Nature of Rental Equipment

It is important to understand that rental equipment is not an inventory item, but rather a fixed asset that the company owns. Even though the system allows the company to use the inventory mechanisms in SAP Business One to control the movement of rental equipment, the items represent fixed assets owned by the company not inventory.

The fact that the rental equipment reflects fixed assets does have some practical implications that must be considered when configuring SAP Business One for use with Eralis Rent, and for general transactions that are processed in SAP Business One relating to rental equipment. These considerations are specifically relevant for situations where the rental equipment is based on inventory items, rather than Customer Equipment Cards.

1. For the company to separate out levels of available rental equipment, the company should have separate warehouses that hold the rental equipment on hand quantities. This also addresses practical considerations that must be considered with the on-hand quantities.
2. Since the rental equipment items reflect fixed assets and not inventory, there should not be a cost associated to the rental equipment warehouse(s). The cost of the items is reflected in the fixed assets and not in the inventory accounts.
   
   This does require that SAP Business One is set to manage items costs at a warehouse level, especially in situations where the same item code can be sold, but there is also a quantity of the items that represent rental equipment. In such a situation a separate warehouse will be needed for the saleable stock and the rental equipment holdings.
3. SAP Business One also needs to be configured to handle the release of stock without a cost. This is because inventory transactions need to be processed to track the movement of inventory items, but these transactions should be processed without a cost.
4. The company also needs to be aware that cost generating transactions should not be processed directly to the Rental Equipment warehouse. To explain this, here are two examples:
   1. Purchase of New Rental Equipment: Generally, this would be carried out via an A/P transaction. However, the nature of the transaction is the purchase of fixed assets and not the purchase of inventory. Therefore, the cost of the items should be processed to the fixed asset control account and not to the inventory control account.
      
      The A/P transaction generated to purchase the equipment should be processed in the following manner:
      
      Two lines need to be added to the document. The first line using a non-inventory item which is set to post to the relevant fixed assets control account. This line should contain the cost of the purchase. The second line should have the Item Code and the Quantity being purchased, but should not contain a cost. This will have the effect of bringing the cost into the relevant Fixed Asset account, and the quantity into the correct warehouse without a cost being applied to the warehouse.
   2. Transfer of Saleable Items to Rental Equipment (or vice versa): This is specifically in situations where the company has a single Item Code and sells the equipment, as well as renting the equipment out. As previously mentioned, separate warehouses will need to be configured to hold the different quantities.
      
      The nature of the transactions being processed are that of a fixed asset acquisition or disposal, and an inventory write off or receipt.
      
      The processing should be carried out via Goods Receipt and Goods Issue in SAP Business One, rather than a stock transfer.
      1. In the situation where saleable stock is being transferred to rental equipment, a Goods Issue should be processed at the current SAP Business One cost out of the saleable stock warehouse with the offset General Ledger account set to the Fixed Asset General Ledger account. This will move the stock out of the saleable goods warehouse and update the fixed assets with the cost. Thereafter, a Goods Receipt should be processed into the rental equipment warehouse at a zero cost.
      2. In the situation where rental equipment is being transferred to saleable stock, a Goods Issue should be generated out of the rental equipment warehouse; the cost on the warehouse should be zero, so no cost will be applied to the transaction. Then a Goods Receipt should be processed into the saleable stock warehouse at a company determined cost, with the offset General Ledger account set to the Fixed Asset General Ledger account.