Hello,

We would like to know how to record an order, which represents a binding contract agreement of specific value.
This contract order is a valuable intangible asset to the company.

As invoices are raised against it over time, we would expect to reduce the value of the asset by the value of each invoice until it was expended, or a contract variation was made.
Each invoice raised against the contract becomes income

Is there a mechanism to do this in Solar Accounts?
It doesn't look straightforward.

Any help greatly appreciated

Thanks

Hi Dan,

I'm afraid Solar Accounts doesn't have a way to create sales order
documents. The closest thing would be to create a Quote with the details
of the order, but add some information to the Journal Memo field so you can
distinguish it from 'real' quotes.

Hi Mark,

Maybe the explanation I gave wasn't very good.
Our order and quote system is handled fine.

What we are trying to do is record the contract being signed on the books, as thee contract is basically an order for services at a specific value, but that will be invoiced in stages.
We want to reduce the value of the contract on the books by each invoice amount.
This would reduce the value of the contract asset by the value of each invoice until it was expended, or a contract variation was made.
Each invoice raised against the contract becomes sales income.

Is it possible to create an asset class and have multiple invoices reduce its value?
Or should the contract be an invoice itself, each child invoice generating a credit note against the parent?
We just want to know how to record this asset with a balance in some form, and draw against it as its converted to cash.

Any pointers greatly appreciated.
Thanks

Dan

Hi Dan,

I'm not familiar with your proposed accounting treatment for the order -
normally most businesses would recognise the order as an 'asset' until they
have provided the goods or services, at which point they create the invoice
and the associated amount due is the asset on their books.

In your case if you want to treat the order as having a value on the asset
side of the ledger, you would also need to record an associated obligation
on the liability side representing your obligation to provide the goods or
services in future. When you receive the order you could create a General
Transaction from the liability to the asset, and when you raise an invoice
you could then create another General Transaction in the reverse
direction. However, this approach would be very unusual and I don't see
the benefit of doing it that way because the asset will always be cancelled
out by the liability obligation. Please check with your accountant to see
how he/she would like to treat the order in your accounts.