If you’re working with quotations and billing, you may have encountered the Third-Party Billed setting. Here’s a simple explanation to help you understand how it works and how to make sure your figures are accurate.
What Does the Third-Party Billed Setting Do?
A Third-Party Billed field has been added to the price book to ensure that your turnover figures are calculated correctly, whether you're dealing with wholesale (self-billed) or resale (third-party billed) services.
⚡Note: The Third-Party Billed setting does not control whether an item appears in the Billing Export Queue. Instead, the Billing Route setting is what determines if an item will appear in the Export queue.
Key Points to Remember:
Default Setting: When you import your price books, the Third-Party Billed field will default to TRUE, unless you specify otherwise. This is done to ensure profitability is not over-counted when calculating ongoing revenue.
Wholesale Margin Calculation: If you’re looking to calculate wholesale margin (using the formula: recurring sell - recurring buy * term), you need to set the Third-Party Billed field to FALSE. This ensures you're only calculating the correct margin for self-billed services.
Third-Party Billed for Wholesale and Resale Models:
Wholesale Model: When selling products directly to customers (self-billed), you would set the Third-Party Billed field to FALSE to avoid over-counting profits.
Resale Model: When you sell products through a third party (third-party billed), you will leave the Third-Party Billed field set to TRUE to properly account for the revenue.
🚩Important:
Please remember:
When you import price books, the Third-Party Billed field defaults to TRUE. If you are calculating wholesale margin (recurring sell - recurring buy * term), make sure to change the setting to FALSE. This will ensure your margin calculations are accurate and avoid over-accounting profitability.
Examples of Third Party Billed
Understanding Third Party Billed = TRUE in the Reseller Model
In this example we illustrate how the turnover and profit values are calculated when the Third party billed field is set to TRUE.
Example Scenario:
Tariff: EE LB Sharer
Recurring Buy Price:
Recurring Sell Price: £14
OGR (Ongoing Revenue): 15%
Term: 24 months
Calculation:
Third Party Billed set as TRUE will result in the following turnover for one service:
Turnover = Recurring Sell Price x Term x OGR
Turnover = £14 x 24 months x 15% = £50.40
In this scenario, Turnover and Profit (prior to any discounts being provided or costs being added) are the same figure.
⚡Key Notes:
When third-party billed is set to true, the recurring buy value will be ignored and assumed to be the same as the recurring sell.
This ensures a clear and simplified calculation focused on the Sell Price and OGR.
Understanding Third Party Billed = FALSE in the Wholesale Model
This guide demonstrates how turnover and profit are calculated when the Third Party Billed field is set to FALSE
Example Scenario:
Tariff: Single PSTN Line
Recurring Buy Price: £10
Recurring Sell Price: £14
OGR (Ongoing Revenue):
Term: 24 months
Calculations:
Profit:
The profit is calculated as the difference between the Recurring Sell and Recurring Buy prices, multiplied by the term.Profit = (Recurring Sell - Recurring Buy) x Term
Profit = (£14 - £10) x 24 months = £96
Third Party Billed set as FALSE will result in the following turnover for one service:
2. Turnover:
The turnover is based on the Recurring Sell Price multiplied by the term.
Wholesale Turnover = Recurring Sell x Term
Wholesale Turnover = £14 x 24 months = £336
⚡Key Notes:
The Recurring Buy Price is factored into the profit calculation when Third Party Billed is set to FALSE.
The Wholesale Model focuses on both turnover and profit, reflecting the impact of the buy price on overall earnings.
Understanding Third Party Billed = FALSE in the Wholesale Model (Including Ongoing Revenue: where ongoing revenue is also provided)
This outlines how the turnover and profit is calculated when the Third party billed field is set to FALSE and OGR Buy Price Override is marked as TRUE.
Example Scenario:
Tariff: O2 Sharer
Recurring Buy Price: £10
Recurring Sell Price: £14
OGR (Override Gross Revenue): 15%
Term: 24 months
Profit for one service:
Calculations:
1. Profit Calculation:
Profit is the sum of the OGR Profit and the Recurring Margin.
OGR Profit:
OGR Profit = Recurring Buy Price x Term x OGR
OGR Profit = £10 x 24 months x 15% = £36Recurring Margin:
Recurring Margin = (Recurring Sell - Recurring Buy) x Term
Recurring Margin = (£14 - £10) x 24 months = £96Total Profit:
Profit = OGR Profit + Recurring Margin
Profit = £36 + £96 = £132
Third Party Billed set as FALSE and OGR buy price override marked as TRUE will result in the following turnover for one service:
2. Turnover Calculation:
Turnover combines the OGR Value and the Recurring Sell Margin.
OGR Value:
OGR = Recurring Buy Price x Term x OGR
OGR = £10 x 24 months x 15% = £36Wholesale Margin:
Wholesale Margin = Recurring Sell x Term
Wholesale Margin = £14 x 24 months = £336Total Turnover:
Turnover = OGR Value + Wholesale Margin
Turnover = £36 + £336 = £372
Dashboard Widget: Turnover Visibility
Turnover figures are visible in the Won Quotations and Sales Order Leaderboard widgets.
