How to Handle Pre-buys
Pre-buys are situations where the customer pays for propane ahead of time, typically in anticipation of future price increases.
Pre-buys involve what's known as a contra asset, "a negative asset account that offsets the asset account with which it is paired".
As an example, let's say they buy 100 gallons at the current price. Then, as deliveries are made, the amount delivered (for instance, 25 gallons) is subtracted from the amount they pre-bought (thereby leaving 75 gallons in this example). This process continues with each delivery until the pre-bought gallons reach zero.
The process of starting a pre-buy contract begins with finding the account belonging to the customer pre-purchasing propane.
To find the customer use one of the following methods: Methods of Finding a Customer
From the customer's account screen. . .
1.
Left-click on the
tab. This will display the
Pre-buy tab screen
for the account.
2.
Left-click the
button.
3. This will bring up the Add, Change, Delete Pre-buys screen.
4. Use the dropdown menus and text-boxes to enter in the pre-buy information:
. . . How many gallons of gas the customer pre-bought.
. . . . . The price per gallon of propane agreed to in the contract.
. . . . . The deposit should be the total monetary value of the pre-buy contract (Gallons Contracted x Pre-buy Price x Tax if applicable) and should be paid in full before deliveries start. See Price Calculator for help on doing this.
. . .The date the pre-buy contract began (most likely today's date)
. . this is a required field and is the date the pre-buy gallons must be delivered by. If there is no "End date" involved, simply select some date way out in the future (like several years away) so that this date will not be a factor.
. . Commonly used to key in the type of propane that was contracted (domestic, commercial, etc.).
. . .Tags are optional and can be used however you'd like.
. . The date the customer paid their pre-buy deposit.
. . . . . . . If the price of gas you're selling drops lower than the pre-buy price the customer agreed to, Lynx will automatically reduce their pre-buy price to match these savings. However, if you would like the pre-buy price to be firm, check 
this box.
Example: A customer pre-baught 100 gallons of gas for $2.00 a gallon, half-way through their contract the price of gas drops down to $1.8 per gallon.
- With
- With
the pre-buy price will stay at $2.00 unless you go into the contract and manually change it.
You can change the default values of these fields by left-clicking the 
button
and then left-clicking 
.
Here's a look at the pre-buy contract we'll be using in these examples:
- To get $512.53 as the pre-buy deposit, multiply gallons contracted (250) by the pre-buy price ($1.90), and then multiply that result with the tax assosciated with this account (7.9% tax in this example). You can also use the Price Calculator.
You're now ready to select which tank you would like to apply this contract to.
5.
Left-click the
button, which will bring up
this screen.
will move the selected (blue highlighted) tank from Tanks on this Account to Tanks Assigned to this Contract
will move all tanks from Tanks on this Account to Tanks Assigned to this Contract
will move the selected (blue highlighted) tank from Tanks Assigned to this Contract back to Tanks on this Account
will move all of the tanks from Tanks Assigned to this Contract back to Tanks on this Account
6. When you've finished making your tank selections, left-click the 
button to return to the Add, Change, Delete Pre-buys screen.
When you have all the pre-buy information filled out and you have assigned the proper tank(s), it is time to validate the pre-buy contract.
7.
Do this by left-clicking the 
button.
If you were to try and exit the Add, Change, Delete Pre-buys screen before validating the contract Lynx will warn you, as shown below.
- Left-clicking
will cancel the contract, returning you to the Pre-buy tab screen for the account.
- Left-clicking
will validate the contract, bringing you to step 8 below.
8. Lynx will then create an invoice for the pre-buy, this will act as a debit on the account against which the pre-buy payment amount will be applied. You will be automatically redirected to this new invoice.
Using the pre-buy contract example shown above, we were redirected to this invoice.
The pre-buy contract is all set and you're now ready to start delivering to the tank! Here's how Lynx handles deliveries involving pre-buys. Using our example, let's assume we delivered 50 gallons of gas to the prebuy customer.
9. First, we'll need to create an invoice for the delivery. For help on this see Enter Invoices. (steps 1-7)
From the invoice detail tab of the delivery batch. . .
10.
Use the Bill To:
button to select the pre-buy customer who received the delivery.
When entering a delivery invoice for a prebuy, you'll notice some new features on the invoice detail tab. Click here for examples of this.
Left-clicking the
button will have Lynx check to make sure there are no errors. For example, if we change the delivery invoice due date to a date before the pre-buy contract starts we will get this message:
However, assuming everything was entered in correctly the expected message will be:
The delivery invoice will also include details of the pre-buy contract at the bottom of the window such as balance, pre-buy gallons left, and pre-buy price per gallon.
11.
Double left-click the quantity field 
and enter the gallons delivered. As you type it in, you should see the other fields populate with correct information.
12.
When you're finished keying in the quantity, press the asterisk .gif)
key to save that entry. Lynx should then apply a percentage of the prebuy deposit towards the delivery, and charge any tax if applicable. In our example, 7.9% tax.
To see what our example customer's delivery invoice looks like after entering the 50 gallon delivery, click here.
- 50 gallons of gas (20% of "gallons contracted") were delivered, reducing "pre-buy gallons left" to 200 from 250.
- Lynx applied $102.51 (20% of deposit) of the "prebuy deposit" to the invoice.
- Customer balance remains $0.
- "Pre-buy price" remains $1.90
13. It's highly probable that the "Gallons Left" will reach zero part way through a delivery. For instance, if we made a 220 gallon delivery to the pre-buy contract example which only has 200 gallons remaining. When this happens, the gallons that are NOT part of the pre-buy should be billed to the customer at the then prevailing price for that product (which may or may not be the same as the pre-buy price). Lynx will take care of this for you.
To see what our example customer's delivery invoice looks like after entering the 220 gallon delivery, click here.
- Although 220 was entered in the qty field, Lynx split the record into two. One with 200 gallons, and one with 20 gallons.
- 200 gallons (80% of "gallons contracted") delivered at the "pre-buy price" reduces "pre-buy gallons left" to 0 from 200.
- Lynx also applied the remaining $410.02 (80%) of the "prebuy deposit" to the invoice.
- Lynx created a delivery record with left-over gallons delivered (20 gallons), and the normal price for the customer (in this case $.65).
- Lynx calculates total tax to be $31.05 ($30.02 was towards the pre-buy and $1.03 towards new 20 gallon record).
- Customer's balance is now $14.03 (20 gallons of propane at $.65 = $13 + $1.03 tax)
14. You can always check an account's pre-buy tab screen to see updated information regarding their pre-buy.
To see our example customer's pre-buy tab screen after all the deliveries we've done, click here.
- Gallons Left: 0 ✔
- Deposit Left: 0 ✔
- Another successful pre-buy ✔
Pre-buy dollar amounts are recorded in the system (and show up on the Sales Summary report) for the month the sale is recorded. Conversely, the gallons show up during the month the actual deliveries are made.