How do I deal with sub-contract work in the workshop?

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Summary

The following article explains how to deal with sub-contract work in Workshop.

More Information

Sub-contractors maybe used for work on both stock units, company units and customer units.

Non-Moving Stock Item

You are advised to create a stock code to allow you to charge the work to the customer. This should be a non-moving item.

  • Ensure the retail and cost price are left at 0.00.
    • You will enter a retail price per job as this will vary depending on the type of work and how much the sub-contractor charges you.
    • You can also enter the cost per job.
  • Allocate a sales and nominal centre to the item if you wish to show Sub-Contracted work separate to your usual workshop parts and labour.

Retail Work

When you sub-contract work , you will need a method to charge the customer for this work. This work will include certain specialist repairs or other types of work that you don't carry out yourself.

On the back of that work, you will receive an invoice from that supplier that you will need to post onto the Purchase Ledger.

Charging the Customer for the Work

  • Create the workshop job in the usual manner.
  • On the "Invoicing" tab, enter the stock code for sub-contract work to charge the work to the customer or press 'C-F1' to search for it.
  • If a stock code for sub-contract work does not exist, create a non-moving item, ensuring that on the [Invoicing] tab you enter the sales centre for sub-contract work and set the "Update quantity?" flag to 'No'.
  • Invoice the job out as normal.

Dealing with the Supplier Invoice

  • Post on the purchase invoice in the usual way.
  • At the "Centre" field, enter a suitable centre for the sub-contract work e.g. a centre linked to a Profit & Loss Cost of Sale centre.

Accounting Entries

The non-moving item used to charge the customer allows the nett retail value of the sub-contracted work to be posted to sales on your Profit & Loss. Non-moving items do not post a cost so your Purchase invoice creates the cost on your Profit & Loss for the work.

Sale Units

If you choose to sub-contract work for a sale unit, and do not create a workshop job on your system, when the work has been done you should post the purchase invoice onto the purchase ledger. Ensure the centre you choose is linked to your Unit Expense Accruals Nominal.

You should also then create an expense record on the unit for the work. This will be posted to your Profit & Loss as part of the unit cost of sales when it is sold.

See How do I log a purchase invoice as an expense against a unit?.

However if you create a workshop job for the internal sales account, you should post the sub-contractors purchase invoice to your centre linked to a P&L Cost of Sale code, as per customer sub-contracted work.

Company Units

How you manage these depends on whether you have your company units as stock records on your system or just recorded on your balance sheet as company assets. You should seek advise from your accountant if you are unsure how to proceed. This advice is purely a guide and depends on your system settings and company procedures.

If they are logged as stock units and you intend to sell them in the future then follow the section above as though they were a sale unit.

If they are logged as assets and will not be brought into your unit stock, post the purchase invoice to the purchase ledger. Enter a centre for sub-contracted work that posts directly to your Profit & Loss as an Overhead.

See also


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Keywords AND Misspellings
third, third party, external, work, sub, subcon, contract, contractor, subcontract