BARTERAG - Barter Agreement

There are 2 styles of barter agreements 

Standard - In origination companies it is a common practice to sell seed/fertiliser to a grower and then buy crops from the same grower. The fertiliser sales contracts and grain purchase contracts are linked in a barter agreement then invoiced together. PINVGL will invoice them at the same time using the Barter Settlement option whereby the Purchases creates a purchase invoice and the Sales a sales invoice. The invoice values will net off in the client account for the cash settlement. 

Prepayment Interest - This option is where the Trading Entity acts as an agent to buy fertilizer and sell it to a grower but the Entity never takes ownership of the fertilizer. However interest is accrued/charged to the grower.  The Grower orders the fertilizer from a recognised Trading Entity supplier. The Grower requires this fertilizer in order to produce the Goods, but may not have the funds to cover this expense.  The Fertilizer  Supplier invoices the Grower for the delivery of fertilizer. The Grower sends the details to the Trading Entity who then pay the invoice on behalf of the Grower. This amount will become a prepayment/prefinance marking to be applied against Goods deliveries after the crop is harvested and made ready for delivery.  The Trading Entity and the Grower agree the monthly interest charge. These values are accrued on a monthly basis in EOMPO and are added as an increase to the prepayment invoices notating the prepayment interest. The Grower delivers the Goods and generates a purchase invoice which deducts some or all of the original fertilizer invoice=prepayment + Accrued interests recorded as increased prepayments + prepayments interest from the last month end until purchase invoice. This last prepayment interest between most recent month end and invoice date is captured against the contract.

This is handled in ITAS as follows:

• The fertilizer purchase is entered as a 3rd Party TRADE
• The product purchase is entered as a regular TRADE with an interest rate
• The 2 are linked in a Barter agreement BARTERAG
• Prepayments are executed on the 3rd party contract (to get the quantity and rate), but are registered on the product purchase i.e. the prepayment is assigned to the Goods Purchase
• GPLREP/P&L, GPLREP/Pre Payments Report and EOMPO/Pre Payment Interest track/post accrued interest
• The purchase invoice for the product subtracts prepayments and applies interest as standard
• The 3rd party TRADE is closed

The style of barter agreement operating for the company is configured in S01 (ctrl30_barterstyle)