What is Security Deposit?
Security deposit is an amount which is collected from Lessee when credit-worthiness of lessee is not fully established or when it is a new customer. This amount is invoiced and collected by Lessor during the start of the contract billing. The amount is held till the contract termination.
What Configuration is Required?
We need define a stream type for security deposit with stream type purpose of ‘Security Deposit’. There is a standard stream type also available which can be used instead of defining a custom stream type.
[restrictedarea]How to Author Security Deposit?
Security Deposit is associated with a contract during authoring process. It is captured at contract level on the tab ‘Additional Charges’ as shown in the below Figure (1):
Figure (1)
You can collect the security deposit either as one payment or multiple payments. The details of the payment structure for security deposit can be defined under the payment tab Figure (2):
Figure (2)
There are two Terms and Conditions which need to be populated under the tab ‘Terms and Conditions‘ for handling of Security Deposit. One T&C is Security Deposit and another is Security Deposit Disposition section under T&C of ‘Termination Quote Calculation – Early Termination, Contract‘ and ‘Termination Quote Calculation – End of Term, Contract‘
Security Deposit
Held Until Maturity: If Yes, then security deposit will remain with lessor until contract matures.
Net from Proceeds: If Yes, then when termination quote is created for contract termination, the security deposit amount will be deduced from the total proceeds of the termination quote.
Held Until Date: You can also specify the date till which the security deposit will be held (which will usually be earlier than contract end date).
Automatically Credit security deposit on expiration: When this option is chosen, a credit memo will automatically be created once the contract has passed its end date.
Termination Quote Calculation – Early Termination, Contract and Termination Quote Calculation – End of Term, Contract
Security Deposit Disposition Option: Possible values are Not Applicable, Use Fixed Amount and Use Formula. When it is not applicable then security deposit is not included in the termination quote. When fixed amount is used, that amount is included in the termination quote. When formula is chosen, then amount is derived using the formula and then included in the termination quote.
Security Deposit Disposition Amount: If Use Fixed Amount is chosen in the option, then this field must be entered.
Security Deposit Disposition Formula: If use Formula is chosen, then you need to enter a formula.
Security Deposit Disposition Prorate: Possible values are Do Not Prorate, Line Calculation and Prorate.
Contract In-Life and Termination
When contract is activated, stream elements are created for security deposit based on the payments defined. When billing is run, these stream elements are billed and transferred to AR as invoices.
During the life of the contract, lessor may use this security deposit against outstanding invoices or use it against the last few invoices of the contract. If not used in-life, the Security deposited is refunded at the end of the contract or adjusted against the termination quote proceeds.
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