How does the Purchase (Un-Ordered) Product Invoicing Work?

Entering Supplier Invoices which have not been the subject of Supplier Orders.

Written By Gerry Mckeown ()

Updated at May 26th, 2021

1.     Introduction:

You can operate the Purchasing System without Purchase Orders if you wish. Additionally, even if you operate Purchase Ordering, there are certain Invoices which you may not want to Pre-Order – such as bills for Electricity, Rates, Rent, etc.  This program facilitates the entry of Supplier (Vendor) Invoices unaccompanied by an Order.  Its companion program “How does the Purchase Ordering System Work?” details the instructions for Supplier (Vendor) Invoicing where a Purchase Order has been raised beforehand.      

Purchase Invoicing is, or can be, integrated with the Inventory Management system, either fully in the context of quantities management, or partially in the context of non-stocked goods and services.   It can also be optionally implemented with Purchasing Approval and/or Budget Holders (How do I Implement Purchasing Approval with Budget Holders?” and “How do I Implement Purchasing Approval for Non-Budget Holders?”). 

Not all Orders need to be entered into the system:  Small low value Items (e.g. Stationery, Refreshments, etc.) can be processed through the Batch Entry facility (“How does the Batch Purchase Invoice Work?”) without the necessity of a preceding Purchase Order.   This, however, is a security risk as it bypasses the Ordering (and Approval) processes and, if it’s a concern, then you should remove the Batch Invoicing option from your Menus (or severely restrict its usage) - thereby requiring all Invoice processing to be carried out using the “Item Invoices” Menu option.  Refer to Section 3. of the Article “How do I use the Client Administration System Layer to Add End Users and Control their Permissions?” which details the control of the Menu Options which users can or cannot access.

The Purchase Invoicing facility has a number of pre-requisites.  These include the set-up of the Supplier (Vendor) Master table, the Inventory Master table (Stock and/or Non-Stock), and various Code tables including General Ledger Codes, Taxes and Currencies.  

2.     Purchase Invoice (Item/Product) Entry:

To enter a new Purchase Invoice click on the highlighted area “New Item Invoice” as shown here;

This will bring up the following screen;

The Invoice No. is the Supplier’s (Vendors) Invoice Number. 

Next, choose the Supplier (Vendors)  from the Drop Down provided which will retrieve and populate his details on the Invoice Header.  The system now checks for duplicate Invoice Nos. from that Supplier (Vendor)  and will warn the User if it’s found to already be in the system.  It will not, however, prevent the user from continuing with the Invoice

The Order Date is defaulted to today’s date, but you can change it using the Drop Down.

The Order No. is irrelevant since this is an Invoice without an Order.

The Order Date and Expected Delivery Date are also largely irrelevant. They are also defaulted to today’s date but you can change them using the Drop Downs.

The Use ACC VAT (Tax) Code and its accompanying Drop Down indicate that this Rate of VAT (Tax) is to be used on all Lines for this Invoice instead of the VAT (Tax) Codes associated with the Items  When used it is a default and can be over-ridden on any line. 

Some Suppliers (Vendors) always supply the same part of the Company. Defaulted from the Supplier (Vendor) Master record where it is an optional entry, this is the default “Department” for this Supplier (Vendor).  A BI Code is a sub-division of the company and its uses and setup are detailed in the article “How do I Implement Extended Business Analysis?”.  It is not a mandatory entry as you may not wish to use Extended Business Analysis or the Invoice might consist of several BI Codes.  If there is an entry here, then it will be presented on each line of the Invoice where it can be re-directed to another department or cost centre if required.  However, if you are also using Purchase Invoice approval, then note that only one BI Code is permitted per Invoice.

Supplier (Vendors) Area is defaulted from the Supplier’s (Vendors) Master record and can be over-ridden here.

OCR Checked is only used if the Invoice has arrived from a third party system such as EPOS or the Scanning solution.  It indicates, when ticked, that the Invoice has been examined and has had its General Ledger Codes and BI Codes added.

Supplier (Vendors) Contact is the Primary Contact from the Supplier’s (Vendors) Master record.

Turning to the lower part of the screen which deals with the entry of the Order Lines, you can now temporarily remove the Supplier (Vendor) Detail in the upper half of the screen by clicking “Display Lines Only”.   Click again to restore.  Similarly, the button highlighted in the Red Circle can be used to display/un-display details from the Inventory file for the Item nominated on that Invoice Line.

The Item is retrieved from the Inventory Product (Item) file using the Drop Down together with its Description and default General Ledger Posting Code which can be changed if required.

If you are using Extended Business Analysis then you will be asked to supply a BI Code in this next field – although it might be inherited from the Invoice Header, in which case it can be over-ridden here.

Next key in the Quantity of Product invoiced by the Supplier.  The Unit Price is defaulted from the “Last Cost” field on the Inventory Master record.  If the Supplier’s (Vendors) Invoice has a different Price, then you can over-ride the default if the price is deemed to be acceptable.

The VAT (Tax) Rate is either inherited from the Invoice Header (which in turn is inherited from the Supplier’s (Vendors) Master record) or from the VAT (Tax) Rate associated with this Item on the Inventory file.  In both cases it is a default rate and can be over-ridden here if the Supplier’s (Vendors) Invoice differs.

If there is a Discount Percentage on the Supplier’s (Vendors) record then this will be presented and applied.  You can either accept this Rate and Calculation or you can input a fixed amount in the Disc. Amount field and the system will work out the percentage.  If the Supplier (Vendor) hasn’t allowed Discount (or has given a different amount) and this is acceptable, then you can over-ride the amount by keying in this amount in the “Disc. Amount” field.  The VAT (Tax) will then be recalculated and also the Line total.

Finally, you can add a Note to each Order Line.

Exchange Rate.  If the Supplier (Vendor) is a Foreign Currency Supplier (Vendor) then, at the start of the Invoice, you will be presented with an Exchange Rate from the Currency table at the lower end of the screen, which you can over-ride if necessary.

In this instance, the Invoice Lines costs will be calculated taking account of this Exchange Rate.  However, you can also over-ride the calculated foreign currency Price to correspond to that of the Supplier’s (Vendors) Invoice for each Line.  The totals for both Currencies are shown at the bottom of your system Invoice.

If there are additional lines on the Supplier’s (Vendors) Invoice, for example, Carriage, Duty, etc. then you can either add (if not already present) a new Service Type to your Item/Service Table without leaving the current process by clicking here;

which will bring up the Item/Inventory maintenance facility in an overlay window where you can fill in the details.  Alternatively, if the extra charges are related to a particular Line on the Invoice then you can add a new line with the same Item Code, a quantity of 0.00 and put the extra charge in the “Net” column.  This additional cost will subsequently be used in the calculation of the overall Average Cost for the Item;

On the second Tab of the Invoice Entry screen the Forecasted Payment Date is worked out (at the end of all Lines on the Invoice) based on your Company’s payment history with this Supplier (Vendor).  If needs be you can change this date using the Drop Down.  The date will be Cash Flow Forecasting to predict when this Invoice will be paid.

The third Tab on the Order Entry screen allows you to add internal Notes to the Supplier (Vendor) Invoice;

3.     Purchase Invoice Amendment:

Prior to “Posting” (see 4. below) you can recall the Invoice at any time in order to amend it for any reason;

Click on the Invoice No. as highlighted above to recall the Invoice;

You can now Delete Lines, Add new ones, change Quantities and Prices, Vat (Tax) Rates, add Line Notes and so on.  You can also amend General Ledger Codes and BI Codes codes.  Click on the Circle (highlighted) or in the Item Code Drop Down to carry out these actions on any or all of the lines.

Alternatively, you can “Duplicate” the Invoice which will create a replica to which you can now add a new “Invoice No:” and then modify it (including adding new Invoice Lines) as you require before “Saving” it.

4.     Posting Invoices to the Accounts System:

At this stage your Supplier (Vendor) Invoice has been entered and is available to View, attach Documents, and Notes.  It has not yet been posted to the Supplier’s (Vendors) Account in the Creditors Ledger or to the General Ledger.  However, the Inventory Management System was updated with Quantities and Costs when you clicked “Save” on completion of the Invoice.  (If you now delete Lines from the Invoice, these Quantities will be reversed).

To post the Invoice to the Ledgers, select the Invoices you want to post as shown below and then click on “Post Selected”.

The Invoice will now disappear from this Grid and will appear in the Supplier’s (Vendors) Account Grid which you can access by clicking on the Balance field below;

Any further amendment can only be made by following the instructions detailed in the article “How do I Amend, Correct or Delete a Transaction?”.

5.     Managing Previously Entered Purchase Item Invoices:

To view or edit an existing Invoice simple go to the Purchases > Item Invoices screen and enter your search criteria in any of the column headers. This screen defaults to Processed Invoices but you can clear this by Clicking the Clear option on the Filter;

You can duplicate or copy an order at any time by on the Purchases > Item Invoices screen going to Actions > Duplicate or by opening it and clicking on the 'Duplicate' button. This will copy the contents of the invoice to a new Invoice which will be saved with a new number when you process it. Of course, you can change the details of the ‘copied’ order as required before saving it. In fact, the duplicate Invoice may have completely different line details than the original but you may want just the original ‘header’ information to remain.