Overview
Follow a purchase from setup and commitment through receiving, billing, returns, and settlement.
Before you begin
Finance must enable Purchasing Setup for the active subsidiary with Accrued Purchases, Purchases Returned Not Credited, Vendor Prepayment, default A/P account, and default location. Vendors, item assignments, currencies, tax/WHT, tracking settings, and open posting periods must be ready. Approval permissions and steps are configured rather than assumed from a job title.
Main task
- Create a PO for fictional supplier Example Supply: 10 stock units at 100 each. Select location, currency, VAT/WHT, and required dimensions; review total and submit for approval.
- After final approval, receive the quantities actually delivered. For a partial receipt of 6 units, record 6 and the required tracking details; keep the remaining 4 open.
- Open the posted receipt and inspect quantities, inventory movement, and accrual accounting. The PO remains a non-posting commitment.
- Create the vendor bill from the PO using eligible received quantities and the supplier invoice reference. Review receipt allocations and tax/WHT before approving the bill.
- If an advance exists, review the posted Vendor Prepayment and explicitly apply available funds through supported settlement actions. Otherwise settle the approved bill with a Bill Payment.
- For a return, create and approve a vendor return authorization, post its shipment against the source receipt, and create the linked bill credit. Apply the credit to the eligible bill.
- Review the PO’s received/billed/returned quantities, related records, open vendor balances, and purchasing exception reports.
Check the result
Every financial or stock document retains a link to its source. Purchase-order approval, receipt posting, bill posting, credit application, and cash settlement are separate events. The PO’s derived status reflects actual quantities. Closing a PO closes open receiving quantity; it does not erase posted receipts, bills, or balances.
If something goes wrong
If a received quantity is wrong, use the supported receipt reversal rather than amending the approved PO around posted receipts. Billing above eligible quantities, duplicate supplier references, missing tracking detail, and closed periods require correction at their source. Investigate outstanding accruals and returned-not-credited balances through related documents.
Accounting checkpoints
| Stage | What to review |
|---|---|
| Approved PO | Commitment and approved quantities; no purchase GL |
| Posted receipt | Stock or configured receipt impact and Accrued Purchases |
| Posted bill | Vendor liability, receipt clearing, VAT/WHT, and bill allocations |
| Vendor advance/application | Prepayment asset and the explicit amount consumed |
| Return shipment/credit | Returned stock, returned-not-credited clearing, and vendor credit |
| Bill payment | Cash, credit/advance applications, and remaining payable |
Amounts and account choices depend on configuration and line type. Review the actual GL Impact instead of treating this table as a universal journal recipe.