Purchase orders
A purchase order lists the supplier, products, quantities and prices. It moves through these statuses:
| Status | Meaning |
|---|---|
| Draft | Being prepared. No number yet, nothing has moved. |
| Confirmed | Confirmed by a user with the approval permission. The order gets its number and goods can be received against it. |
| Partially received | Some of the ordered quantity has arrived; the rest is still expected. |
| Received | Everything ordered has arrived. |
| Closed | Part was received and the rest is not coming. You are billed only for what was received. |
| Cancelled | The order will not go ahead. |
Confirming a purchase order is a separate permission from creating one, so a buyer can prepare orders that an owner or manager confirms. When goods are bought and collected at the same time, a direct purchase creates, confirms and receives the order in one step.
Low stock can start the process too: Reorder low stock opens a draft purchase order for every product at or below its reorder level.
Receiving in parts
Suppliers often deliver an order over several days. Each goods receipt records:
- the warehouse the goods went into,
- the quantity that actually arrived for each line, and
- the receipt date.
Stock goes up in that warehouse, the weighted-average cost is updated, and the order shows how much has been received against how much was ordered. Store keepers can be given permission to record receipts without being able to create or confirm orders.
Supplier bills
Recording a receipt also creates the supplier bill for what was received, with the supplier’s own bill number and a due date if you have them. What you owe is therefore current as soon as goods arrive, not when someone gets round to entering the bill.
Purchase returns
A purchase return sends goods back against the receipt they came in on. Once approved, it takes the stock out of the warehouse and reduces the balance due on the supplier’s bill. The original bill is never edited, so the history stays intact. Because the return reverses a specific receipt at the cost it came in at, the remaining stock keeps a correct average cost.
What you owe suppliers
- Supplier ledger: bills, returns and payments for each supplier, with a running balance
- Payments to suppliers recorded from your bank accounts or cash
- Payables aging: unpaid bills grouped by how long they have been open
- Purchases summary and payables summary reports, by month
A worked example
Figures are invented to explain the flow, before sales tax.
- You order 100 cartons at Rs 900 each and the order is confirmed. Nothing has arrived, so stock and balances do not change.
- 60 cartons arrive at the Karachi godown. Stock rises by 60, the order shows Partially received, and a supplier bill for Rs 54,000 is created.
- The supplier says the remaining 40 will not come. You close the order: it stays billed at Rs 54,000 for the 60 received.
- You pay Rs 30,000 from your bank account. The supplier ledger shows Rs 24,000 still owed.