Record Purchases with Purchase Invoices

You create a purchase invoice or purchase order to record the cost of purchases and to track purchase ledger. If you need to control an inventory, purchase invoices and purchase orders are also used to dynamically update inventory levels so that you can minimise your inventory costs and provide better customer service. The purchasing costs, including service expenses, and inventory values that result from posting purchase invoices or orders contribute to profit figures and other financial KPIs on your Role Centre.

Create purchase invoices

In addition to buying physical items (Inventory item type), which affect inventory valuation, you can purchase services represented by time units. You can do this either with the Service item type or with the Resource line type.

When you receive the inventory items or when the purchased service is completed, you post the purchase invoice or order to update inventory and financial records and to activate payment to the supplier according to the payment terms. For more information, see Posting Purchases and Making Payments.

Caution

Do not post a purchase invoice for physical items until you receive the items and know the final cost of the purchase, including any additional charges. Otherwise, your inventory value and profit figures may be skewed.

To create a purchase invoice

The following describes how to create a purchase invoice. The steps are similar for a purchase order. The main difference is that purchase orders have additional fields and actions for physical handling of items.

  1. Choose the Lightbulb that opens the Tell Me feature. icon, enter Purchase Invoices, and then choose the related link.

  2. In the Supplier field, enter the name of an existing supplier.

    Other fields on the Purchase Invoice page are now filled with the standard information of the selected supplier. If the supplier is not registered, then follow these steps:

    1. In the Supplier field, enter the name of the new supplier.
    2. In the dialogue box about registering the new supplier, choose the Yes button.
    3. For more on how to fill in the supplier card, see Register New Suppliers.
    4. When you have completed the supplier card, choose the OK button to return to the Purchase Invoice page.
  3. Fill in the remaining fields on the Purchase Invoice page as necessary. Hover over a field to read a short description.

    You are now ready to fill in the purchase invoice lines with items or resources that you have purchased from the supplier.

    Note

    If you have set up recurring purchase lines for the supplier, such as a monthly replenishment order, then you can insert these lines on the invoice by choosing the Get Recurring Purchase Lines action.

  4. On the Lines FastTab, in the Item No. field, enter the number of an inventory item or service.

  5. In the Quantity field, enter the number of items to be purchased.

    The Line Amount field is updated to show the value in the Direct Unit Cost field multiplied by the value in the Quantity field.

    The price and line amount are shown with or without GST depending on what you selected in the Prices Including Tax field on the supplier card.

    The totals fields under the lines are automatically updated as you create or modify lines to display the amounts that will be posted to the ledgers.

  6. In the Invoice Discount Amount field, enter an amount that should be deducted from the value shown in the Total Incl. Tax field at the bottom of the invoice.

    Note

    If you have set up invoice discounts for the supplier, then the specified percentage value is automatically inserted in the Supplier Invoice Discount % field if the criteria are met, and the related amount is inserted in the Invoice Discount Amount field.

  7. When you receive the purchased items or services, choose Post.

The purchase is now reflected in inventory, resource ledgers, and financial records, and the supplier payment is activated. The purchase invoice is removed from the list of purchase invoices and replaced with a new document in the list of posted purchase invoices.

Note

In rare cases, the posted amounts may deviate from what is displayed in the totals fields. This is typically due to rounding calculations in relation to GST or US sales tax.

To check the amounts that will actually be posted, you can use the Statistics page, which takes into account the rounding calculations. Also, if you choose the Release action, the totals fields will be updated to include rounding calculations.

When to use purchase orders

You must use purchase orders if your purchasing process requires that you record partial receipts of an order quantity, for example, because the full quantity was not available at the supplier. If you sell items by delivering directly from your supplier to your customer, as a drop shipment, then you must also use purchase orders. For more information, see Make Drop Shipments. In all other aspects, purchase orders work the same way as purchase invoices. The following procedure is based on a purchase invoice. The steps are similar for a purchase order.



Selling non-inventory items

The items on a purchase invoice can be of type Inventory, Service, Resource and Non-Inventory to specify if the item is a physical inventory unit, a labour time unit, or a physical unit that is not kept on inventory. For more information, see Register New Items. The purchase invoice process is the same for all three item types.

Note

With the Resource purchase line type, you can also purchase external resources, for example, to invoice a supplier for work delivered. For more information, see Set Up Resources.

To use a purchased resource, you may need to set the resource's capacity and manually assign it to a job. Purchasing a resource will create a resource ledger entry, however, resource ledger entries are not tracked for quantity and value as, for example, items are. If quantity and value tracking is required, then consider using other line item types.

Posted invoices

Once the invoice has been posted, you can find it in the list of posted invoices. Both the Posted Sales Invoices list and the Posted Purchase Invoices list show the posted invoices with the final invoice numbers. From the list, you can look up each posted invoice, and you can correct or cancel a posted invoice.

For each posted invoice, you can look up statistics, dimensions, and the ledger entries that are the result of the posted invoice. You can also print or send the posted invoice.

You can easily correct or cancel a posted purchase invoice before you pay the supplier. This is useful if you want to correct a typing mistake or if you want to change the purchase early in the order process. For more information, see Correct or Cancel Unpaid Purchase Invoices. If you have already paid for items or services on the posted purchase invoice, then you must create a purchase CR/Adj note to reverse the purchase. For more information, see Process Purchase Returns or Cancellations.

Open the Posted Purchase Invoices list in Business Central.

External document number

On purchase documents and journals, you can specify a document number that refers to the supplier's numbering system. Use this field to record the number that the supplier assigned to the order, invoice, or CR/Adj note. You can then use the number later if, for some reason, you need to search for the posted entry using this number.

The Ext. Doc. No. Mandatory field in the Purchases & Payables Setup page specifies whether it is mandatory to enter an external document number in the following situations:

  • In the Supplier Invoice No. field, Supplier Order No. field, or the Supplier CR/Adj Note No. field on a purchase header

  • In the External Document No. field on a general journal line, where the Document Type field is set to Invoice, CR/Adj Note, or Finance Charge Memo, and the Account Type field is set to Supplier.

If you select this field, it will not be possible to post an invoice, a CR/Adj note, or the type of general journal line described above without an external document number.

The external document number is included in posted documents where you can search by the relevant number. You can also search using the external document number when navigating on supplier ledger entries.

A different way to handle external document numbers is to use the Your Reference field. If you use the Your Reference field, the number will be included in posted documents, and you can search by it in the same way as for values from External Document No. fields. But the field is not available on journal lines.

See Also

Purchasing
Setting Up Purchasing
Set Up Resources
Posting Purchases
Request Quotes
Purchase Items for a Sale
Register New Suppliers
Prepare Drop Shipments
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