Indexation of contract payments

A multi-year contract can raise its later payments each year, by a fixed rate or by an index series. Indexation is applied one contract year at a time: Backed works out the new amounts, you check them, and applying them changes the milestones. No document or signature is needed.

Year 1 starts on the contract's start date and each later year starts on its anniversary. A milestone belongs to the year of its due date, and year 1 is never indexed. A contract with no indexation terms, or with no start date, shows none of this.

This appears only when Payments is turned on for your organisation. Labels that name Milestone and Contract use your organisation's own term if you've renamed it.

An index series and the value for each period are recorded in your organisation's payment settings, and a contract's terms come from its grant or from the contract's own setup. Terms can't be changed once a contract's first year has been applied.

See that a year is due

Indexation due appears at the top of the contract's page from the first day of a contract year that has milestones and hasn't been applied. It stays there until every due year is applied.

While a year is due, the milestones it will index can't be added to a payment batch: Add Milestones asks you to apply the indexation first, so nobody is paid the old amount by mistake.

Preview and apply a year

Applying needs Can access Payments and Full Access to the contract. Without them you still see Indexation due, but Apply indexation isn't offered or is refused. See Payment permissions and separation of duties.

1. On the contract's page, select Apply indexation.
2. Check the preview. It opens on the earliest due year and names the method, such as Fixed rate of 3% a year, or the series and its two values, with the Factor they give.
3. Read the table. Each milestone shows its Current amount, Base, Uplift and Indexed amount, with a Total at the foot.
4. Check Not indexed, which lists any milestone that keeps its amount and why: A payment has already been made, No amount to index or In-kind support.
5. Select Apply indexation in the dialog.

Each milestone takes its indexed amount and its GST is worked out again. See GST on payments. If another year is also due, select Apply indexation again.

What the trail shows

Variations on the contract's Details tab lists the contract's variations and its applied indexation together, by date. Each indexation entry, such as Indexation: contract year 2, names the method and the rate or index values, says who applied it and when, and lists every milestone's Base, Uplift and Indexed amount. An entry has no document, so it links nowhere.

The Base, Uplift and Indexed columns

Once any milestone on the contract is indexed, or will be, the table on the contract's Milestones tab gains three columns:

• Base: the amount before indexation.
• Uplift: what indexation adds.
• Indexed: the amount after indexation.

The columns stay empty for a milestone indexation doesn't touch, such as one in year 1. A year that hasn't been applied is marked, and its figures can still change:

• Projected: the uplift and indexed amount are worked out but not yet applied.
• To be indexed: an index series year with no value recorded, so Uplift is empty and no indexed amount can be said yet.

Applicants see the same figures on their own milestones list.

If Backed refuses

• This contract year has not started yet, so its indexation is not due. The year's first day hasn't arrived. Apply it on or after that day.
• The indexation for this contract year has already been applied. Someone applied it before you did, and a year can only be applied once. Cancel and check the trail.
• Record the index series value for this contract year before applying its indexation. The contract uses an index series and this year's value is missing. Record it, then try again.

If a milestone's amount changes while the preview is open, Backed doesn't apply the old figures. It says An amount changed after this preview was read. Check the new figures below, then apply again. and shows the new preview.

A value recorded after a year was applied changes nothing already applied.

See also

• A contract
• Building a payment batch
• GST on payments