up a credit on the customer’s account.) Enter another material line on the job for the replacement material, assigning a different piece of existing inventory or creating a PO for it.
Create a new job using the mill or supplier as the customer - use Job Type of Claims. In the Ship-To box, enter the customer’s information so you can search by the Job Name or Address. Enter a line on the job in the amount of the defective material and assign the defective material to the job. (You may or may not need to add labor lines if you must pay an installer to repair or replace the defective material.) Add job notes to record the claim number and any follow-up communications with the rep or mill.
When you are ready to install the replacement goods, you will need to print a work order from both jobs: One will be from the customer’s original job for the replacement piece and one from the mill’s job for the labor lines, if necessary. You may also want to print a work order for the defective goods on the mill’s job, putting notes on it to advise the warehouse of any disposal or Return Authorization Instructions. (You can tell them to make a remnant of the piece, send it back, dispose of it, or that it was never received in the warehouse.)
When the work is done on the customer’s job, invoice the material, equaling the amount of the credit memo you created in step #1 above. In Post Customer Payments, apply the credit to the invoice you just created to clean up the customer’s account.
Invoice the supplier job, creating a receivable for the supplier in the system. The mill will have an unpaid invoice in Accounts Receivable, which will appear on the AR Aging Report. You may leave it there until you get your mill credit or payment.
In Accounts Payable, you will receive an invoice from the mill for the original material. Enter this invoice as you would any other. Post a debit to the appropriate inventory account number. When the invoice for the replacement piece comes in, post that as well (also to inventory), but immediately place a hold on that invoice so it will not be paid. If you are concerned that the mill may not send a credit memo or you fear you may pay it accidentally, you can do the following: Add a credit memo of your own using the mill invoice number, date, and amount, and post it to the cost of goods sold account number as a credit. You can put a hold on it, along with the invoice, until the mill credit arrives. When it arrives, delete your credit memo and add the mill’s credit memo in its place, code it to the claims clearing account, and select it for payment along with the replacement invoice.
In Accounts Receivable, when the mill credit comes in, enter a payment in Post Customer Payments and use the payment code mapped to the claims clearing account (typically ZVCR).
If you are concerned the mill may not credit the entire amount of the claim you have submitted, you can leave the claim open until the mill credit is received. If the credit memo amount differs from the claim amount, adjustments can be made to the claim. You can post the credit memo as a deposit on the claim if you choose. If the payment type is toggled as a claim type, and the user posting the deposit has the user setting labeled "allowed to post deposit/AP claims," the system will prompt you and then take you to AP > Open Item Maintenance to enter the credit memo. When entering the credit memo, the GL account # should be the same as when setting up the claims clearing payment type.
Conclusion:
These procedures will keep all claims in an Open Job Status until you are ready to invoice. Then, if you choose not to post the credit memo as a deposit against the open claim, it can be tracked as a receivable until the credit is issued. You will be using your normal job entry procedures, so the process is not complicated, and the information will be kept in the system along with your customer information.