A Quick Guide to Contract Overruns in Levridge

By Levridge staff | Published: Jun 2, 2023 | Accounting , Ag sales | read

In release 2023 R1, Levridge added support for contract overruns and purchase floating contracts. Many contracts (both sales and purchases) have a provision where the customer can deliver more than the contract quantity up to a point without penalty. The word overrun, in this context, will be the concept that allows a contract to be over-delivered. For example, purchase contract A12345 has a contract quantity of 5000 and allows an overrun of 500 bushels, which means the maximum quantity that can be delivered on that contract is 5,500 bushels.

To allow for any contract overruns, go to Commodity accounting > Setup > Commodity accounting parameters > under Commodity set the “Allow overrun on sales contracts” and “Allow overrun on purchase contracts” toggles to yes if you want to allow on both contract types. You should also set the “Default sales quantity” and/or “Default purchase quantity” if you have a standard overrun value. These default values will be defaulted as the overrun values on your contracts when you create a new purchase or sales contract.

"Allow overrun on sales contracts" and "Allow overrun on purchase contracts" are both set to yes.

After configuring the system to allow for overruns and defining the default quantity overrun values, create your contracts. In the Sales or Purchase contract header, there is an Overfill group. Within the group are the settings for contract overruns. Set the Allow overrun on sales/purchase contracts to yes if you want to allow an overrun on this contract. When set to yes, the Overfill quantity will default to the value entered in commodity parameters. The maximum quantity will be the contract quantity + the overfill quantity.

"Allow overrun on sales contracts" is set to yes.

When scale tickets are applied to contracts that have overfill quantities the following rules are applied:

  1. Each delivery period line on the contract is filled up to the quantity defined on the line until we get to the last delivery period, then that line can be exceeded by the amount of the overfill quantity.
  2. If the contract can be overrun and you apply a ticket to a contract where the ticket net quantity exceeds the open quantity on the contract, Levridge will check to see if the contract quantity + the overrun allowed will allow the entire ticket to be applied to the contract without exceeding that max quantity. If it can, the ticket will be applied. If the entire ticket cannot be applied without exceeding the max quantity, then the system will default back to filling the contract to the exact quantity and then split the ticket so the remaining can be applied to a different contract.
  3. Once a ticket successfully overfills the contract, the contract will be closed, and no more tickets can be applied to it.
  4. The long/short report uses the open quantity on a contract which is the contract quantity – cancelled quantity – delivered quantity. If the delivered quantity exceeds the original quantity (meaning there is an overfill quantity), the open quantity will be zero, even if the delivered quantity is less than the max quantity.

When it comes to floating quantity on purchase contracts, the system increases the contract quantity as it is applied to contracts. It will not close until you manually close the contract.