Warranty Work Best Practices

Modified on Wed, 12 Feb at 1:25 PM

This article provides general guidance on our best practices for setting up and managing warranty work within your system. It covers creating an internal warranty customer, configuring the suggested accounts and sale/expense codes, processing warranty documents, and handling OEM warranty credits.

1. Setting Up Your Internal Warranty Customer

Before processing warranty claims, we suggest setting up a dedicated internal customer(s) to track warranty transactions separately. You may create an internal customer for each OEM handling warranty.

Steps to Create an Internal Warranty Customer:

Navigate to Accounting > Customer Program.
Create a new internal customer.
Under the General Tab, set the customer type to Internal.
Assign applicable Terms and Tax Codes.
Click Save to finalize the customer setup.

2. Configuring Warranty-Specific Accounts and Codes

For a more detailed mapping view we suggest setting up dedicated warranty sale codes, expense codes, and receivables accounts.

Creating the Warranty Receivables Account

Setting up a Warranty Receivables Account ensures that warranty transactions are properly recorded and separated from the regular Accounts Receivable (AR) account and other expense accounts. This account acts as a holding place for expected reimbursements from OEMs, allowing accurate tracking and reconciliation of warranty claims.

Go to Accounting > Chart of Accounts.
Click + Chart of Accounts.
Enter the Account # and Description.
Check the "Accounts Receivable" checkbox.
Save the setup.

Internal Warranty Sale Codes & Expense Code

Create a Warranty Internal Sale Code for Parts and Labor.
Please reference this article for more information on how to set up sale codes in the system: How to Setup a SaleCode
Set up an Expense Code mapped to the Warranty Receivables GL Account. You can set up an Expense Code by navigating to Settings > Administration > Expense Codes.
Please reference this article for more information on how to set up Expense Codes in the system: How to Setup an Expense Code

3. Processing a Warranty Internal Document

Once the accounts and codes are set up, create a warranty document to process the claim.

Steps to Create a Warranty Internal Document:

Open the Invoicing Program and create a Warranty Internal Document.
Select your Branch & Department.
Select the Warranty Type of Sale.
Under the Expense Section, select the Expense Branch & Department and the Warranty Expense Code
Select your Internal Warranty - OEM Customer as the Bill To customer and click Open to open the document. The Ship To Customer can be set to any internal/external customer.

4. Applying OEM Warranty Credit in AP Invoice Entry

When the manufacturer issues a credit, you can then follow these steps to apply it to clear the warranty receivable.

Steps to Apply OEM Warranty Credit:

Navigate to Accounting > AP Invoice Entry.
Enter the OEM Warranty Credit Invoice.

In AP Invoice Distribution:

In the Customer # Field, enter Internal Warranty - OEM Customer.
In the AR Invoice # Field, enter the Warranty AR Invoice # (from step 3).
Distribute the AP Invoice Credit Amount toward the Warranty Receivables Account.

Handling Partial OEM Credit
If the OEM credit does not cover the full warranty invoice:

Enter the OEM Warranty Credit Invoice amount in the General tab of AP Invoice Entry.

Apply the full AR Invoice amount to the Warranty Receivables Account.
The remaining balance can be distributed to another GL account of your choice.

Disclaimer
This documentation is provided for informational purposes only. The procedures outlined herein are intended as general best practices for managing warranty work. When configuring your system for warranty processing, including but not limited to Sale Codes, Expense Codes, and Chart of Accounts setup, it is strongly recommended that you consult with your accountant or financial professional to ensure proper configuration and alignment with your organization's specific financial policies and procedures.