Working with Order Markups, Taxes, Freight and Fees

One of the biggest differences between the FF&E data created in FF&EZ-Design and that in the Purchasing module is that the Design data is intended to be presented at a point when final values for some things (especially freight) may not be known or may be adjusted to make a sale. This is in contrast to Purchasing, where you are typically confirming final freight amounts and working from a signed contract specifying the exact price to be charged and based on an agreed cost from a vendor.

Based on this, the Purchasing module has the following differences:

Markups, Purchasing Fees

The cost and price data, which transfers from the design specification, is a simpler calculation of cost, markup and sell price. The sell price is always protected from accidental changes: While changing either the markup or the sell price will recalculate the other amount, changing the cost will only change the markup, protecting the sell price. If you want to preserve the markup, make a note of the current value and re-enter that after entering the new cost.
On purchasing management projects (billing types 2 and 3) the purchasing fee % for each order item transfers from the original specification and can still be overridden on the Item screen.

Freight

Orders do not have a percentage for freight (the percentage from the Design module does not transfer). Instead, there is a "Freight Quote" field what is applied to an entire order and "Freight Invoiced" fields for each item (actually for each item split). The freight invoiced by the vendor is allocated across selected items to allow freight charges for multiple shipments to be recorded as needed.
Freight quotes are compared to what a vendor invoices for tax and freight to help validate vendor billings.
If freight is marked as being taxed, any calculated tax estimate will include tax on the freight quote (or actual freight) if a rate is available. A tax is calculated automatically for all orders if a tax rate exists for the order and its items. You can, however, manually enter a tax quote for purchasing management and VAT-eligible projects if the tax rate on the order and all individual items is 0. You can also exempt a specific freight amount from being taxed on an item that is exempt from the VAT on purchase orders. See the next section for more.
The freight amounts that appear on check requests or on invoices for for-profit (billing type 1) projects are based on the amounts entered using Process> Enter/Reconcile Vendor Final Invoices.
Some reports may show freight quotes for reference, but they are never used for invoicing. In order to invoice a client for freight, you must enter the exact freight amount as part of using "Enter/Reconcile Vendor Final Invoices."

Taxes

Purchasing management projects, especially large ones like hotels, tend to generate very different tax amounts, depending on the vendor and site. some purchasing management users have found that using the "Tax quote" field on the Orders screen is easier than having FF&EZ try to calculate the tax on purchase orders for this billing type. For this reason, you can elect to not transfer tax rates to the orders, using controls on the project screen. This means you can use the tax rate on the Projects screen to add estimated taxes to a Design module quote, but add more accurate tax quotes to the orders without confusing the two.

For FF&E amounts, the tax rate is applied in the following way:

In a for-profit project (billing type 1), the tax rate is normally applied only to the sell price and if applicable, the vendor's freight charge. The latter is the amount entered from a vendor invoice using Process> Enter/Reconcile Vendor Final Invoices
In a for-profit project where the "Apply as VAT type" option has been selected, the tax is applied to both the vendor cost (for your own payments) and the sell price (on your invoices). VAT credits must be handled off-system.

If you are dealing with a VAT system but do not have to pay a VAT on the PO cost due to a "business-to-business" exemption, you should not select the "Apply as VAT type" option, since your exemption makes the VAT function in the same way as a sales tax that applies to retail but not wholesale amounts. On the other hand, if you want to be able to report on the VAT you paid, the "Apply as VAT" option may still be appropriate.

Usually, there is no reason to use the "Apply as VAT type" option on a billing type 2 or 3 project, since the tax is normally applied to the cost and there is no "sell" price. However, if you have vendors that are exempt from charging tax, using this option will prevent a tax from being entered on products from those vendors.
If you enter a tax rate on an order in a purchasing management project, the tax is applied to the vendor cost and if enabled on the project screen, to the vendor's freight charge and the calculated purchasing fee. The first two appear on check requests while the fee appears on your invoice.
Estimated taxes on purchasing management orders are entered in one of two mutually exclusive ways: 1) As a tax rate on the order that can be overridden on each item, with any tax on freight using the order's rate or 2) as an entered tax quote (from the vendor) that should include all applicable taxes on the order. The "Tax Quote" field is only available if the tax rate on that order is set to zero.
For VAT-eligible orders in resale projects, you can also exempt specific items from the VAT on purchases using the "No PO VAT?" option on the Item screen. If that option is used and freight is normally taxed in that project, you can also enter a specific freight amount to deduct from the total freight quote next to that field, reducing the total tax. This option does not affect the VAT applied to the sell price and freight (if applicable).

In for-profit projects, the tax percentage for each order item automatically transfers from the original specification and can still be overridden on the Item screen. This is also true for purchasing management projects, but only if you choose to transfer the tax rates at the time you create the orders:

The "Copy tax rate" option appears when you use the FF&E Worksheet's Order... command on purchasing management projects.

This option only appears in purchasing management projects. If you leave it unchecked (recommended), it will leave the order tax rate empty so that the "Tax Quote" field can be used instead.

FF&EZ can handle different tax rates on each specification. Although it would be unusual, it is possible that an order could contain items taxed at a different rate (or non-taxable items such as installation). A note will appear on the Orders screen to flag this situation. However, if you change the tax rate on the order screen, it will be applied to all items on the order. You can manually edit individual items (such as non-taxable items) afterward if exceptions apply.

The tax is applied to freight amounts and purchasing fee amounts only if these options are selected on the project screen. The tax base amount is selected based on the logic used for FF&E amounts.
On the order screen, the "Est. Tax" field is calculated from the tax rates and amounts on each item. The freight quote is added to the tax base amount if available and that tax is enabled. This is updated if item quantities or amounts change. However, if the order is a purchasing management order and the order's tax rate is not entered (i.e., zero), an editable "Tax Quote" field appears instead. It applies to the whole order. You can right-click the "Tax Quote" field to have FF&EZ calculate a tax amount based on the project tax rate.
Tax estimates/quotes and freight quotes are compared to what a vendor invoices for tax and freight to help validate vendor billings. They are not used as "final" amounts—only the actual amounts from vendor invoices are considered to be final.

Depending on the billing type, your own invoicing will be based on and show either the full sell price or the purchasing fee calculated from the cost shown on any given item. If entered, taxes are applied to the sell price of items in billing type 1 orders.

For more details about these fields, see the field entries for the Orders List screen, the Item Form and the "how to" for entering vendor final invoices.