Rate Adjustments are used to periodically increase a Contract’s Transaction Amount by a set percentage, over a specified time, occurring on a specific schedule. To add a rate adjustment to a Contract, first navigate to the Contract’s edit form and click the create icon on Contract Event.
From the Contract Event edit form, select Adjustment from the dropdown list for Type, then optionally fill out Remarks with information regarding the rate adjustment. Then select the Effective Date for the rate increase which determines when the adjustment will come into effect. The End Date field that follows should be filled out with the date the rate increases will stop. The Review Date will determine when the Contract should be placed into the Needs Review status. The Increase (Percent) determines should contain the adjustment amount (as a percentage) for the Contract’s Transaction Amount. The Increase Frequency (Months) controls how often the rate adjustment occurs.
In the Contract Event above we have selected the Adjustment type and left some Remarks regarding the purpose of this rate adjustment. A client is leasing out a building from our company that is in a rapidly expanding neighborhood and as the landlord we have decided to apply a yearly rate increase of 5% on the current cost of the building. The Increase (Percent) is the value that determines the 5% adjustment and the Increase Frequency (Months) is used to determine the yearly rate adjustment. We have set the Effective Date to start at the beginning of 2016 and the End Date 10 years later. We also set a Review Date about ten months ahead to remind us to update our accounting records regarding the expected adjustment.
Rate Increases are controlled by a scheduled task that executes once per day. The Contract must meet the following conditions in order for a rate adjustment to take place:
- Has a Contract Event with an Effective Date, Increase (Percent), or Increase Frequency (Months) set to a value.
- Has a Contract Event with an Effective Date less than or equal to the current date. The same Contract Event must either have an End Date set, or the End Date set must not be larger than the current date. This Contract Event must not have a Increase (Percent) value set and must not have an Increase Frequency (Months) value set.
- Must be either in Needs Review or Active status.
- Has a Contract Event with an Effective Date less than or equal to current date.
- The Contract Event either has an End Date that has not been set or an End Date greater than or equal to the current date, and it also has an Increase (Percent) greater than 0 and an Increase Frequency (Months) greater than 0.
Rate Adjustments are applied as follows:
- Sets the Contract’s Transaction Amount to a percentage determined by the Contract Event’s Increase (Percent) of the Transaction Amount.
- When the Contract Event has a value set for the Last Increase Date, sets the current Last Increase Date to the Last Increase Date plus the number of months in this Contract Event’s Increase Frequency (Months).
- When the Contract Event does not have a value set for the Last Increase Date, sets the Last Increase Date to the Effective Date plus the number of month in this Contract Event’s Increase Frequency (Months).
- Adds a note to the Contract with a subject containing the Last Increase Date, a body containing the Increase Frequency (Months) and Transaction Amount, and a Date Created set to the current date.