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Ordering And Receiving

Ordering Items

Receiving Items

Invoicing

Ordering or Transferring?

Suggested Orders

Allocated Orders

Allocating Stock From Warehouses

Reviewing Orders

Backordering

Ordering Items

When you want to order items from a supplier, you raise a purchase order. A purchase order is simply a list of the items and the required quantities. The sending/receiving of purchase orders and transfer requests may be performed electronically to the supplier via the B2B Service. Within an order an item is deemed InActive if the Active check box on the Basic tab within Items is not checked and cannot be added to a Purchase Order.

Purchase orders can be entered manually or can be suggested by the system (see Suggested Orders) based on current and required stock levels. The PO updates the On Order quantity of each item to show we are expecting stock to arrive.

Receiving Items

Once the items are delivered, you can create a goods receipt. A goods receipt records the items that were received, ensuring accurate stock levels are maintained. A goods receipt is only concerned with the quantity of goods received, not the cost. When a goods receipt is entered, the average cost of the items will be updated using the expected cost of the item. The actual cost that was paid is entered later on in the invoice transaction.

A goods receipt is usually linked to a purchase order, although this would not be the case if the original purchase order were made verbally. (Even if a purchase order was made verbally, its still a good idea to create a purchase order so the system knows how much stock it can expect to receive.) If no purchase order was created, you can simply create a goods receipt and enter the items directly. If a purchase order was created, the goods receipt can be matched to the purchase order. This will automatically import all the items from the original purchase order. All you have to do is enter the received quantities.

If you are in a small environment, you can use invoice matching to also receive goods so that you don't need to create a goods receipt at all. However, in a larger environment, you may find it more useful to separate the receiving and costing functions.

A goods receipt will update:

At a later date, when the invoice is entered, the average cost is updated again to reflect what was actually paid for the delivered goods.

When goods are received, the goods receipt shows the original purchase order number on the receipt as a reference. This allows easy reconciliation with the purchase order and the goods receipt.

Invoicing

When an invoice for the items is received, it is entered into the system. The system will then update the average cost of the item to show the amount actually paid. It will also write a transaction to the supplier's account to show we owe the supplier money.

Invoices can be used in two different ways. It can be used as a separate part of the receiving process. The goods are received and entered on a goods receipt. The invoice is then entered as a separate transaction. This is useful if the floor staff is just concerned with receiving stock and there is a back office person who can enter all the invoices together later on. Alternatively, invoices can be used as the receiving process. Instead of entering the goods receipt as a separate transaction, no goods receipt is entered at all. Only the invoice is entered and it takes care of receiving and the costing is one transaction. This is useful in a small environment where the same person would normally enter both transactions.

Like a goods receipt, an invoice is usually linked to a purchase order. If no purchase order was created, you can simply create an invoice and enter the items directly. If a purchase order was created, the invoice can be matched to the purchase order. This will automatically import all the items from the original purchase order. All you have to do is validate the quantities and the costs.

Multiple invoices can be matched to a single purchase order as long as the status of the applicable line items is changed from 'Received” to' 'More To Come'. See How Do I Record Multiple Invoices? for more information.

The 'Extra Invoice Costs' is a function which is used to record additional costs in association with an invoice. Lets say for example the goods came through customs and there is an additional custom duty to pay. This custom amount will not be reflected on the original invoice of the goods but still impacts on the cost of the goods. Other examples may include freight or to add a distributed service fee amount to a previous invoice - useful when the invoiced and received quantities do not match and the service fee originally applied was only a partial amount.

Using this function you can create a new invoice and link it to the original one. This will import all the items from that original invoice. Then you can distribute this extra value over the items. You can distribute the value based on Cartons, Weight or Value.

When you accept the transaction, the system will generate adjustment entries for each item and adjust the average cost of the item. You can see the impact of this in Stock Audit. It will also generate an entry to the supplier's credit account to show that you owe them money.

When you create an Extra Invoice Cost transaction, you will be asked for the Invoice Type. You can create your own invoice types by using the Reason function. When you select this type you can also select the tax code that will be used, if any.

Ordering or Transferring?

If you need stock, should it be ordered from the supplier? Or would it be better to transfer it from the warehouse? And if you do need to order it, do you really have to create a separate purchase order for each supplier? Let the system work it out for you!

Lets look at how the system can tell if it can do a transfer or not. The Warehouses section explains how you can set up the warehouse locations so that the system knows which items are available from where. You then set the Transfer New Stock From Warehouse (No Supplier Orders) option on the Advanced tab of Items for each that you want to transfer from a warehouse. Now the system knows which items can be transferred from which warehouse. Once the system determines an item can be transferred, it will always raise a transfer request. If the warehouse does not have stock, it is expected the warehouse will raise the purchase order and transfer the stock once it arrives.

So how does the system know whether to do an order or a transfer request? Well, it uses another transaction called a Required Stock transaction. Instead of working out whether you need to raise a purchase order or a transfer request, you create a single Required Stock transaction. In this transaction, you add all the items you want and how much you need. When you accept a Required Stock transaction, the system will automatically create all required purchase orders and transfers for you. The system uses the same approach when doing suggested orders. It creates a single Required Stock transaction showing what stock is required for a location. From this it is able to generate purchase orders and transfer requests.

Suggested Orders

Instead of creating purchase orders or transfers manually, you can let the system suggest them for you. See Suggested Ordering for more information.

Allocated Orders

Lets say you have to create a purchase order for the same item for lots of stores. How can you do this quickly and how can you work out how much to order? The Allocated Orders function is used for this specific purpose. It allows you to enter an item, and then for each location specify the required quantity. Imagine a spreadsheet with one item per row and one location per column. This is similar to how the allocated orders works. The system can use rates of sale to help you set the quantity for the locations. Also, similar locations can be grouped together so you don't have to enter a quantity for each location. Once you have the details entered, the system can create purchase orders and transfer requests for you.

Allocating Stock From Warehouses

What if you have stock sitting in the warehouse and you want to send it out to the stores? How can you do this quickly? Again, the Allocated Orders function can be used to do this. You can specify the warehouse location and then the locations you want to send the stock to. You can add your items, do allocations based on rates of sale, and so on. When finished, the system will create Transfer Requests for each location.

Reviewing Orders

Once the system has created orders for you (either using suggested orders or allocated orders), the Review Orders function will let you review the individual transactions before you actually accept them. You can then accept or reject the transactions as a batch, instead of working each one separately.

Backordering

Lets say you ordered ten units but only six were received. What happens to the other four? The items can go on back order, that is you expect the supplier will supply the remaining items later on without you creating another purchase order, or the items have to be marked as received and no more stock will come, in which case you need to create a new purchase order.

Whether an item can be back ordered depends on two conditions:

Both have to be true for back orders to be allowed. If one of the conditions is false, the item cannot be placed on back order.

Use the Allow Backorder option on the Ordering tab of the Supplier function to indicate if a supplier supports back ordering.

Use the Allow Backorder For Incomplete Purchase Orders option on the Inventory Options tab of the Location function to indicate if a location supports back ordering.

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