Purchase Agreements

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

With Purchase Agreements you can:

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

Purchase Agreements 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 agreements from the Purchase Agreements tab. You can create a purchase agreement:

  • From the Purchase Agreements 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 Agreements functionality fully available in your org:

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

List Views

You can also sort and filter your purchase agreements 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 Agreement Active Purchase Agreement 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 Agreement Lightning Page offer you a quick overview regarding the most relevant information on a purchase agreement'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 agreement lines on the purchase agreement.
Days until Expiration The number of days remaining until the agreement ends. If you don't define a value in the End Date field of the purchase agreement, 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 agreement lines on the purchase agreement.
Remaining Amount to Order The remaining amount that you can order on the purchase agreement. 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 agreement. 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 agreement status. It can be one of the following: "Draft", "Submitted for Approval", "Approved", "Active", "Canceled", "Complete" or "Expired".

Purchase Agreement Workflow

The purchase agreement workflow is as follows:

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

Purchase Agreement Types

There are two types of purchase agreements:

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

Purchase Agreement Line Types

You can add a line to a purchase agreement 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 agreement line you use. There are three types of purchase agreement lines that you can add to a purchase agreement:

Purchase Agreement 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 agreement. 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 agreement line page depending on the line type selected.

Working with Purchase Agreements and Purchase Orders

Linking purchase agreements 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 agreement and then create purchase order lines from the lines on the agreement . By doing this:

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

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

Complete - If the line is already complete.

 Active
Active - If the line is not yet complete.
Purchase agreement 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 agreement are not yet reached. Expired Expired
Purchase agreement line Current ordered amount or quantity reaches the maximum specified for the line, but the maximums specified for the purchase agreement are not yet reached. Complete Active
Purchase agreement line Current ordered amount or quantity reaches the maximum specified for the line and this makes the maximums specified for the purchase agreement to be reached. Complete Complete
Purchase agreement 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 agreement are not yet reached. Active Active
Purchase agreement 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 agreement are not yet reached. Expired Active
Notes:
  • If all the purchase agreement lines on the agreement have a status of "Complete", the purchase agreement status changes to "Complete".
  • If a purchase agreement status changes to "Complete", the status of all its purchase agreement lines changes to "Complete".
  • When a purchase agreement 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 agreement 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 agreement lines of type Category. In order to create category purchase agreement lines, you must use the Category record type. For more information on how to create category purchase agreement lines, see Creating Purchase Agreement Lines.