You create lease/rental contracts when you wish to track the assets that are owned by another party that will need to be returned to that party at the end of the lease or rental period.

Lease/Rental Contracts are generally used with rotating assets that you rent or lease from a vendor for a period. With a lease contract there is an option to purchase the asset, you do not have this option for a rental contract, you just return it at the end of the period.

The general process is that you create a contract, add contract lines that reference rotating items, authorize sites to use the contract, approve the contract and then add associated assets, either manually or automatically via the receiving process of a purchase order. You can also add non-rotating assets to the contract. For the associated assets you can then arrange for the payments during the lease/rental term by creating a payment schedule.

You’ll find that this is quite a long article, I’ll start with Rental Contracts, and use an example of a Tool Asset. We will then review Lease Contracts which have the End Lease options. You can use a Lease/Rental Contract on a Purchase Requisition and Purchase Order and when you receive a rotating item the asset created during the serialization process will be added to the Lease/Rental contract as an associated asset. But you can associate assets without going through the receiving process, and you can reference non-rotating assets, the example I provide is a lease/rental contract without a contract line. You pay for the lease/rental of assets by creating a schedule and schedule lines which refer to the assets and you then create a series of invoice records (not invoices) which can be used to create the payments when they fall due.

Lease/Rental Contracts, like Warranty and Service Contracts and Labor Rate Contracts all use Invoices for the payment to the vendor. They are unlike Purchase Contracts which may be mastered in another system and integrated to Maximo. These are contracts which are created in Maximo and are either asset or craft dependent, and where the payment is a service. While a purchase order may be raised for the leased or rented asset which creates a material receipt transaction, at the end of the contract period, the asset is returned, and this creates a negative material receipt. Therefore, the lease or rental payments must be covered by another method, a set of service invoices, one per period per asset, or a consolidated invoice per period covering multiple assets.

While the examples shown generally have one contract line and one associated asset, a lease/rental contract can have many contract lines and many associated assets. You will find that the number of payments and the payment term in months is set on the contract header, and while the payments for associated assets may start at different times, the number of payments will remain the same. Therefore, if you lease/rent additional assets from the same vendor, if the number of payments is different then you will need to create a new contract. If the term and number of payments is the same, then you might consider adding additional assets to an existing lease/rental contract.

New Rental Contract

I’m creating a new rental contract for the hire of a DUMP TRUCK, which is an existing tool item in the MAXDEMO database. The Contract number is auto keyed and the default status is DRAFT. You can see that contracts are defined at the Organization level, but before we use them, we will have to enable them for a SiteA structural element of a Maximo database that is used for data separation. More. You can also see in the header that contracts are revision controlled, the default revision starts at 0 and is incremented when you use the action Revise Contract.

I’ve selected the Type of RENTAL and added a Start Date of 1^st May 2024 and an End Date of 30^th April 2025. WILSON has been selected as the Buyer and ATI-R Atlantic Trading Inc as the vendor. If you are going to enter an End Date, then it must be a future date as otherwise you will receive the error – BMXAA0743E – End Date must be in the future and greater than the Start Date.

At the bottom of the main screen are some fields in the Costs section. As this is a Rental Type the Finance Type is not applicable and is read-only. The rental Term in Months has been set to 12 and we will make monthly payments and the Number of Payments is also 12. I’ve determined the Payment Period by using the lookup.

The Lease Rate Factor is 1 divided by the Number of Payments. It would be multiplied by the cost of the contract to calculate the per period amount.

The Set Schedule lookup is used in different places across Maximo and not just with contracts. We have selected to pay every 1 month on the last Friday of the month at 10:00am. There is a Preview button nearer the top of the dialog, and this populates the right-hand panel of dates and times.

On the Contract Lines you would create a new line, if this is a regular rental then the Vendor Items button could be used. I’ve selected the rotating item of DUMP TRUCK; the Select Value shows both rotating items and tools. However, you do not have the possibility to navigate to the Tools application, therefore, if you are selecting tools, it is best to make sure they reference a Commodity Group or Commodity Code of TOOLS to make the selection easier.

To be selected the item or tool cannot be in PENDING or OBSOLETE status at the Item/Organization level. If you navigated to the Item Master application and selected an item at either of these statuses, you would receive the error message – BMXAA5609I – This action is not allowed since the item CSD600 is in Pending or Obsolete status at Item/Organization level.

I entered the total line cost for the hire of dump truck at $5000, and Order Unit of EACH and a Delivery Time of 3 days, this is the number of days between order date and expected delivery date of the assets.

Notice there is a Line Status field, which defaults to DRAFT. There is an action to change this, but the contract needs to be at Approved status first.

Incidentally, the Manufacturer, Catalog #, Model, Commodity Group, Commodity Code and Order Unit will all be copied from the corresponding fields from the Vendor details in the Item Master application for the same vendor referenced on the contract. The Delivery Time comes from the field Promised Lead Time (Days). If the item is marked as Inspect on Receipt, it does not change the Inspection Required field, this is copied from the vendor record.

You will not be able to add the dump truck asset until the contract is approved and active. Regarding the term active it means that time now is between the Start Date and End Date. When trying to add an asset you would receive the error message BMXAA0742E – A new row cannot be entered unless the status of the contract is Approved and the contract is active.

Before you approve a contract, you must associate it with one or more sites, otherwise you will receive the error message – BMXAA0776E – Could not change contract 1041 status to APPR.
BMXAA0780E – The contract must be authorized to be used in at least one site. Use the Authorize Sites action to authorize the contract for a site.

You do this from the action Authorize Sites, either through the New Row button or Select Sites button which allows you to authorize multiple sites in one action.

The Change Status action is now used to Approve the contract. A memo can be entered. The resulting status will be APPR and the main contract record, properties, contract lines and terms and conditions will be read-only. Further modifications require you to use the Revise Contract action. The exception is to use the Associated Assets tab.

I’m going to create a couple of rotating assets linked to the DUMP TRUCK rotating item.

On the Associated Assets tab, you identify the assets which are being rented, in my case the asset is TOOL01. The Location defaults from the asset if it exists, if the asset has no location reference it might be an idea to say where it should be found, and I entered NEEDHAM, this has not moved the asset, it is just an identifier of the location in the contract register. 

I’ve set the field RMA Required, RMA stands for Return Material Authorization, it would be used to return the asset to the vendor for repair or replacement. I don’t believe there is any specific functionality behind this field in Maximo.

The two fields Custodian and User indicate the asset’s user and custodian record which is marked as Primary. Both fields could be filled but only with the same name and where the primary person is marked as both a custodian and a user.

The Warranty Start Date is enterable if the property – Warranty Extended to Lessee? – is set, which is the default. It is a start date and not the expiry date of a warranty that the vendor may have with the manufacturer. There are two other property fields warranty duration and time period, but there is no field that is calculating the warranty expiry. However, armed with this information Maximo Warranty Contracts functionality could be set up to warn you that the asset is under warranty. This depends on whether maintenance and repairs can be carried out, or whether they are provided by the vendor.

Further down the Associated Assets tab below the Location are fields for Start Date and End Date, these are not copied from the contract for a rental type of contract. However, the total cost is copied from the contract line’s line cost field. This is the cost used to determine the payment per period. The Interim Charge is used when there is a part payment before per period payments start. For example, if you leased a car but wanted payments to occur after the start of each month, you may have several days to pay as an interim charge. The Lease End Value and Lease End Status are associated with LEASE type contracts.

View Contracts

There is nothing on the Assets application’s main tab to indicate that the asset is owned by a vendor and is being leased or rented. The Vendor field on the asset can be used to indicate who it is leased from. Ideally, there would be a field to indicate that the asset exists on a lease or rental contract, and I have raised an IBM idea for this. An Escalation could be created as an interim.

On the Assets application there is an action View Contracts which shows contracts of various types that reference the asset along with the contract status and vendor. You can see that RENTAL contract 1041 with Vendor ATI-R is shown for asset TOOL01.

A similar View Contracts action and dialog is shown for the NEEDHAM location, it also shows RENTAL contract 1041.

The View Contracts dialog will also be found on the detail’s menu of the Asset and Location fields across Maximo. It does not require the contract line status to be approved.

A View Contracts action is also available on the Companies application. For company ATI-R it shows contract 1041 of type RENTAL and another LEASE contract 1042 that I have also created.

There is a View Contracts action in the Item Master application, but there is no similar action in the Tools application, hence why I have shown the View Contracts for a different item, not DUMP TRUCK.

There is also a Contracts table in the View Item Availability dialog found in the Item’s detail menu, in the Purchasing tab you will have to scroll down past the table for Purchase Orders and Purchase Requisitions to find the Contracts table window.

In the Tools application the View Tool Availability dialog found under the Tool detail menu, will also display the contracts referencing the Tool Item. Again, you will need to scroll down past the Purchase Orders and Purchase Requisitions tables to get to the Contracts table window, there is one contract 1041 for the DUMP TRUCK tool.

Contract Status

The Lease/Rental Contract Status has the same values as for all contracts. There are 10 statuses in the synonym domain CONTRACTSTATUS. The default for new contracts is DRAFT. The set of statuses are DRAFT, WAPPR (Waiting to be Approved), APPR (Approved), WSTART (Waiting to Start), EXPIRD (Expired), CLOSE (Closed), CAN (Cancelled), SUSPND (Suspended) and the two statuses associated with revising a contract are PNDREV (Pending Revision) and REVISED (Revised).

If you go to the Escalations application and query with a description of – contract – you will probably find 13 escalations, two are associated with the Applies To object of LEASEVIEW which is used with Lease/Rental Contracts. The two we are interested in are:

• LEACTREFF which changes a lease/rental contract at WSTART status to APPR when the Start Date of the contract has been reached and it notifies the Buyer (LEASEVIEW.PURCHASEAGENT).
• LEACTREXPD which changes a lease/rental contract at APPR status to EXPIRD when the End Date of the contract has been reached and it notifies the Buyer (LEASEVIEW.PURCHASEAGENT).

These escalations are not active by default.

Did you notice that the object is LEASEVIEW. This is a view on the CONTRACT and CONTRACTLEASE tables. The other contract applications are also based on a view, the fields which are common across the contract applications will be found in the CONTRACT object and the contract properties will be in the other table, CONTRACTLEASE in our case.

When you create a Lease/Rental Contract the Start Date is defaulted to today. If you change the Start Date to a future date and then change status to Approved (APPR), Maximo will change the status to WSTART (waiting to be started). The contract will be read-only as it would be for APPR. You will not be able to move it to APPR until the Start Date has been reached, you can change status to cancelled (CAN), closed (CLOSE) or suspended (SUSPND). Therefore, it is a good idea to activate these two escalations, and other ones if you are using other types of contracts.

The initial statuses are then DRAFT to WAPPR to APPR or direct from DRAFT to APPR. If the Start Date is in the future and the escalations are active, then eventually the contract will move from WSTART to APPR.

After a contract has reached APPR or WSTART you can suspend (SUSPND) a contract, and from a suspended state you can move back to APPR, or CAN, or CLOSE. I do not believe much happens at a suspended state except while you can modify existing associated assets you cannot create new ones. You cannot revise a contract at a suspended state.

A contract must be approved to use the Revise Contract action, you can also revise the contract at the WSTART status. The Revise Contract dialog opens, and you must provide a reason before using the OK button. The initial revision is zero, and this is incremented each time you use the OK button in the action. Each revision is a complete copy of the previous revision, the status will be changed to PNDREV (Pending Revision) and you can now make changes to the new revision, but it is not active. The new revision will appear in the View Contracts dialogs.

After changes you would normally change the status back to APPR, but it is possible to go back to WAPPR, and from there back to DRAFT status, but I wouldn’t advise this. When at APPR or WSTART, then the contract will be read-only again, and the previous revision will be at REVISD (Revised) state. The status cannot be changed at REVISD state.

You cannot change status to EXPIRD, only via the escalation. If you are not using the escalation that will expire the contract when the End Date has been reached, then when it is no longer needed you should move the contract into history by changing the status to CLOSE. There is a history flag which will be set at CAN, CLOSE, REVISD and EXPIRD states. It does not appear in the Advanced Search and records in history are not hidden by default, but you may think about adding a default query to do so.

Contract Line Status

There is a Status field on the contract lines, the values can be DRAFT, WAPPR, APPR, CAN, or PNDREV. Contract lines can only be added when the contract is at a status of DRAFT, WAPPR or PNDREV, otherwise you will receive the error message – BMXAA0739E – Contract lines can only be added to contracts that are in a status of Draft, Pending Revision, or Waiting on Approval.

The Line Status will default to the same status as the contract when a new contract line is entered. When the contract is approved the contract lines will also be moved to APPR. If you revise the contract and the contract is now at PNDREV and you enter a new contract line, it will also be at PNDREV status.

There is an action Change Line Status which allows you to select multiple contract lines and change their line status. The contract must be at APPR state to use this otherwise you will receive the error message BMXAA0794E – Contract needs to be approved before performing this action. You cannot use this action at PNDREV status.

In the Change Line Status dialog, the Line Status options are DRAFT, WAPPR, APPR, or CAN. However, if the contract is at APPR state changing a line to DRAFT or WAPPR will not enable it to be modified.

If you change the contract line status to CAN, you will not be able to change it again. You can change the contract line status without revising the contract.

It is only the contract lines with a status of APPR that can be used on a Purchase Requisition or Purchase Order, therefore, to suspend the use of an item you can change its status to DRAFT or WAPPR. However, you will not be able to change the line status from APPR if it exists on an open PO, you will receive the error message – BMXAA0721E – Could not change the line status on line 2. There are PO(s) that reference this contract line. You will need to process the POs through to closure first.

Lease/Rental Contracts on Purchase Requisitions

For you to be able to reference a Lease/Rental Contract on a PR or PO the property PO Required must be set. This is set automatically for a LEASE contract, but not for a RENTAL contract. In the OrganizationsA structural element of a Maximo database which is used for data sharing. More application and action Contract Options, you can make active the contract type that you wish to change, and then through actions you can Associate Terms and Associate Properties. In the Associate Properties for a RENTAL contract type I have enabled the POREQUIRED property to be editable. Note PAYMENTSCHED is the other property which cannot be initially edited for a RENTAL contract type.

This has allowed me to set PO Required for Contract 1041, but I had to revise the contract, make the change and approve it again.

I have created a new purchase requisition for a rental of a dump truck with a Required Date of next Monday 3^rd June 2024.

In the Contract field in the Purchase Requisition header, you can select from Purchase as well as Lease/Rental contracts. Now that rental contract 1041 has had its PO Required property set it can now be selected.

I have now selected Contract 1041 and vendor ATI-R is selected from the contract details.

On the PR Lines tab, I used the action Contract Items and selected the DUMP TRUCK tool item. When I used the OK button I received the error message – BMXAA3348E – Item DUMP TRUCK does not exist in this line type. This is telling me that the Contract Lines is always going to select a line type of Item, which shouldn’t be the case, and so I’ve raised an IBM Support case.

If I create a new PR Line and select Line Type of Tool, then the Select Value shows no rows. If I navigate to the Tools application and select DUMP TRUCK and return with value, I received the error – BMXAA3314E – Items cannot be added that are not found on the original contract. But DUMP TRUCK has existed in all revisions of the lease/rental contract, I’ve added this to the same support case as I think they are connected. 

Something is stopping tool items from a Lease/Rental Contract from being added to a PR. I did check Purchase Orders and I got the same errors.

I’ve added a new item SNOWTHROW to the contract 1041 as line 2. To do this I had to revise the contract, add the contract line and then approve the contract again.

Using the New Row button with a line type of Item I can now see the SNOWTHROW item. Initially, I got the error message – BMXAA3314E – Items cannot be added that are not found on the original contract. Then I realised that the PR was referencing contract 1041 revision 1 which only had the DUMP TRUCK item, so after I cleared the Contract field on the PR header and reapplied it for revision 2, I could now select the SNOWTHROW item.

PR line 1 now shows the SNOWTHROW item with a quantity of 1.

Further down the PR Line details the Unit Cost of $1000 has been copied from the Contract Line and the PR line references Contract 1041, Rental Contract Type and Contract Reference Revision of 2. To save I needed to add a Conversion Factor of 1.

I could now approve the Purchase Requisition, use the Create PO action, and navigate to PO 1106 which referenced the same Contract and Revision. I had to add a Location and full GL Debit Account before being able to approve the PO, I didn’t want to enter the item into a storeroom.

In other tests I did:

• You do not need to reference the lease/rental contract on the PR header. If the vendor of the lease/rental contract is referenced on the PR header and you raise a PR line against a rotating item that is referenced on the contract then the active contract, revision and unit cost will be referenced on the PR line.
• If a work order planned material is marked as direct issue and references a rotating item that is referenced on the lease/rental contract, then if the item has been leased/rented previously the vendor and unit cost will be populated, this is coming from the Item Master – Vendor table. Otherwise, you can reference the vendor on the lease/rental contract. After work order approval and the Reorder routine for Direct Issues and Services has been run, then the PR will be created that references the lease/rental contract and revision on the PR header.

Receiving an asset on a PO that references a Lease/Rental Contract

In the Receiving application I have queried for Purchase Order 1106 and on the Materials tab, I have used the Select Ordered Items action and selected PO line 1 for the SNOWTHROW item.

After pressing OK, the item has gone straight to a WASSET inspection status, I hadn’t said that it needed to be inspected. You will need to Save this transaction.

Using the Receive Rotating Items action I used the blue Autonumber button and Maximo added Asset 2117, I then entered Serial # 132-7154A before using the OK button.

After the asset has been received and serialised it will be added as an Associated Asset to the Lease/Rental Contract that is referenced on the PR/PO header. The Start Date is today (30^th May 2024), the date the asset was received, and the End Date has been calculated as the Start Date plus the Term (12 months) less one day, 29^th May 2025.

New Lease Contract

For the rest of this article, we will look at the LEASE type contract. I’ve created a new contract 1049, starting today (31^st May 2024), with no End Date, with WILSON as the Buyer, the person to be notified about contract approval or expiry if the escalations which we have already discussed are active. The company is ATI-R, Atlantic Trading, I will be using the SNOWTHROWER item.

Further down the main tab I have indicated that the Finance Type is OPEX (Operational Expenditure), if you are going to use this field I would recommend adding a domain of values. This time the Term is 6 months with 6 payments starting on the 12^th of the month, with the expectation we will add an interim amount.

Notice I’ve added a Lease Suspense Account of 6200-638-450, I’ll see if I can track down where this is used. Above this the Inspection Required field is read-only and is set if the Vendor has the same field set on their Companies record.

I’ve added the SNOWTHROW item on the Contract Lines by using the Vendor Items action and dialog, we had previously rented this item and it now exists on the Item Master, Vendors table (INVVENDOR).

The Lease will be $2000 with an option to buy for $1000 at the end of the lease period. I have marked this item as requiring inspection, just to check it goes through that step during receiving.

I’ve added BEDFORD as an authorized site and approved the lease contract. The Contract Line Status has also changed to APPR from DRAFT.

On the Purchase Requisitions application, I have created a new PR 1043 and referenced lease contract 1049 on the PR header, the Vendor has been set to ATI-R.

On the PR Lines for Line 1 I selected the SNOWTHROW item from the Select Value, it was also the only record shown in the action – Contract Items.

At the bottom of the PR Line details the Line Cost is $2000 and it references lease contract 1049. I added the Location of NEEDHAM partially to provide me a GL Debit Account which I completed, 6000-300-450, also to see whether the received asset would use this location. 

The Purchase Requisition was approved, a PO was created from the PR using the Create PO action, the PO number is 1107. I approved the PO so that I could receive the item and asset. This I have now done. The GLDEBITACCT for the Material Receipt (MATRECTRANS) where the Type is TRANSFER, i.e. the transfer from the holding account, is the same GL reference on the PR line, 6000-300-450. The Lease Suspense Account of 6200-638-450 was used as the GL Credit Account on the receipt to the holding location, the MATRECTRANS transaction where type is RECEIPT.

During receiving, the inspection step was needed, and the serialization step created asset 2118 and placed it in location NEEDHAM. You can see from the screenshot that in the Assets application the Vendor details show Vendor ATI-R, a Purchase Price of 2000 and PO of 1107. There is nothing on the Asset record to say that it is owned by the vendor ATI-R and that it is being leased or rented. I think you would want to know that as much as knowing an asset is under warranty or that there is a service contract. A simple non-persistent field would indicate that there are relevant contracts to view, in the View Contracts dialog. I’ve created an IBM Idea for this. https://ibm-ai-apps.ideas.ibm.com/ideas/MASM-I-1118

It would also be useful to know on a work order when referencing the lease/rental asset that there is a lease/rental contract to review (it would also apply to warranty/service contracts), a YORN field, Has Contracts? But it would also be useful to know the Asset Owner, a company field added to the Asset object and crossed over to the work order so that it can be queried. I’ve also created an IBM Idea for this. https://ibm-ai-apps.ideas.ibm.com/ideas/MASM-I-1119

The receipt and serialization of asset 2118 has added a record to the Associated Assets tab for the lease contract 1049. The contract is due to start on 31^st May 2024 with the asset being returned or purchased on or before 29^th November 2024. The Total Cost is $2000 with an Interim Charge of $500, therefore a total of $2500 is to be paid, with a Lease End Value of $1000. Note the Payment Schedule field is not set.

Payment Schedules

You set up payment schedules with the action Manage Payments. There can be multiple payment schedules each with multiple schedule lines, it is the schedule line where the asset is referenced. Payments can then be created as Maximo invoice records which you’ll be able to see in the Payment Details tab.

A Payment Schedule can only be created if the property Payment Schedule is set, and the contract is at a status of APPR or WSTART (waiting to start). 

You use the New Row button to create a schedule, the first schedule will be Schedule 1. Schedules can also be revised; the initial schedule revision is 0. The Line Cost will remain blank until schedule lines are added to the schedule. 

I’ve entered the first Start Date as 5^th June 2024 and Maximo has calculated the End Date as the day before the term which is 6 months, the Payment Schedule End Date is 4^th December 2024. You will need to provide a GL Debit Account for the invoices created to support the payment schedule, there is no default GL.

I found that I needed to use the OK button to save the Payment Schedule, then I used the Manage Payments action again to add the Schedule Lines. Notice there is no new row button in this table window. There are two actions, Select Assets and Generate Payments. The Select Assets action is needed to add Associated Assets to the Schedule. In my case I selected asset 2118 and this created Schedule Line 1 of Schedule 1.

You cannot add additional assets to a schedule after using the Generate Payments action, you would receive error message – BMXAA0818E – Payments have already been generated for this schedule. 

The Line Cost for Schedule 1 and the Interim Charge have been copied from the Associated Assets record on the contract. If you subtract the interim charge from the line cost and divide by the Number of Payments on the contract header, which for contract 1049 was 6 payments, this derives the Periodic Payment of $250. The first payment will be the Interim Charge ($500) plus the first period payment of $250, i.e. $750, plus tax. 

If you look to the Schedule table details the Line Cost and Interim Charge now have values. If you scrolled up and looked at the second tab Payment Details there would be no records, we haven’t yet used the second action Generate Payments.

I used the OK button and re-entered the action Manage Payments to ensure a save had occurred, I then used the action Generate Payments action. Perhaps I was impatient, nothing seemed to happen, so I used the OK button again and re-entered the dialog and now the Payment Details showed for Payment Schedule 1.

All amounts are the gross figures that include tax. The Next Due Date (the first payment) is the 12^th June 2024, it is using the Payment Period schedule defined by the Set Schedule dialog on the main tab of the Lease/Rental Contract. The payment amount is $787.50.

You can navigate to the Invoices application. For the first payment it is invoice record 1072 of type SCHED and the status is SCHED with a Due Date of 12^th June 2024. In the PO Details the invoice record references lease contract 1049 and Payment Schedule 1. Notice the record is read-only.

There is an escalation INVDUE which will change invoice status to WAPPR or APPR for invoices where the status is SCHED and the due date on the invoice has now been reached. By default, this escalation is inactive, and you will need to activate it if you are generating invoices for payment schedules. The escalation schedule is set to run every day at midnight. The Target Invoice Status field on the Contract Schedule determines whether the escalation changes the status to WAPPR or APPR. WAPPR is the default, it will allow you to enter the Vendor Invoice Number and Invoice Date when you receive the invoice from the vendor, at APPR state the invoice record will remain read-only.

If you scrolled down, you would find that the Remit To Company is ATI-R and the Pretax total is $750 with Total Tax of $37.50 for an Invoice Total of $787.50.

The Invoice Line is of type Service.

If you scrolled down on the invoice line, you would find the Line Cost of $750.00 with Tax of $37.50. The Lease Contract is referenced on the invoice line along with the Lease Asset of 2118.

Back on the Lease/Rental Contract and Manage Payments dialog, when an invoice has reached WAPPR status the Total Outstanding Amount will be reduced by the sum of the SCHED invoice records at WAPPR or APPR or later state. The Total Payment Amount is the sum of the SCHED invoice records that have reached APPR or later state.

On the Associated Assets tab, you would find that the Payment Schedule field is now set. When the payment schedule has been defined for the asset, you cannot delete the associated asset record as you will receive the error message – BMXAA0784E – Cannot delete this asset because the payment schedule exists for it.

Also, in the Manage Payments dialog you cannot delete the schedule line that references this asset because you would get error message – BMXAA0831E – Cannot delete this schedule line as it has payments generated against it.

If you use the Revise Schedule action you will receive the warning BMXAA0835E – The remaining scheduled invoices are canceled when you revise the current schedule. Do you wish to continue? There are OK and Cancel buttons. If you use the OK button, then the remaining invoices are now at CANCEL status.

The result of the Revise Schedule action is that there is a new schedule line with Schedule Revision 1 and linked to it is Schedule Line 1 for Asset 2118 and for this record you can change the Line Cost, or you can delete the Schedule Line. However, you cannot change the term or the Interim Charge for the Asset, they are still being defaulted from the contract header. For example, if you revised the schedule and made no changes, you may just wish to change the GL Account, in our example, you would expect there to be a remaining term of 5 months with no interim charge because the interim charge and the first payment amount had already been invoiced and that invoice had been approved.

What you get instead is 6 new invoices with the first payment being $500 plus a periodic payment of $125, a total first payment of $625 with five further payments of $125, for a total of $1250. This is the correct remaining amount, but you wouldn’t expect to pay a second interim payment or to change the number of remaining payments, after you had revised the schedule. I have raised an IBM Support case for this.

End Lease Options

There are two End Lease options, Purchase Asset and Return Asset.

The Return Assets option opens a dialog where you can create an Invoice, the Invoice Number 1086 was created when I used the Autonumber button. In the Assets table window, you can the select from the associated assets referenced on the Lease/Rental Contract, in my case I selected asset 2118. You can then enter a remaining cost to pay, I entered zero. 

This created an invoice with status of WAPPR with invoice total of zero. The invoice had one line with line type of Service and a description of PAYMENTS. The invoice line referenced asset 2118 and the lease contract 1049. There might have been a cost for the return of the asset, and this amount could have been entered. Asset 2118 is now set to DECOMMISSIONED status. The Returned To Vendor field on the asset is not set, this is used for the return of purchased assets that may be faulty.

We could have chosen the option End Lease – Purchase Asset, and this gives the option to raise a new PO or an Invoice, in both cases choosing the status of WAPPR or APPR. The Autonumber button finds the next PO or Invoice depending on the radio button. 

The Select Assets finds no assets, because our asset 2118 is now DECOMMISSIONED the option to purchase no longer exists.

There is an Escalation called LEASSTDUE which queries assets that have not been set to DECOMMISSIONED status or a synonym and warns the users and custodians of that asset that the asset is due to expire its lease. Emails will be sent out 90 days, 60 days and 30 days prior to lease expiry. The designated supervisors of the users and custodians are copied in on the emails titled – Lease expiration notice-nnnn – where nnnn is the contract number. This does not apply to RENTAL type contracts.

Lease/Rental Contracts without Contract Lines

I’ve created a new lease contract 1054 without any contract lines. I’ve authorized the BEDFORD site and changed status to approved (APPR).

On the Associated Assets tab, the Select More Assets button gives you several options for finding the assets that you wish to associate with the lease/rental contract. Note that this dialog is not restricting to your Authorized Sites, nor is it restricting to the same organization. Its only restriction is that the asset is at OPERATING status. If you are going to use this, it does need some configuration to provide a more useful set of assets. I have raised an IBM Support case for this.

The point is it is not restricted to rotating assets. In the screenshot asset 11230 – Emergency Generator does not reference a rotating item.

You can use the New Row button (+) and select assets one at a time as I have done. Asset 11230 – Emergency Generator is non-rotating, asset 11450 – Centrifugal Pump is rotating, asset 6163 is a tool asset from the NASHUA site. Only 11230 is at OPERATING status, the other two assets are at NOT READY status.

You cannot use the Asset’s Select Value to select a Decommissioned asset you will receive an error message like – BMXAA4191E – The value 21000 is not valid for Asset. Specify a valid value for Asset.

If you try to pick an asset that is referenced on another Lease/Rental Contract you will receive an error message like – BMXAA0773E – This asset is already present in revision 2 of contract 1041.

If you try to enter a location without an asset you will receive the error message – BMXAA4195E – A value is required for the Asset ID field on the CONTRACTASSET object. The ASSETID field is set to be required. The original design allowed for lease/rental contracts on locationsA physical place where assets exist and where work can be performed. More, and it would be interesting to see whether the functionality holds together if you removed the required setting from ASSETID in Database Configuration.

As there are no contract lines the Total Cost, Interim Charge, Lease End Value will not be defaulted and will need to be manually entered.

Although there are no contract lines you can set a Payment Schedule. This time I have opted for the Single Payment Line setting. I changed the Start Date to be in a couple of days’ time, 6^th June 2024 and the End Date is calculated as the Start Date plus the term of 12 months.

In the second table window for the Schedule Lines, I’ve used the Select Assets option and selected all three assets. The Total Cost for all three assets was set the same, to keep the maths simple. $1200 over 12 months should be $100/month for each asset.

Three Schedule Lines have been created one for each asset. If you looked at the Associated Assets tab, the Payment Schedule field for each asset will now show that a Payment Schedule exists.

After using the Generate Payments action, 12 invoices of type SCHED with a status of SCHED have been generated. The effect of the Single Payment Line field is to consolidate the asset payments onto a single invoice line per period. Three assets with a per month charge of $100 gives a net monthly total of $300 and gross monthly total of $315.00 with tax.

Notice the Due Date of each invoice is set by the schedule you define on the Lease/Rental Contract header. However, when this is copied to make the Schedule, you can modify this. Although the field looks as if it is read-only, you can still change the schedule through the dialog. This allows some asset payments to occur on different schedules to others, some may be consolidated on an invoice, others may not. It is the Schedule that defines the set of invoices, the Schedule is referenced on the invoice header along with the Contract Reference, Contract Type and Contract Reference Revision.

The End Lease options are also available for a Lease/Rental Contract without contract lines. This time I’ve chosen the Purchase Assets option and will create a PO, 1110 was assigned when I used the Autonumber button. I used the Select Assets and chose just one asset of the three, asset 11230 the Emergency Generator. We hadn’t made any payments yet, therefore there is a Remaining Cost of $1200. This is the service amount on the Purchase Order.

After the PO is approved, you will want to revise the Schedule on the Lease/Rental Contract to stop paying for this asset.

On the Associated Assets tab for asset 11230 the field Lease End Status is now set to PURCHASED and this record cannot be modified.

Properties

There are several properties for LEASE and RENTAL type contracts. There are 32 for LEASE and 14 for RENTAL, but all are shown in the Properties tab irrespective of type.

You can modify whether the fields are modifiable and what their default values are in the Organizations application – Contract Options.

Most of these properties are for information and there is no associated functionality in Maximo. The only properties which seem to have functionality are the three already referenced: PO Required, Payment Schedule, and Warranty Extended to Lessee. These happen to be the first ones displayed in the first column of fields on the Properties tab.

Terms and Conditions

The Terms and Conditions shown in the tab of the same name, are copied from those associated with the type of contract as defined in the Organizations application – Contract Options – Associate Terms button. There are 5 terms and conditions for a RENTAL type of contract and 4 for a LEASE type contract.

The Terms and Conditions associated with a Master Contract are not copied to the Lease/Rental Contract, but if a PO is raised against the Lease/Rental Contract then the terms and conditions come from both the Master Contract and the Lease/Rental Contract.

You can only add, remove or change the Terms and Conditions on the Lease/Rental Contract at certain statuses like Draft, and Waiting to be Approved, otherwise you may receive an error message like – BMXAA0759E – Terms and Conditions cannot be added to contracts with a status of Approved, Revised, Closed, Suspended, or Canceled.

Master Contract linked Lease/Rental Contracts

You might have noticed on the Lease/Rental Contract header the Master Contract field, which is set read-only at all statuses. This is because there is an action Create Associated Contract on the Master Contract application which allows you to create a contract linked to the master contract.

In the screenshot I have provided a contract number (using the Autonumber button), I forgot to enter a description, I selected a Lease Contract, there was also an option to create a Rental Contract.

When using the OK button this will create the new contract with a link back to the Master Contract. Some Properties are copied from the Master Contract but not the Terms and Conditions. 

For Lease Contract 1057 I added a Contract Line for the SNOWTHROW item, authorized the sites and approved the contract. I raise a Purchase Requisition that referenced contract 1057, added the PR line for the SNOWTHROW item and approved the PR, before raising the Purchase Order that you see above, PO 1112. 

PO 1112 has 10 Terms and Conditions.

• Sequence 20, 70, 80 and 90 you would find on the Lease Contract 1057. 
• Sequence 80, 30, 90, 70, and 100 you would find on the Master Contract 1055.
• Sequence 10, 40, 20, 60, 30 and 50 you would find on the Terms and Conditions application where the Default on PO field is set.

There are fields and records copied from the Master Contract when another contract is created from it, for example Authorized Sites, Associated SLAs, and Associated Commodities are copied. I will discuss this as part of a future article on Master Contracts.

Apply Price Adjustments

A quick reference to another action, Apply Price Adjustment. This action is normally performed when you revise the contract and it is at PNDREV state, otherwise you might receive the error message – BMXAA0786E – This action can be performed only if the status of the contract is DRAFT, WAPPR or PNDREV.

You add an Adjustment % (I’ll use 10), then select the Contract Lines and use the Apply button. The New Unit Cost and New Line Cost were set to $2200 and after OK the Line Cost on the SNOWTHROW item was set to $2200.

IBM Ideas

I have raised a couple of IBM Ideas to improve the Lease/Rental Contracts functionality.

Assets application to show that an asset is part of an active lease/rental contract

Assets are leased and rented, and you need a visual indicator to know that you should look up the contract details to determine whether you are allowed to perform maintenance (or not), perhaps review properties or terms and conditions.

From the Assets application you can View Contracts and navigate from there. But it should be highlighted on the Assets application that a contract exists. A field HASCONTRACT (persistent or non-persistent) would work well.

But you should also know that the asset is owned by a 3rd party. Ideally there would be a separate field for a company reference – Asset Owner.

https://ideas.ibm.com/ideas/MASM-I-1118

Work Order indicator that a lease/rental contract exists for the asset

When you are planning work or about to work on an asset, you should know whether the asset belongs to an active lease/rental contract, or there is a warranty/service contract, there is already a field to indicate that a warranty exists. You can then use the View Contracts action in Asset details menu and navigate to the contract to review Terms or Properties. There should be a visual indicator that a contract exists, rather than relying on someone remembering to go and look at View Contracts. These assets are likely to be in the minority, so a reminder (and warning) would be useful.

Additionally, it would be very useful to know the Asset Owner (company) on the work order. In some cases assets can be jointly owned, but in the initial case a Primary Owner would meet most clients needs. This would be an Asset field crossed over (persistent) to the WORKORDER object so that it can be used in reporting.

(See also https://ibm-ai-apps.ideas.ibm.com/ideas/MASM-I-1118) which is the same but for the Assets application.

https://ideas.ibm.com/ideas/MASM-I-1119

Lease/Rental Contracts – Add the term and number of payments to modifiable fields on the Associated Asset to provide greater flexibility.

The term and number of payments are on the lease/rental contract header which means that if the term or number of payments will differ for an asset you need to create another contract. This can lead to many contracts with the same vendor, each with only one asset.

Greater flexibility can be provided if these fields were copied to the Associated Assets records where they could be modified before those new values are used on Manage Payments action. This would lead to fewer contracts to maintain.

https://ideas.ibm.com/ideas/MASM-I-1121

Lease/Rental Contracts – Handling of asset rentals for a small number of days

In the current Lease/Rental Contracts the Term is in months. When hiring equipment, from tool hire or plant hire companies, the term may be measured in days with only one payment or a few payments including a refundable deposit. Ideally you would raise a Lease/Rental Contract with a company, with the items that you typically hire with the day rates to be used. You then use this contract on a PR/PO each time you rent the assets; tools assets should be supported.

Tool or Plant Hire is common, for example a Cherry Picker or other working at height equipment. Mobile generators, etc.

https://ideas.ibm.com/ideas/MASM-I-1122