With the Purchase order document, you can record preliminary agreement on terms and delivery time for goods purchased from the supplier. As a purchase management tool, it allows you to follow up the fulfillment of supplier's liabilities and your personal financial liabilities.
You can enable this option in Master data and settings – Master data and sections – Purchases – Purchase orders.
Purchase order generation
Purchase orders can be generated automatically according to the calculation of goods demand fulfillment based on supply parameters—delivery time from supplier, average daily consumption, etc.
You can create a purchase order manually by using one of the following methods:
- From document list
- Based on sales order
- Based on transaction
Creating purchase orders from PO list
You can create a purchase order from the PO list in the Purchases section. The PO can be registered under the agreement with supplier or without it.
If there is only one agreement with supplier, it will be automatically specified in the purchase order when entering the supplier name.
If you register purchase orders under the agreement, the main purchase conditions (currency, supplier price type, VAT taxation, payment parameters, contract usage, etc.) are filled in automatically. If there is a price restriction in the agreement (the Prohibit purchases for higher prices than those specified in the agreement check box is selected), it will be checked whether price specified in the purchase order match the supplier price type specified in the agreement. The maximum allowable purchase price that is set in the allowable price range settings are controlled as well.
When registering delivery documents under the agreement, discount and markup values specified in the agreement are controlled.
The terms of agreement are controlled only if purchase conditions variance is disabled for the user. In this case, the document with variance from purchase conditions will not be posted. If the user (for example, Sales Manager) has the right to vary from purchase conditions, the document will be posted. You can generate the Variance from purchase conditions context report to compare purchase conditions in the document and in the agreement in details.
When creating a new order, you should fill in parameters (a warehouse, a company, taxation, etc.) specified in the agreement. If these parameters are not specified in the agreement or documents are registered without the agreement, parameters as warehouse and company are filled in according to their usage statistics. For example, if you register three purchase documents for the same warehouse, this warehouse will be automatically selected during registration of the next purchase document.
Purchase order registration based on sales order
You can choose this option if your company uses the Order against order scheme. For the Sales Manager to register purchase orders based on sales orders, assign the Purchase Manager rights to him or her. It means that Sales Manager must be added to the Procurement officers access group with Sales Manager profile.
You can register purchase orders based on sales orders having For execution status. The sales order must contain information on goods to supply. In the tabular section of the sales order, the supply option (the Actions column) must be filled in with To supply or Provide on pegging basis, and estimated shipment date must be specified. Based on a sales order, you can register a purchase order to one or more suppliers, or several purchase orders to different suppliers.
When you register a PO to a supplier based on a sales order, fill in the tabular section of the document with sales order items to order (these items have the To supply or Provide on pegging basis supply option). The purchase order is created with the On approval status without specifying supplier name or delivery dates. Fill in supplier information, price and delivery date manually, and then post the document.
You can create purchase orders to several suppliers if you have already registered goods delivery ordered by the customer before. In this case, you will see extra information about the supplier who delivered these goods before for each item you need to order.
When filling in supplier information, the following algorithm is used. Information is analyzed on last three deliveries of goods (the Purchase of goods and services document). If you specify the same supplier twice in the last three delivery documents, supplier information will be automatically added. If goods are delivered from different suppliers, then supplier information is not filled in, and you should enter it manually.
Click Fill in the supplier in selected lines to specify the same supplier for several goods. You can see a requested shipment date filled in the sales order. In the Receipt date field, you can fill in the scheduled delivery date.
To reserve goods supply against the sales order, set the Provide on pegging basis supply option in the sales order. If you use this supply option, the sales order will be displayed in the Assignment column in the purchase order and in the receipt document.
Information about purchase orders created on the basis of sales orders will be shown in the hierarchical structure. After receiving goods from suppliers according to the previously generated purchase orders, you can carry out shipment against sales order.
Purchase order registration based on transaction
You can create a purchase order based on a transaction. If you keep separate accounting of goods within the transaction, the tabular section of the purchase order will contain a list of goods that require supply by sales orders registered within the current transaction.
The transaction under which the purchase order was created will be automatically specified in the generated purchase order.
You will find transaction information in the supply document upon goods receipt. If you keep separate accounting of goods within the transaction, you can analyze gross profit by a certain transaction considering supply costs registered for this transaction.
You can also keep separate accounting for each purchase order registered within the transaction.
Purchase order approval
Before being passed to a supplier, the purchase order can be approved within the company. You can enable this option in Master data and settings – Master data and sections – Purchases – Purchase order approval.
In the settings, select users, persons responsible for logistic, financial, price, and commercial terms and conditions.
During the approval process, you can edit the purchase order, that is why all document versions are saved and kept. It is recommended that you enable versioning of the Purchase order documents (Enable versioning button).
Results of approval process are stored in the Purchase approvals list. To open the list, click Approval on the navigation panel of the PO form.
To start a new business process, click Create.
After business process start, users responsible for approval of each type of conditions will see a list of purchase orders requiring approval on their desktops. For example, if the prices in the purchase order are changed, this order is a task for the person responsible for price approval.
If the PO is changed during the approval process, this information will be recorded in the approver's task (only if the versioning is enabled).
When completing the task, the approver can control parameter variance set in the purchase order from those included in the agreement with the help of the Variance from purchase conditions report.
Person responsible for commercial conditions approval analyzes all approval results. This person makes a final decision on the purchase order approval.
To view the results of PO approval, use the Approval results report. This report shows a list of incomplete purchase order approval processes. A list of visas is displayed for each process. You can also view a list of all approval processes including completed ones.
The status of purchase order will not change if at least one approver rejected the approval. Procurement Manager who sent the PO for approval analyzes the approval results, eliminates the remarks, and then sends the purchase order for an additional approval starting the Purchase approval business process once again. The result of approval is the Approved status set to the purchase order.
Monitoring order fulfillment by supplier
You can follow up supplier's liability fulfillment by using statuses and states. Status is one of the most important stages of the order life cycle. Status can have the following values:
- On approval – approval within the company is expected.
- Approved – approved within the company.
- Confirmed – confirmation of goods shipment from supplier is received.
- Closed – the order is complete.
Manager changes the status manually after the PO is approved and corresponding steps are paid according to the supplier's data. You can enable the status usage option in Master data and settings – Master data and sections – Purchases – Purchase order statuses.
State is information on purchase order that is calculated automatically according to the infobase data (status, payment, warehouse availability, etc.). For example, the Prepayment is expected before receipt state is set if advance payment to supplier is expected. If the order includes purchase on credit basis and the goods are received at the warehouse, then the Payment is expected after receipt state is set.
In the purchase order list, you can filter orders by their states and automatically change the statuses for highlighted orders in the list.
Overdue orders are highlighted in red in the list. To see the orders that are due tomorrow, in a week, etc., filter the orders by due date. You can filter the orders by due date so that urgent orders appear at the top of the list.
The order list displays percentage of order fulfillment according to the receipt, payment and debt information. This information will be displayed only if settlements are kept by orders.
You can always run the Execution state report. You can generate the report for one or several purchase orders selected from the list (click Reports – Execution state).
The report provides detailed information on payment and shipment against order.
Payment registration against order
Payment registration against the order depends on the selected payment terms in Master data and settings – Master data and sections –Purchases. When selecting Prepayment and/or credit payment terms, you can use only these terms or their combination (partly prepayment and partly credit).
If you select Arbitrary number of payment steps, you can pay for the Purchase order in three steps:
- Advance payment (before confirmation)
- Prepayment (before receipt)
- Credit (after receipt)
For each step, you can specify a date and an amount of payment, which allows you to plan cash outflow and create a payment calendar.
Once payment by the Advance payment (before confirmation) and Prepayment (before receipt) steps are made, the order is assigned with a certain status. Steps of payment with delay and interest can be committed in the Purchase terms agreement document and translated to the purchase order.
You can also fill in the payment schedule according to the previous orders.
If the company monitors cash outflow, register the Expenditure request document before paying to supplier.
You can generate the expenditure request based on Purchase order. In the Purchase orders list, you can select all orders expecting payment and generate Expenditure request.
If payment is divided into several steps, the request will be generated for the unpaid balance on the current step.
If payment requests are not used, the Purchase order document becomes a reference for registration of cash debiting documents.
Payment by the Credit after receipt step can be registered after goods are received at the warehouse.
Letter of authority for goods receipt
To register unified forms M-2 and M-2a (letter of authority), the Letter of authority for goods receipt document is used. To use letters of authority, select Master data and settings – Master data and sections – Cash flow – Issued letters of authority for receipt of goods and materials.
You can create the document by using the following methods:
- Go to Purchases – Letters of authority for goods receipt. On the Bases for issuing (goods receipt) tab, click Create letter of authority.
- Go to Purchases – Letters of authority for goods receipt. On the Letters of authority tab, click Create.
- Enter the document based on the Purchase order.
The document is used to keep records of issued letters of authority.
There are the following steps of operating with letters of authority:
- Registration and printing of letter of authority. Basis for issuing a letter of authority for goods receipt is the Purchase order document.
- Letter of authority usage. Usage of letter of authority is tracked: whether the goods receipt against a letter of authority was registered and whether the letter of authority is valid.
- Cancellation of expired letter of authority.
In the list of LOAs, you can follow up the state of issued letters of authority: who a letter of authority is issued to, validity period, usage state, canceled letters of authority, etc.
Besides letters of authority for goods receipt, you can register letters of authority for receiving cash from customers and tangible assets. Information on received tangible assets can be stored outside the infobase. You can enter this information as a custom text (tangible asset name).
You can view the list of all registered letters of authority and basis for them in Cash outflow – Advance holders – Letters of authority for cash receipt.