Buy from a vendor, from requisition to payment

The business ends with the goods in stock at the agreed price and the vendor paid exactly once for them. Purchasing makes the commitment (requisition, quotation, order); Inventory receives the goods; Payables books the invoice; Cash and bank pays.

Phase

Daily work

Who

The department that needs the goods raises the requisition; the buyer sources and orders; the import desk handles shipments; the warehouse receives; accounts payable books and pays

How often

Per purchase

Screens

Purchase Requisition, Purchase Quotation, Request For Quotation Reply, Quotation Compare, Purchase Order, Incoming Shipment, then the receipt, the vendor invoice and the payment

What it is for

Every step leaves a document the next one is checked against, so nothing is received that was not ordered, and nothing is invoiced that was not ordered and released. The rule people get wrong: nothing in Purchasing posts. The purchase order is a commitment. Stock and money move only on the receipt, the vendor invoice and the payment.

Before you start

• Purchasing is set up: see Set up purchasing.
• Vendors exist in the company (see Vendor In Legal Entity and How do I create a vendor?), with their purchase account in the Posting Profile.
• Items, units and purchase price lists (see Item and Item In Legal Entity); sites and warehouses (see Site and Warehouse).
• A ledger budget on the purchase accounts if purchases are budget-controlled: requisitions, orders and invoices are checked against the General Ledger Account Budget on release.

The process at a glance

#	Screen	Who	What you do	What it creates
1	Purchase Requisition	Requesting department	Lists what is needed	A requisition with quantities to be ordered
2	Purchase Quotation	Buyer	Asks vendors to price it (or Publish to Portal)	One enquiry per set of vendors
3	Request For Quotation Reply	Buyer	Records each vendor's offer	One reply per vendor
4	Quotation Compare	Buyer, manager	Awards each line and releases	The vendor and price on the requisition lines
5	Purchase Order	Buyer	Generated from the requisition, or copied	The commitment to the vendor
6	Incoming Shipment	Import desk	Groups an import's order lines, values them for customs	The shipment the import is received against
7	Receipt of the goods (Item Receipt for Purchase Order, in Inventory)	Warehouse	Receives against the order or the shipment	Stock in, and the posting of the receipt
8	Vendor Invoice, in Payables	Accounts payable	Invoices the received lines	The vendor's balance
9	Payment, in Payables	Accounts payable	Pays the invoice	The payment

Steps 2 to 4 are skipped when the vendor is already known: type Vendor and Price on the requisition lines, or raise the order directly. Step 6 is only for vendors marked foreign.

Steps

1. Open Purchase Requisition (Purchasing › Purchase). Fill the lines with item, quantity, site and account. Save.
   • Each line's quantity becomes the ceiling for the orders made from it.
2. Press Publish to Portal on the requisition, tick the vendors per line. A Purchase Quotation is made for each set of vendors.
3. Record each vendor's answer on Request For Quotation Reply. Prices, promised dates, scores, answers.
4. Open Quotation Compare for the quotation, award the lines, save and release.
   • The requisition lines now carry the awarded vendor and price.
5. On the requisition, press Generate Purchase Order. One Purchase Order per vendor, site and project. Or open a purchase order and copy the lines with the Purchase Requisition button.
   • On a released order, each line is checked against the budget.
   • From now on, received lines cannot be removed, reduced below what arrived, or re-dated.
6. For an import, make an Incoming Shipment with the order lines on the boat, the exchange rates, customs values and charges.
7. The warehouse receives against the released order, or against the shipment for an import on Item Receipt for Purchase Order (see How do I receive goods against a purchase order?). Lines with Delivery Stop are not offered.
8. Accounts payable books the vendor invoice on the Vendor Invoice for the received lines (see How do I enter a vendor invoice against a receipt?). Only orders whose Vendor for Invoice is that vendor, and without Invoice Stop, are offered.
9. The vendor is paid on the Payment screen (see How do I pay vendor invoices?); for cheque payments see also How do I clear a cheque?. An advance agreed on the order is paid earlier and shows on the order as Prepayment Cleared.

What posts

Nothing in Purchasing posts to the accounts. The postings of this process are made by the receipt (Inventory), the vendor invoice (Payables) and the payment (Cash and bank); see those areas' What posts pages: Inventory, Payables, Cash and bank. No Purchasing screen has Reverse; a purchasing document is changed or deleted, and deletion is refused once a later document has used it.

What happens

• The requisition's status moves from Requisition to Order Partial to Order Completed, and its quotation status follows the enquiry from sent to comparison completed.
• The purchase order keeps the line identity that the shipment, the receipt and the invoice follow.
• Each change of an order line's quantity is kept in its quantity history.
• An order on an inter-company vendor makes a sales order in the sister company.

How the variants differ

	Local purchase	Import	Return to vendor
Order	Purchase Type PO	Purchase Type PO, vendor marked foreign, foreign currency	Purchase Type RO, negative quantities
Before receipt	Nothing	Incoming Shipment	Nothing
The warehouse	Receives against the order	Receives against the shipment	Sends the goods back against the return order, on Purchase Return
Budget check	On release	On release	Not checked

Subcontracting, where the vendor makes the item from your components, is a variant of the local purchase: see Send components to a subcontractor.

Common mistakes

• "To Covert Purchase Requisition to Purchase order Required data is not complete." Generate Purchase Order needs lines with a Vendor and a Price. Award a compare or type them.
• The receipt does not offer the order. The order is not released, or its lines have Delivery Stop.
• The vendor invoice does not offer the order. Vendor for Invoice is another vendor, or Invoice Stop is ticked.
• "Back date not allowed". The company limits back-dated orders in the setting.
• The requisition cannot be saved: "Purchase Team Cannot be Empty". Untick Required Purchase Team on the company; the requisition screen has no such field.
• Old lines stay open for ever. Close them with Purchase Order Closure.

Related screens

• Purchase Requisition - the need.
• Purchase Quotation, Request For Quotation Reply, Quotation Compare - sourcing.
• Purchase Order - the commitment.
• Purchase Agreement - agreed prices the order takes.
• Incoming Shipment - imports.
• Purchase Order Closure - closing what will not come.
• Item Receipt for Purchase Order and Purchase Return - the goods in and back out, in Inventory.
• Vendor Invoice and Payment - the bill and the payment, in Payables.
• General Ledger Account Budget - the budget that requisitions, orders and invoices are checked against on release.
• Material Requirement Planning and Plan Order - requisitions raised from planning; see Plan to produce.
• Sales Order - an order on a sister company is created by its Sales Order; see Order to cash.
• Asset In Bulk and Asset Acquisition - asset purchase lines become assets; see How do I make assets from a purchase receipt?.
• Project Accounting Setting - the auto issue of project purchase orders.
• How do I make stock lines name a storage location? - when the warehouse keeps bins.
• Purchasing how-to - every task.