Purchase order posting

The Purchase order tab on the Inventory posting profiles page controls how purchase orders post to the general ledger. Two main activities post to the general ledger for a purchase order:

• Product receipt
• Invoice

For a physical transaction (product receipt) to post to the general ledger on a purchase order, select the following checkboxes:

• On the Inventory and warehouse management parameters page, the Post product receipt in ledger checkbox.
• On the Item model groups page, the Post physical inventory and Accrue liability on product receipt checkboxes.

The main accounts must be specified in the Inventory posting profile page for the following posting types:

• Cost of purchased materials received
• Purchase expenditure, uninvoiced
• Purchase, accrual

For a financial transaction (invoice) to post to the general ledger on a purchase order, the following conditions must be met:

• The Post financial inventory checkbox must be selected in the Item model groups page for the item selected on the purchase order line.
• The main accounts must be specified in the Inventory posting profile page for the following posting types:
  • Cost of purchased materials invoiced
  • Purchase expenditure for product
  • Purchase expenditure for expense
  • Discount (optional)

Fixed receipt price posting

You can use fixed receipt price as the standard cost for a product as an alternative to selecting the Standard cost option in the Inventory model field on the Item model groups page for an item. The main difference is that when Fixed receipt price is used, the current cost price is used for the item when the inventory receipt is posted. There's no cost revaluation process for Fixed receipt price; when a financial update is posted, the current cost price is used at the time of posting. If there's a difference between the cost price used at receipt and invoice, the variance posts to the fixed receipt price profit and loss accounts.

To use a fixed receipt price for a product, configure the following:

• On the Item model groups page, select the Post physical inventory and the Fixed receipt price checkboxes.
• On the Inventory and warehouse management parameters page, select the Post packing slip in ledger checkbox.
• On the Inventory posting profile page, specify the main accounts for the following posting types:
  • Fixed receipt price profit
  • Fixed receipt price loss
  • Fixed receipt price offset

For more information, see Fixed receipt price.

Purchase charges and stock variation posting

If you plan to account for purchase charges and stock variations, do the following:

• On the Accounts payable parameters page on the Invoice tab, select the Post to charge account in ledger checkbox.
• On the Item model groups page for the item selected on the purchase order line, select the Post physical inventory, Post financial inventory, and Accrue liability on product receipt checkboxes.
• On the Procurement and sourcing parameters page, select the Generate charges on product receipt checkbox.
• On the Inventory and warehouse management parameters page, select the Post packing slip in ledger checkbox.

On the Inventory posting profile page, you must specify the main accounts for the following posting types:

• Purchase expenditure, uninvoiced
• Purchase expenditure for product
• Stock variation

Note

The Charge posting type isn't used when the Post to charge account in ledger parameter is selected.

For more information, see Post to charge account accounting principle.

Sample posting profile configuration

The following table shows examples of the default posting types with sample main accounts and descriptions:

• The Clearing account column indicates that the posting type is a clearing account. The amount posted in this account is automatically reversed when a later transaction is posted.
• The P/F column indicates P for physical posting and F for financial posting.
• The Follow column indicates if the main account for a specific posting type is typically the same as another posting type. The value in the column indicates the posting type that's typically used.

Note

The main accounts and main account names are only suggestions. It's recommended that you work with your accountant to determine the best configuration for your business needs.

Posting type	Main account example	Main account name example	Account type	Debit/ Credit?	Clearing account	P/F	Follow	Description
Cost of purchased materials received	140100 140101	Materials inventory Materials shipped not invoiced	Asset	Debit	Yes	P	Cost of purchased materials invoiced	Used when a purchase order product receipt is posted, the offset to the account is Purchase expenditure, uninvoiced. The amount in this account is reversed when a purchase order invoice is posted.
Purchase expenditure, uninvoiced	600180	Material receipts	Expense	Debit	Yes	P		Used when a purchase order product receipt is posted. Two vouchers are created for the receipt to track purchase price variances when standard cost is used. The offset to the account on the first voucher is Purchase accrual. The offset on the second voucher is the sum of the Cost of purchased materials received and Purchase price variance accounts. The amounts posted in this account are reversed when a purchase order invoice is posted.
Cost of purchased materials invoiced	140100	Materials inventory	Asset	Debit	No	F	Cost of purchased materials received	Used when a purchase order invoice is posted. The offset to this account is the Purchase expenditure for product. This account represents the inventory on your balance sheet. The account used is typically the same account used for Cost of units delivered and Cost of units invoiced for sales order.
Purchase expenditure for product	600180	Materials receipt	Expense	Credit	Yes	F		Used when a purchase order invoice is posted. Two vouchers are created for the invoice to track purchase price variances when standard cost is used. The offset to this account is the Purchase expenditure, uninvoiced account which is used on the receipt posting and reversed during the invoice posting. Represents costs for the inventory purchased at invoicing that's not reflected in inventory account on the balance sheet. This is a profit and loss posting for purchase price variance most commonly seen in standard cost item purchases.
Fixed receipt price profit (Purchase, fixed receipt price profit*)	510310	Purchase price variance	Expense	Credit	No	F	Fixed receipt price loss	Used when a purchase order invoice is posted and there's a difference between the invoiced price and the default cost for the item. This account is used when the difference is higher. The offset to this account is the Fixed receipt price offset.
Fixed receipt price loss (Purchase, fixed receipt price loss*)	510310	Purchase price variance	Expense	Debit	No	F	Fixed receipt price profit	Used when a purchase order invoice is posted and there's a difference between the invoiced price and the default cost for the item. This account is used when the difference is lower. The offset to this account is the Fixed receipt price offset.
Fixed receipt price offset (Purchase, fixed receipt price offset*)	140900	Stock variation	Asset	Both	No	F		Used when a purchase order invoice is posted and there's a difference between the invoiced price and the default cost for the item. This account is the offset to the Fixed receipt price profit and loss accounts.
Charge	NA	NA	NA	NA	NA	NA	NA	This account is no longer used. Use Stock variation instead.
Stock variation	600170	Stock variation	Expense	Credit	No	Both		This account is used when: There's a difference in the unit price between product receipt and invoice. Charges are posted to the item. Indirect costs have been added to the purchased items. The offset to this account is the Purchase expenditure, uninvoiced account.
Purchase, accrual	200140	Accrued Purchases	Liability	Credit	Y	P		Used when a purchase order product receipt is posted and the option to accrue purchase amounts is enabled.
Accrued sales tax on receipt	250500	Accrued Sales Tax	Liability	Credit	Y	Both		This account is used when you select the Post physical tax option on the Inventory and warehouse management parameters and you have a purchase order with tax. The amount is posted when you update the purchase order physically (product receipt), and reversed when you post the purchase order financially (invoice).
Fixed asset receipt (Fixed asset debit*)	180100	Tangible fixed assets	Asset	Debit	N	Both	Both	This account is used when you select the option on the purchase order line for Fixed assets. The purchase order integration has been configured to acquire the fixed asset upon product receipt or invoice. For more information about Fixed asset purchase order integration, see Acquire assets through procurement.
Purchase expenditure for expense	618900	Miscellaneous expense	Expense	Debit	N	Both		Used when posting a product receipt or invoice for a purchase order where the items aren't stocked, or a procurement category is used.
Prepayment	132190	Prepaid expense	Asset	Debit	N	Both		Used when processing a prepayment invoice on a purchase order.

*Values shown in parentheses represent the value that is used in the Posting type field on the Voucher transactions page. You can view the Posting type on the Voucher transactions page on the General tab.

Fixed asset posting with purchase orders

If you use the Fixed assets module and plan to purchase fixed assets through purchase orders, configure the Fixed asset receipt posting type on the Purchase order tab of the Inventory posting profile page. For more information, see Fixed assets integration and Create and acquire assets from Accounts payable.

Prepayment purchase order invoice posting

If you plan to use the Prepayment invoice feature for purchase orders, the Prepayment posting type must be selected on the Purchase order tab on the Inventory posting profile page. For more information, see Prepayment invoices vs. prepayments.

Purchase requisition and purchase order confirmation posting

Purchase requisitions and purchase order confirmations can also be configured to post pre-encumbrances and encumbrances to the general ledger. These postings are controlled by a posting definition. For more information, see About purchase order encumbrances.

Procurement category posting

As an alternative to setting up the inventory posting for all items, a group of items, or a single item, you can set up categories and control the ledger posting by procurement categories. For more information about setting up categories and assigning them to products, see Sample posting profile configuration earlier in this article.

When using categories with purchase orders or vendor invoices, the category hierarchy needs to be assigned to the Procurement category hierarchy type on the Category hierarchy role assignments page.

Vendor invoices with procurement categories

If your organization uses purchases orders for some purchases and not for others, you can process non–purchase order related invoices in a variety of ways. This includes using journals in Accounts payable or by the Pending vendor invoices page that's used to generate invoices for purchase orders. When creating invoices for non–purchase order related invoices, you'll need to create procurement categories for each type of expense. Map the category to the correct expense account on the Inventory posting profiles page.

The exact number of categories will vary based on the number of expense accounts that you use to post your invoices. You'll need at least one procurement category for each main account that you expense non–purchase order invoices to. Many categories can be used for a single main account. This can be useful for usability, searchability, and reporting the types of expenses you use.

Benefits of using procurement categories for vendor invoices

Some benefits of using procurement categories for vendor invoices include:

• Consistent user experience: When you configure procurement categories for all non–purchase order related expenses, users can be trained on one process for invoicing by using the Pending vendor invoices page.
• Improved reporting experience: When you configure procurement categories for all items and all non–purchase order related expenses, the procurement spend report will analyze the spend by vendor, category, and more.
• Consistent workflow: When you use Pending vendor invoices to process all invoices, you can create a consistent workflow and approval process by using a single workflow.

Consignment inventory posting

Consignment inventory uses the same ledger posting as other purchased items. The key difference is that when the inventory is received, no ledger transactions are recorded. To transfer ownership to the organization when an Inventory ownership change journal is posted, a voucher is generated to record the cost of the item. For more information, see Set up consignment.