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Setting up a Revenue Contract
In Caribou's Logger's Edge Software, "Revenue Contracts" are used to determine the terms that you will receive payment from your customers. Most of the time, these customers will be sawmills or pulp mills. A Revenue Contract specifies the effective date, the rates and rate breaks, the basis of payment, and any other factors that are used to determine the revenue due to your company from the performance of your work.
It is important to understand the distinction between a "Revenue Contract" and a "Pay Contract." A Revenue contract defines the terms by which you will be paid (from the mill or other customer) for the work your company performs. Conversely, a Pay contract defines the terms by which you pay your subcontractors or employees for work to be performed. (Pay contracts are setup under Main Menu | Contracts | Payment Contracts | Setup.) The easiest way to remember this distinction, is that a 'Revenue' contract is the source revenue; a 'Pay' contract gives rise to you making payments to vendors (or employees).
A revenue contract is quite flexible in terms. These terms include:
- The start date and end date;
- The Blocks to which the contract will apply;
- The activities (trucking, felling, loading, etc.) for which you will receive revenue;
- The rates and their effective dates that apply;
- The basis of payment (hours, loads, weight or volume, etc.); and
- Any specific rate breaks for destinations, species, sorts, grades, routes, etc.
As you can tell, revenue contracts are at the very heart of The Logger's Edge revenue system. A Block Profit & Loss statement begins with how much you earned (revenue) from the Block. Revenue contracts determine those dollars. Pay contract perform the opposite task: they determine to cost side of the P&L equation.
When entering time slips (or production slips), you not only specify the Block associated with the time entry; you also specify the revenue contract. This distinction allows you to track costs against specific revenue streams. For example, if you perform road-building as well as harvesting in a particular Block for a mill, you can distinguish between the time (and thus the costs) associated with your harvesting revenue stream, separately from the road-building revenue stream.
The system includes some standard reports that are organized around revenue contracts (rather than Blocks). These reports are found under the "Contract" menu item in the Logger's Edge Reporter. They are useful if you harvest many Blocks for a single mill and want to look at your profitability for all work done for that mill. Likewise, they are useful for reporting on the profitability of specific work orders that you have set up as separate revenue contracts.
You will notice that load slips are not explicitly assigned to a specific harvesting revenue contract when you enter the slip. Rather, the loads are matched up to the correct revenue contract based on the Block and destination entered on the load slip during the invoice calculation process. (When you set up a revenue contract, you are prompted to associated the contract with one or more Blocks and one or more destinations.)
So how do you set up a revenue contract?
I've listed the steps below -- You can click on a link to see the steps in the Logger's Edge Software.
- From the Main Menu, select Setup | Contracts | Revenue Contracts | Contract Setup
- This selection brings up a listing of active revenue contracts. In order to add a pay contract, click on the Add button at the bottom of the window.
- The Add button starts the Revenue Contract Setup Wizard that takes you through all the steps necessary to add a pay contract.
