 |  |
How To: Manage Advances
1. BackgroundIn The Logger's Edge (and The Cutting Edge), you can issue advances to contractors, landowners, or any vendor. An advance is basically a loan to a vendor, that is subsequently repaid at a future date. There are three basic types of advances in The Logger's Edge:
(1) On demand advance. This type of advance is issued to a vendor and then collected in some future pay period. The collection of the advance may be timed to some event or completion of some activity. The collection of the advance is handled manually and can be set for any date or amount(s) that you choose.
(2) Production advance. This type of advance is issued to a vendor and then collected in the future as loads are delivered. For example, you might advance a contractor $10,000 and then collect it back at a rate of 25% of the pay he is otherwise due for loads for which he is paid. Another example might be a landowner whom you advance $50,000 for stumpage prior to harvesting. You might then reduce your stumpage payments to the landowner at a rate of 25% until the principal amount of the advance has been collected. The Logger's Edge has an automated way of collecting advances against contractor pay statements.
(3) The third type of advance is a 'mid-month' advance. This type of advance involves making an advance in the middle of the month to a contractor for work already performed. For example, you might advance a contractor 80 percent of the pay he would be otherwise due at the 15th of the month. At the end of the month, you would calculate his entire pay for the whole month and then remit to him that amount less the amount advanced on the 15th.
We have a separate document on Mid Month advances located here.
The remainder of this document covers on-demand and production advances.
2. Steps
Enable Advances in Basic Setup
You must be logged in as an administrator in order to enable any of the advance settings.
The advances functionality is not available by default but must be turned on by a switch in Basic Setup.
In this selection frame, the 'enable' and 'disable' options refer to Mid-Month Advances (as does the Exclude Tax checkbox). Thus, you enable Production and/or On Demand (Manual Add) advances with their specific check boxes. You should disable Mid Month advances. You can enable either On Demand or Production advances or both together.
You
cannot use Mid Month advances in conjunction with either of the other two
types of advances for the same vendor/contractor/landowner.
When configuring the advance functionality, you must also decide whether the advance will take into account tax (e.g., GST, PST. Thus if the amount otherwise payable is $10,000 without GST and $10,700 with GST, and you are applying a certain percentage, say 90%, you need to decide if the 90% applies to the pre-tax number of $10,000 or the post-tax number of $10,700. The checkbox 'Exclude Tax' governs which way the percentage will be applied.
The functionality of the two different types of advances (On Demand, Production) is described separately below.
3. Working with On Demand Advances
You set up an on-demand advance (issuance), by selecting Data Entry | Advances Issued to Vendors from the Main Menu.
This selection will bring up a grid with all your advances and advance collections.
In order to create an advance, you would click on Add (or Copy) which would add a new row to the grid. You would then select the vendor/contractor and the pay period in which you want to issue (pay) the advance. You next would enter the amount. Positive amounts are used for an issuance of an advance; a negative sign is used for collections. For example in row 3, we have a $10,000 advance to Whiskey Creek issued in the 12/15/05 pay period. We also see a collection of $2,000 in the same period and a collection of $2,500 in the 12/31/05 pay period. You will need to mark the advance type as 'ON DEMAND'.
You can leave the
When you make a collection you will need to check the "Repayment?" checkbox on the far right of the grid.
You
can only have one on-demand advance and one collection per vendor per pay
period. If you need to have more than one advance or collection, you
will need to combine the amounts in order to make one entry.
Note the back
tab of the advances grid will show you the current advance balance for each
vendor/contractor.
Once you have entered an advance or an advance collection, The Logger's Edge will append the amounts to the vendor's pay statement.
In the statement below, we see the Whiskey Creek statement for the 12/15/05 pay period.
The advance issuance shows as a payment and the collection shows as a deduction. These amounts are added to the otherwise payable amount to arrive at the statement total.
4. Working with Production Advances
Production advances can be set up in the
In the
When production advances are enabled, an additional step / screen is
added to the
The left part of this screen allows you to set up a production advance. You first select the vendor -- Longstreet Longing in this example. Next, you select the Activity. The activity determines which activity should be used when collecting the advance and should match the corresponding pay rate entry in the pay rates grid for this vendor. The Amount is the amount of the advance to be issued and the pay period is the period when the advance is to be issued. The collection percentage determines the rate at which the advance will be collected and the 'Collection Starts' date indicates when you will start collecting the advance.
The above settings can be interpreted in English as: Longstreet
Logging is
to be issued an advance of $15000 payable in the Wk 35/06 pay period.
The advance will be collected at a rate of 40 percent of Longstreet Logging's pay
for the CUT activity, starting with loads delivered on or after 9/1/2006 for the
current
Once you save the
Advances Grid
The above entries appear as such in the advances grid:
Unlike on-demand advances, the
You
can only have one on-demand advance and one collection per vendor,
Pay Calculator
Production advances are collected automatically when the FULL
Vendor pay calculator is run. (Production advances are not affected if
the incremental vendor calculator is run.) When the calculator is run,
The
Logger's Edge keeps track of the
amount paid and the advance balance for each vendor. At the end of the
process, The
Logger's Edge writes an advance
repayment record that is equal to the lesser of (1) the current balance
outstanding and (2) the repayment percentage multiplied by the pay due the
vendor for the relevant activity on the
In the grid below, the calculator has been run and the repayment record has been created:
In the advances grid, the advance collection appears with a negative sign.
You
must run the FULL pay calculator for the advance collection to appear on the
vendor statement. If you edit the advance or edit or add load tickets,
the advance repayment may change and you must rerun the calculator so that
it can update the advance collection.
On the vendor statement, the advance collection appears as follows:
In the statement above, you can see the advance collection. If the
contractor was working multiple
Note, the
statement above also has an on demand advance issuance. On demand
advances and collections can be combined in any manner with production
advances.
5. Issues
Overlapping Advances.
You can set up multiple advances for a vendor /
The effective date -- the date when repayments will start -- is the same for both advances. Thus, when the pay calculator is run, both will be collected upon. So what happens then? Let's suppose Longstreet is owed $50851.23 for CUT on his loads for the 35/06 pay period. The pay calculator will collect $48000 (60%) on the Week 34 advance and try to collect $30000 (40%) on the Week 35 advance. Because the total ($78000) is more than the amount payable for the loads ($50851.23), The Logger's Edge will limit total repayments to the amount payable on the loads. Thus, only $50851 will be collected on the advance.
If you do not
want The
Logger's Edge to collect on two
(or more) advances at the same time, stagger the effective dates so that the
second advance starts collecting after the first has finished.
