Purchase Contracts

Purchase Contracts enables you to strategically track and manage purchases from your suppliers.

With Purchase Contracts you can:

  • Create purchase contracts for your suppliers with a specific contract term and a maximum amount or quantity to be ordered.
  • Generate purchase orders based on the information you enter for your purchase contracts.
  • Associate purchase orders with your purchase contracts.
  • Automatically activate and expire your purchase contracts based on their start and end date.

Purchase Contracts helps you to:

  • Reduce the manual input of data required in your acquisition workflow.
  • Easily track your spend with your different suppliers.
  • Get a clear overview of the different ordered, received, and matched amounts or quantities on your purchases.

You can access purchase contracts from the Purchase Contracts tab. You can create a purchase contract:

  • From the Purchase Contracts tab.
  • From a requisition.
Note:

If you are upgrading to Spring 2020 or later, your administrator will need to perform the following tasks to make the Purchase Contracts functionality fully available in your org:

  • Adding the Purchase Contract field and the Add Lines from Contract Lightning action to the required purchase order layouts.
  • Adding the Purchase Contract Line field to the required purchase order line item layouts.
  • Enabling the Purchase Contracts Scheduled Process feature with the Feature Console.

List Views

You can also sort and filter your purchase contracts using standard or custom list views. The following custom list views let you display a list of records sorted by their due date for renewal or the renewal reminder's due date:

List View

Record Type

Status

 Fields displayed
Due for renewal in the current month Purchase Contract Active Purchase Contract Number, Supplier Site, Buyer, Days until Expiration, Amount on Order, Start Date, End Date, and Renewal Reminder.
Due for renewal in the next 3 months
Renewal reminder due in the next 60 days

Summary Cards

The summary cards on the Purchase Contract Lightning Page offer you a quick overview regarding the most relevant information on a purchase contract's record. Your administrator can show or hide these cards as required. The following summary cards are available for display:

Summary Description
Amount on Order The sum of the amounts on the purchase contract lines on the purchase contract.
Days until Expiration The number of days remaining until the contract ends. If you don't define a value in the End Date field of the purchase contract, its validity period is unlimited and the Days until Expiration summary card appears empty.
Quantity on Order The sum of the quantities on the purchase contract lines on the purchase contract.
Remaining Amount to Order The remaining amount that you can order on the purchase contract. This field only populates when you define a maximum sum to spend on the Maximum Amount to Order field. If you don't define a value in the previously stated field, the Remaining Amount to Order field remains blank.
Remaining Quantity to Order The remaining number of units that you can order on the purchase contract. This field only populates when you define a maximum quantity on the Maximum Quantity to Order field. If you don't define a value in the previously stated field, the Remaining Quantity to Order field remains blank.
Status The current purchase contract status. It can be one of the following: "Draft", "Submitted for Approval", "Approved", "Active", "Canceled", "Complete" or "Expired".

Purchase Contract Workflow

The purchase contract workflow is as follows:

  1. Purchase contract is created.
  2. Purchase contract lines are created.
  3. Purchase contract is approved.
  4. Purchase contract is activated.
  5. Purchase orders are created from purchase contracts.
  6. Purchase orders are received.
  7. AP vouchers are created.

Purchase Contract Types

There are two types of purchase contracts:

Purchase Contract Type Description
Purchase Contract A standard purchase contract. Use this record type to create purchase contracts for your suppliers.
Change Request A change request to modify an active purchase contract. This record type is used to create a copy of an active contract in which you can propose changes. Once the proposed changes are approved, they can be applied to the original active contract. For more information, see Change Requests.

Purchase Contract Line Types

You can add a line to a purchase contract for each of the goods or services that you want to purchase. The type of goods or services you are purchasing will determine the type of purchase contract line you use. There are three types of purchase contract lines that you can add to a purchase contract:

Purchase Contract Line Type

Description
Capital Equipment Use the Capital Equipment line type to purchase capital equipment for use in your organization. The incoming items go through a receiving process, but they do not become part of inventory.
Category Use this record type to add goods or services based on categories to your purchase contract. You can add goods or services based on a category such as software or office supplies rather than adding a specific item or service.
Description Use the Description line type to purchase goods or services that have no item master set up.
Item Use the Item line type to purchase goods or services that have an item master set up.
Note: There are slight variations in the layout of the purchase contract line page depending on the line type selected.

Working with Purchase Contracts and Purchase Orders

Linking purchase contracts and purchase orders enables you to manage your purchases more efficiently and reduces the amount of manual data input required in your acquisition workflow.

You can create a purchase order from a purchase contract and then create purchase order lines from the lines on the contract. By doing this:

  • All the key information on your purchase contract lines is copied to the associated purchase order lines.
  • Any changes you make to the purchase order are reflected on the originating purchase contract. The amounts and quantities are automatically updated on the purchase contract and its purchase contract lines.

The amounts and quantities are automatically updated as follows:

Key: ↑ – Value in the field increases. ↓ – Value in the field decreases.

Action Quantity on Order Amount on Order Quantity Received

Amount Received

Quantity Matched

Amount Matched
Good or services added to purchase order line ↑ ↑ Not updated Not updated Not updated Not updated
Goods or services removed from purchase order line ↓ ↓ Not updated Not updated Not updated Not updated
Purchase order line canceled ↓ ↓ ↓ ↓ ↓ ↓
Purchase order line deleted ↓ ↓ ↓ ↓ ↓ ↓
Receipt line created Not updated Not updated ↑ ↑ Not updated Not updated
Receipt line reversed Not updated Not updated ↓ ↓ Not updated Not updated
AP Voucher line matched Not updated Not updated Not updated Not updated ↑ ↑
AP Voucher line voided Not updated Not updated Not updated Not updated ↓ ↓
Notes:
  • When canceling or deleting a purchase order line:
    • The Quantity Received and Amount Received fields are not updated unless you have previously reversed any existing receipt lines.

    • The Quantity Matched and Amount Matched fields are not updated unless you have previously voided any existing AP voucher lines.

  • When deleting a receipt line, the Quantity Received and Amount Received fields are not updated. We do not recommend deleting receipt lines. To prevent potential issues with your receipts, we recommend that you reverse your receipt lines instead.
  • When crediting an AP voucher line, the Quantity Matched and Amount Matched fields are not updated.

Purchase contracts and purchase contract lines automatically change from "Active" to "Complete" when they reach the amount specified on the Maximum Amount to Order field or the quantity specified in the Maximum Quantity to Order field. The status of a purchase contract and its purchase contract lines can change back to "Active" if a modification to the amount or quantity on any of the associated purchase order lines reduces their current ordered amount or quantity.

Object Scenario Purchase Contract Line Status

Purchase Contract Status
Purchase contract Current ordered amount or quantity reaches the maximum specified for the contract. Complete Complete
Purchase contract Current ordered amount or quantity is reduced so that the maximum specified for the contract is not yet reached.

Complete - If the line is already complete.

 Active
Active - If the line is not yet complete.
Purchase contract End date has been reached. An update on an associated purchase order line reduces the current ordered amount or quantity so that the maximums specified for the contract are not yet reached. Expired Expired
Purchase contract line Current ordered amount or quantity reaches the maximum specified for the line, but the maximums specified for the purchase contract are not yet reached. Complete Active
Purchase contract line Current ordered amount or quantity reaches the maximum specified for the line and this makes the maximums specified for the purchase contract to be reached. Complete Complete
Purchase contract line An update on the associated purchase order line reduces the current ordered amount or quantity for the line so that the maximums specified for the line and the contract are not yet reached. Active Active
Purchase contract line End date has been reached for the line but not for the contact. An update on the associated purchase order line reduces the current ordered amount or quantity so that the maximums specified for the line and the contract are not yet reached. Expired Active
Notes:
  • If all the purchase contract lines on the contract have a status of "Complete", the purchase contract status changes to "Complete".
  • If a purchase contract status changes to "Complete", the status of all its purchase contract lines changes to "Complete".
  • When a purchase contract with a status of "Complete" reaches the end date, its status changes to "Expired" if the amount or quantity of an associated purchase order line is modified.
  • When a purchase contract line with a status of "Complete" reaches the end date, its status changes to "Expired" if the amount or quantity on the associated purchase order line is modified.

Indirect Procurement Based on Categories

Indirect Procurement Based on Categories enables you to make indirect purchases based on predefined categories. Your administrator can define these categories for you by marking product groups as categories. For more information, see Marking Product Groups as Categories for Indirect Procurement. This makes the product groups display as categories that you can select when creating purchase contract lines of type Category. In order to create category purchase contract lines, you must use the Category record type. For more information on how to create category purchase contract lines, see Creating Purchase Contract Lines.