Advanced Rental Module Setup

The foundation for equipment rentals is the rental agreement document. A rental agreement is set up to record all revenue and costs for equipment and other service items relating to rental.

About agreement types

Setting up agreement types allows you to categorize rental agreements and associate certain attributes and settings with each type. For example, you may choose to base your agreement types on when you invoice agreements (weekly, monthly, etc.), or, if you categorize your rental equipment, you may choose to set up an agreement type for each equipment category.

Much of the information that you set up for agreement types will automatically fill into your rental agreements and/or agreement lines.

About pricing and invoicing

You can set up your agreement pricing and invoicing in a variety of ways, depending on the needs of your business. The Advanced Rental module is designed to be flexible enough to meet your needs.
Three basic general questions need to be answered before you proceed with setting up and creating rental agreements.

• How often do you invoice?
• What units of measure do you use in your business?
• How do you want to set up your price structures?

Some basic definitions and concepts are defined below:

• Invoice types
  Categorize the types of invoices you create. Invoice types can be used if you are invoicing through SOP (Microsoft Dynamics GP Sales Order Processing). Types are associated with sales order fulfillments in SOP.
• Invoicing frequencies
  Represent "how often" you invoice your customers, and if you bill your customers in advance. Invoicing frequencies can be associated with agreement types.
• Roll forward invoicing
  Allows you to automatically adjust the invoicing frequency during a rental. For example, if a customer is billed at a weekly rate for three weeks, then decides to extend the rental for another week, you may want to change the weekly billing rate to a monthly billing rate.
• Price templates
  Contain price rate lines, which define rental rates. A price template can be assigned a meter overage unit of measure and associated with an agreement type.
• Price Groups
  Provide you with the ability to assign default pricing by linking price templates and price levels to either equipment or inventory items. The price groups can be assigned at the model and/or equipment level. If you use different price rates for different time durations, for example, daily, weekly, and monthly, these can also be created in price groups.

About rental units of measure

Rental units of measure are measurements of time used to define rental periods and billable days. For example, you may define a Week as 5 days or 7 days, depending on the work week of your customers. Or you may choose to define a Month not as a calendar month, but as 30 days. You can also associate a default meter overage quantity with a rental U of M.
Once rental units of measure are set up, they will be used on price rate lines to define rental rates.

About rental rates

You define rental rates when you set up price rate lines. To create, for example, a monthly rental rate, you would set up a price rate line using a Month as the rental unit of measure.
The additional values you enter on this line define the parameters of the rate, that is, what constitutes an overage and when this rate will be used if there are other price rate lines on the template to choose from.

Templates with multiple price rate lines

If you do not want to set up rental rates for every new agreement line you create, you may choose to create a standard price template, with multiple price rate lines, that will default into your agreements. Then the system will automatically choose which rate to use. When multiple price rate lines exist on a template, the system chooses which rate to use by comparing the length of the rental period to the length of the rental U of M on each line, always starting with the bottom price rate line and moving up as necessary. Take, for example, a rental period of 45 days and a template that contains price rate lines for a Day, a Week (defined as 7 days), and a Month (defined as 30 days).

The system looks at the bottom (monthly) price rate line first. The length of the rental period (45 days) is placed over the length of the rental U of M on this line (30 days), creating a quantity (45/30). The system uses the remainder option on this line to determine what to do with the quantity.

Remainder options

By setting up a remainder option on each price rate line, you control the way the system handles the billing of a rental when a remainder exists - when the number of days in the rental period does not equal the number of days in the rental U of M. For example, the quantity 45/30 constitutes one Month and 15 days; these extra 15 days are a remainder. Choosing one of the following remainder options on a line determines which rental rate to use and how to handle the billing of a remainder.

• Rollup
  Any days that constitute a full rental U of M are billed on this rate line. Any remainder is rolled up to the next price rate line, where a new quantity is created, and the billing is dealt with per that remainder option.
• Round Up
  If the quantity yields at least one full rental U of M, those days are billed as a full U of M at this rate. Any remainder is rounded up to and billed as another full rental U of M at this rate. If the quantity does not yield a full rental U of M, all the billable days roll up to be dealt with on the next price rate line.
• Fraction
  The rental period is billed as a fraction of the price on this rate line. The fraction is the quantity: the number of days in the rental period over the number of days in this rental U of M.
• None
  None means to do nothing. This option is meant for use on the top or daily price rate lines, when all other remainder options are invalid (you cannot bill for a fraction of a Day, round up to a Day, or roll up to a line with a shorter price rate duration). On the top line, the billable days are billed as individual days. On the lower price rate lines, None behaves the same way as Fraction, billing the rental period as a fraction of the rate.

See Remainder options and rolldown quantities - sample scenarios for sample scenarios that illustrate how each remainder option functions.

Rolldown quantities

After the system has used remainder options to determine which price rate line(s) to use, the rolldown quantity goes into effect. Starting at the uppermost price rate line in use, the rolldown quantity defines the point at which to roll the billing of a rental down a line. For example, if you want to change the billing of a daily rental to the weekly rate when the rental period exceeds 5 days, enter 5 as the rolldown quantity on the daily price rate line. The 5 days will be billed at the rate of a full Week. This feature is useful if your pricing is set up in such a way that the cost of a Week is less than the cost of 7 days billed as individual Days, and you want to adjust the rate of such a rental accordingly. The section below outlines sample scenarios that describe how remainder options and rolldown quantities function together.

Remainder options and rolldown quantities - sample scenarios

The following scenarios use a price template that contains price rate lines for a Day, a Week defined as 7 days, and a Month defined as 30 days. Keep in mind that when using remainder options to decide which rate(s) to use, the system always looks at the bottom price rate line first.

Sample Scenario 1 - Rollup

The rental period is 48 days.

The system looks to the monthly price rate line first:

• The quantity is 48/30 (days in the rental period/days in a Month), and the remainder option is Rollup. The 30 days that constitute a full Month are billed at the monthly rate, while the 18-day remainder rolls up to the weekly price rate line.
• The new quantity on the weekly price rate line is 18/7 (days in the remainder/days in a Week), and the remainder option is Rollup. The 14 days that constitute 2 full Weeks are billed at this rate, while the 4-day remainder rolls up to the daily price rate line.
• On the daily price rate line, the quantity is 4/1, or 4 Days. The remainder option is None, meaning that all 4 days in the remainder are to be billed simply as individual Days.
• The rental period is now a Month, 2 Weeks, and 4 Days.

At this point, the system looks to the rolldown quantity, starting at the top rate line in use, the daily price rate line:

• The rolldown quantity is 3. Because there are 4 Days in the rental period, and this exceeds the rolldown quantity, these days roll down to the weekly rate line and are billed as an additional full Week.
• The number of Weeks is now 3, and the rolldown quantity on the weekly price rate line is 3. Because the number of Weeks in the rental period reaches but does not exceed the rolldown quantity, the billing does not roll down.
• The rental period is billed as a Month and 3 Weeks.

Sample Scenario 2 - Round Up

The rental period is 45 days.

The system looks to the monthly price rate line first:
The quantity is 45/30. Because the quantity yields at least one full Month, and the remainder option is round up, the billing of the rental stays on the monthly price rate line. The 30 days that comprise a full Month are billed as a Month, and the 15-day remainder is rounded up to another full Month.
Because there is no rate with a longer duration than a Month and therefore no rate line to roll down to, the rolldown quantity is ignored. The entire rental period is billed as 2 Months.

Sample Scenario 3 - Round Up

The rental period is 12 days:

The system looks to the monthly price rate line first:
The quantity is 12/30. Because the remainder option is round up, but the quantity does not yield a full Month, all the billable days move up to the weekly price rate line.
On the weekly price rate line, the quantity is 12/7. Because the remainder option is round up, and the quantity does yield a full Week, this rate will be used. The 7 days that comprise a full Week are billed as a Week, and the 5-day remainder rounds up to another full Week.
The rental period is 2 Weeks. This does not exceed the rolldown quantity of 3 Weeks, so the billing of the rental stays at 2 Weeks.

Sample Scenario 4 - Fraction

The rental period is 7 days.

The system looks to the monthly price rate line first:
The quantity is 7/30. Even though the length of the rental period is equal to a Week, because the remainder option on the monthly price rate line is Fraction, the billing of the rental will remain on this line. Regardless of if a remainder exists, when the remainder option is Fraction, the billing stops on that line.
The rental period is billed as 7/30 of the rate for a Month.

About overages

An overage occurs when the actual usage of a piece of equipment exceeds the allowed usage. For example, if you define a Day as 8 Hours, you expect that a piece of equipment on rent for a Day will be used for no more than 8 hours, and you price the rental accordingly. You define allowed usage in the price rate lines to account for the cost of any additional usage.
Overages are calculated after you mark the equipment as Off Rental and enter a meter reading that describes the actual usage of the equipment. For example, if the equipment was used for 10 Hours, this meter reading value exceeds the overage quantity defined for the rate, and an overage will be added to the cost of the rental.

Although overages may be measured in units of time, overage costs are not calculated based on the length of the rental period. You have the option of adjusting the rate and invoicing frequency when a rental period lasts longer than expected, but unless the allowed usage is exceeded, no overage will be charged when a piece of equipment remains on rent for longer than contracted by the original agreement.

In rental agreement setup, you will encounter the following terms that are used to define overages:

• Overage Quantity
  The point at which to bill for an overage. For example, the overage quantity for a Day with an allowed usage of 8 Hours would be A Default Meter Overage Quantity / U of M can be assigned to a rental U of M so that every time a price rate line is created, the overage quantity defaults.
• Overage U of M
  The unit used to measure overage quantity. For a Day with an allowed usage of 8 Hours, the overage U of M is Hours. A Meter Overage U of M can be assigned to a price template, so that for each price rate line in the template, the overage U of M defaults.
• Overage Rate / U of M
  The amount charged for an overage, per overage U of M. If the overage U of M is Hours, $10 / Hour. A Meter Overage Rate can be assigned to an item or equipment category, model, or ID.

Setting up defaults is optional. Defaults will fill into the price rate lines of an agreement, and they cannot be changed on the price rate line level. Leave these fields blank if you want to be able to define overages per agreement.