Zero Contract Pricing

In Levridge 2024R2, this zero pricing feature can be seamlessly applied to inbound purchase contracts, enabling users to manage contracts with no associated costs.

Implementing Zero Contract Pricing

Users can navigate to the commodity accounting inbound purchase contracts, create a new contract, and set the price to zero. This feature is designed to be intuitive, ensuring that users can manage these contracts as easily as any other standard pricing contract.

Creating a Zero Price Contract

First, users create a new contract by entering the branch, date, contract type, and commodity. For example, a contract might be set up for 100 tons of DDG at a price of $0. Once the user presses “create,” the system will prompt to confirm the price as zero.

Shipping Against the Contract

Once the zero price contract is established, any goods shipped against the contract will reflect the zero pricing. This ensures that all transactions associated with the contract maintain consistent pricing, simplifying inventory and financial management.

Settlement Process

When it comes time to settle, the system walks the user through the settlement wizard. For contracts with zero pricing, the settlement amount will also be zero, unless additional charges, such as fees or handling costs, are applied. If charges are present, the settlement amount could even be negative, reflecting a credit or chargeback to the supplier.

Finalizing the Settlement

Since the settlement amount is zero, the user cannot process a payment, but they can confirm the settlement. If the settlement results in a negative amount due to additional charges, the system will generate a negative purchase invoice. This flexibility ensures that the settlement process can handle various outcomes, whether the final amount is zero or negative.

Key Use Cases for Zero Pricing

1. Byproduct Acquisition: One of the most common scenarios for zero contract pricing involves the acquisition of byproducts. For example, a business might receive a byproduct such as distillers dried grains (DDG), which are a co-product of ethanol production. These materials might be offered at zero cost, as the supplier’s main interest is the removal of the product rather than profiting from it.

2. Internal Contracts: Companies often create internal contracts to track the movement of goods or resources between departments. In such cases, pricing may not be relevant as the transactions are internal. Zero contract pricing allows for tracking without assigning arbitrary prices, streamlining the process.

3. Promotional or Gratis Goods: Some businesses provide goods for free as part of a promotion or to encourage the removal of stock. Zero pricing in this context simplifies the contract and settlement process, making it easier to handle these transactions without needing to manually adjust prices or bypass systems designed for standard transactions.