Sales and Purchase Contracts

Material contracts cover those contracts that involve selling, purchasing, exchanging or processing of materials.

Contract Types

The following types of material contracts can be configured in MineMarket:

• Sales contracts—Generated when a company sells material to an external organisation, internal company or district.
• Purchase contracts—Generated when a company buys material from an external organisation, internal company or district. This material can either be resold or processed further and then sold.

Sales and purchase contracts can be grouped further into contracts based on a different Contract Pricing Basis:

• Product Pricing—For buying or selling of less valuable materials such as coal and iron ore
• Analyte Pricing—For buying or selling of materials such as copper concentrates, which contain base metals (such as copper, gold and silver) that are defined as payable analytes

Essentially, sales contracts and purchase contracts are identical, except that the buyers and sellers are reversed.

There is also a difference in despatching. On a sales contract, the material is generally tracked from loading the ship to unloading at the destination port. On a purchase contract, the material can be tracked from the incoming port.

A purchase contract can be invoiced just like a sales contract. Usually, an invoice generated for a sales contract is issued to the customer. An invoice generated for a purchase contract is not issued to the customer, but used to extract the financial details for the company's ERP system for internal financial tracking.

If internal districts are buying from each other, the company may wish to track the financial ins-and-outs of each district. An invoice generated for a purchase contract with an external organisation may be raised purely to retain the financial information so that it can be used in budget planning. An example of this is a steel producer buying coking coal, using sales contracts to sell the steel, but setting up purchase contracts to keep track of how much coking coal they have purchased. The invoice from the coking coal seller could be used to determine their expected payment.

To set up a sales contract or a purchase contract, the products or brands that are to be sold need to be specified, along with the amount of tonnage that is contractually agreed, and the currency in which it will be sold. The quotation pricing (QP) then needs to be specified for each product or brand, using either product pricing or analyte pricing. A fixed price can be entered, or a price series specified along with the method used to determine the price, for example, highest, lowest or average for the defined period. If there are multiple quotation pricings for an item, the weighting of each pricing needs to be specified. The quotation period in which the quotation pricing is valid needs to be entered. The number of decimal places for both the prices and tonnages are specified, as it is very important for unit testing. This should be specified in the actual contract with the customer, and if not, the customer needs to be asked.

When configuring contracts, dock the navigation pane to maximise the screen display. See Customise the Navigation Pane.

Contract Terms

Contract terms define the pricing many other details required to generate an invoice for despatch orders. See Sales and Purchase Contract Terms.

Contract Products

A sales or purchase contract must be associated with at least one product or brand. See Contract Products.

Contract Quotas

Quotas are an optional sub-division of the contract. See Quotas.

Despatch Orders

Despatch orders are the link between the contract and the despatch (by vessel, train, truck, barge or lot). See Despatch Orders.

Linked Contracts

Linked contracts, also called transfer or inter-company contracts, are used to relate both ends of a contractual agreement, such that the fulfilment of a despatch order in a source contract (the contract dealing with the actual delivery of material) makes the linked contract (the contract used to contain the pricing for raising invoices) contractually fulfilled. See Linked Contracts.