Margin is a notion used to define a profit/surplus gained from the sales of items. The control of a minimum margin prevents selling items and services below a certain threshold level defined in percentage. The system makes it possible to automate the margin control process, owing to which the user does not need to manually calculate margins while processing sales transactions.

To control margins properly, it is necessary to:

• Adjust the parameter Calculate margin on (System → Configuration → Trade)
• Adjust the parameter Control margin on acquisition price (System → Configuration → Trade)
• Define the percentage value of a minimum margin on a given item form, tab General (Main → Items)
• Select the parameter Margin on a given item’s form, tab General, for each price list for released items, for which the system is to control a margin

The parameter Calculate margin on determines how a margin value and final sales price are calculated; it also defines what value range is to be available in the field Minimum Margin on the item form. The following calculation options are available in the system:

• Sales price

Margin [%] = profit / sales price = (sales price – purchase price) / sales price

Sales price = purchase cost / (1 – margin)

The Purchase price option does not bring any limits for the field Minimum Margin. With such configuration, a value set in this field specifies the proportion of a profit (a difference between a final sales price and a purchase/acquisition price) to a purchase/acquisition price (assuming that a purchase/acquisition price = 100%).

• Purchase price

Markup [%] = sales price / purchase cost – 100% = (sales price – purchase cost) / purchase cost

Sales price = markup * purchase cost + purchase cost

In the case of the Sales price option, the permitted value range for the field Minimum Margin is 0-100. With such configuration, a value set in this field specifies the proportion of a profit (a difference between a final sales price and a purchase/acquisition price) to a final sales price (assuming that a sales price = 100%).

If the user manually changes an item’s final price to a value incompliant with minimum margin requirements, an attempt to save the price brings the following results:

• A red exclamation mark indicating an error is displayed next to the item’s value
• The user is notified about what the minimum sales value of a given item should be in order to meet a minimum margin
• In correction documents, the system prevents correcting item values in a way that would make a margin lower than a minimum margin

A minimum margin is only calculated if resources have been retrieved to a document. In the case of SO documents without resources and SI or R documents on shortages, the system does not control a minimum margin, as a purchase cost is unknown.

Margin control upon document generation

The SQ/SO document definition (Company Structure → company form → Documents → SQ/SO) contains a parameter Control minimum margin during document generation. By default, the parameter is deselected, both while converting and creating a database. If the parameter is:

• Selected – while generating SI/SOR/R documents from a SO document, or while generating a SO document from SQ, the system verifies whether minimum margin requirements have been met; if not, a price may be modified by a minimum margin value in relation to a price in the source document
• Deselected – while generating SI/SOR/R documents from a SO document, or while generating a SO document from SQ, the system does not verify whether minimum margin requirements have been met. Relevant values are transferred from the source document.