The basic structure could be to have 2 lines on a Sales Order, one for controlling the product itself, then the second to enter the final charge in number of days.
In this example a customer is hiring 1 piece of equipment (line 1), which has no cost against it. The cost to hire this equipment is £100 per day so we select the “Hire Charge” part for £100, and if we know the number of days this can be entered, but in this instance we don’t know so it is left as zero.
A further description can be added to line 2 on a SO by SO basis to describe what the charge is related to:
From a stock perspective, we hold the actual number of this piece of equipment, but thousands of the charge, so they can be allocated later depending on the number of days it has been hired.
When the customer requires the equipment, we allocate and then deliver it, using the delivery note as paperwork to go with it. This will prompt for an invoice, and because the line is zero value, the invoice can be raised and not sent to the customer, or there is an option to not raise zero value invoices.
When the item is returned by the customer do a customer return:
This brings the actual equipment into stock, available for another customer, but to clear off this line of the sales order, change it down to a quantity of zero. Looking at the transactions against the sales order, shows when it was delivered and received back, so you can work out the number of days easily and enter this into line 2 of the Sales Order.
At this stage, untick the “Estimated Price” option on the Sales Order to allow to be invoiced.
So the order now has a value of £200 from 2 days hire:
Simply allocate the “Hire Charge” part to the sales order from the surplus stocks of this item and then raise a delivery note and invoice for the customer. N.B. the delivery note does not need to be printed or sent to the customer.
EQUIPMENT SUPPLIED BY A SUPPLIER
In the event the equipment is being hired from a supplier and then hired out to a customer, the process is the same except:
-the equipment is supplied through a PO placed on the supplier and receipted in, then delivered
-When the equipment is returned from the customer, it is also sent back to the supplier on a supplier return, printing the supplier return with a reason of “On hire” (or similar) to act as the paperwork
-Although the PO appears as outstanding, when the invoice is matched, the PO line should be marked as “Complete”
-This gives complete control of the equipment in and out, including the specific period of hire.
N.B. The only downside to this method, is that the Cost of the hire from the supplier is not matched against the selling price as the part is sent back to the supplier. To counteract this, instead of using a surplus stock of “Hire Charge” parts, when the number of days is known, stock adjust these parts into the system at a unit cost which equates to the overall total i.e. in this example, there was a 2 day hire, for Equipment 1234 and the cost was £49.99 per day.
