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Dynamics 365 Community / Blogs / The Dynamics Troubleshooter / Tiered charges application ...

Tiered charges application on Sales Orders in Dynamics 365 F&O

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Paolo Cecchelli Profile Picture Paolo Cecchelli 204
What is a tiered charge?
If on a charge is specified the “From Amount” and the “To Amount” for multiple rows, the charge is treated as a “Tiered charge”. One example of their use is in a business scenario in which transportation costs have to be applied as an increasing percentage as the amount of the sales order rises.

Prerequisites
Before creating the tiered charge, make sure that:
  • you created the charge code to be applied under Accounts receivable --> charges setup --> Charges code:

  • the flag enabling the retrieval of the auto charges under accounts receivable is turned on  under Accounts receivable --> Accounts receivable parameters --> Prices tab:
 

Setting up the tiered charge
Tiered charges are setup as auto charges that apply only at the header level, in fact is not possible to define from and to amount on the line-type auto charge  under Accounts receivable --> Charges setup --> Auto charges:

Header auto charges: the from amount and to amount are visible

Line auto charges: the from amount and to amount are not visible
Tiered charges are setup by inputing different rows with different percentage (or fixed amounts) like in the picture below:

Tiered charges

Important notice: it is important for the “To amount” of the previous row and the “From Amount” of the next row to match, because the “To amount” is excluded from the application of the charge. As an example, if a sales order of 1.000 is created, the fee applied will be 20 EUR, because on the first line ranging 0 to 1.000, 1.000 is excluded:

If you do not setup overlapping amounts you could end up with a missing retrieval of the Tiered charge for that limit amount.

Manual Application of the tiered charge
Now that the tiered charge has been setup, let’s use them on a Sales Order. Even if they are setup as auto charges, counterintuitively they are not retrieved automatically at the moment of the Sales Order creation. The button “Tiered charge” on the “Sell” tab has to be hit:

If the Sales order is matching the criteria specified by the tiered charge, the following message is displayed:

And the charge is visible under the tab “Sell” and “Maintain charges” as usual:


If the Sales order value changes, for example increases to 3.000, is mandatory to click again the “Tiered charges” button to have the system recalculate the new charge.
It is important to notice also that if you change the amounts of the Tiered charges, these will only be applied on the future Sales Order that you create in the system.
If you try to apply the tiered charges by selecting more than one Sales Order, the system will not let you do that:


Automatic Application of the tiered charge
Until version 10.0.38, the manual assignment was the only option to apply the tiered charge. However, with version 10.0.38 has become available the feature “Sequence and compound for customer charges” https://learn.microsoft.com/en-us/dynamics365/supply-chain/sales-marketing/auto-charge-sequence-compound that provides the possibility to calculate automatically the tiered charge on the sales order. In order to do that, the flags enabled by this feature “Re-search on posting” and “Combined charges on combined invoices”:
    
The first option “Re-search on posting” ensures that you do not have to click on the “tiered charges” button to apply the charges but they are applied automatically when either confirming of invoicing the Sales Order. Moreover, they are recalculated on the Invoice in case any change in the Sales Order net amount occurs between the Sales order confirmation and invoicing.
The drawback about this solution is that tiered charges are always applied, so you lose the possibility to exclude orders from taking in the charges. In the end, if you are applying them to all the orders is a good solution, if only a minor part of them should take the charges maybe you prefer not to enable the feature.

 The second option “Combined charges on combined invoices” tackle instead the problem of what happens to the charges when you use the Summary update on Sales orders having charges (in this case, tiered charges). As explained in the official documentation from the link posted above: “The option controls how auto charges are calculated when the Summary update function is used to combine multiple sales orders into a single invoice. Set this option to Yes to first calculate the grand total of all sales orders that are included in the combined invoice and then apply the auto charge to that total. Set it to No to calculate a separate auto charge for each sales order that's included in a combined invoice” .
So, if you remember this was the setup of my charges (by the way, you see that by activating the compounding and sequencing feature there are two new columns on the left-end side):

If now I go to post three sales orders: one with a value of 1000, the second with a value of 1600 and the third one with the value of 4000 if I calculate the charges by individual sales orders I get these values:
  
So the total being 70 EUR worth of charges.
Now, if I Arrange by Invoice account (that is the same for all 3 orders) with flag “Combine charges for combined invoices” set to “No” this is the result I am getting on the compounded invoice:

What we get is just the sum of all individual charges that were calculated on the single Sales Orders (still 70 EUR):
 
Now if instead we turn on the flag, the result is different, we are just getting the highest charge among the three Sales Orders:

To me this result is counterintuitive, because I would have expect that the system would have taken the compounded subtotal amount (6.600 EUR) and input a 40 EUR charge because in the tiered charge above 5.000 EUR the setup tells to apply a 40 EUR charge. Well, was in fact puzzling until I arrived to the end of the link shared before where is written that, only for tiered charges: "If you make a summary update, such as a summary invoice, when the system is configured to research when posting occurs, the tiers are assessed against the net amount only of the first sales order that is included in the summary update. The tiers are not assessed against the net amount across all order lines in the summary update”. So, mistery solved… by design it works in this way.

That’s all folks, see you next time!

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