A Purchase Order is a binding contract with your Supplier that you promise to buy a set of items under given conditions.
It is similar to a Sales Order but instead of sending it to an external party, you keep it for internal records.
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Before creating and using a Purchase Order, it is advised that you create the following first:
A Purchase Order can be automatically created from a Material Request or Supplier Quotation.
Items can be fetched into the Purchase Order automatically from open Material Requests. For this to work, the following steps need to be done:
Note: The Get Items from Open Material Requests button is visible as long as the Items table is empty.
You can set the currency in which the purchase order is to be stored. If you set a Pricing List, then the item prices will be fetched from that list. Ticking on Ignore Pricing Rule will ignore the Pricing Rules set in Accounts > Pricing Rule.
Read about Price Listsand Multi-Currency Transactionsto know more.
Setting 'Supply Raw Materials' option is useful for subcontracting where you provide the raw materials for manufacturing an item. To know more, visit the Subcontracting page.
'Price List Rate' will be fetched if a Standard Buying rate is set. 'Last Purchase Rate' shows the rate of the item from your last Purchase Order. Rate is fetched if set in the item master. You can attach an Item Tax Template to apply a specific tax rate to the item.
A “Required By” date on each Item: If you are expecting part delivery, your Supplier will know how much quantity to deliver at which date. This will help you from preventing over-supply. It will also help you to track how well your Supplier is doing on timeliness.
Allow Zero Valuation Rate: Ticking on 'Allow Zero Valuation Rate' will allow submitting the Purchase Receipt even if the Valuation Rate of the Item is 0. This can be a sample item or due to a mutual understanding with your Supplier.
This section appears when 'Supply Raw Materials' supplied is set to 'Yes'. This section shows a table with the Items to be supplied to the Supplier for the subcontracting process.
You can change your UOM as per your stock requirements in the Purchase Order.
For example, If you have bought your raw material in large quantities with UOM - boxes, and wish to stock them in UOM - Nos; you can do so while making your Purchase Order.
4. Mention the UOM conversion factor. For example, (1); If one box has 1 kilo. 5. Notice that the stock quantity will be updated accordingly.
If your Supplier is going to charge you additional taxes or charge like a shipping or insurance charge, you can add it here. It will help you to accurately track your costs. Also, if some of these charges add to the value of the product you will have to mention them in the Taxes table.
Visit the Purchase Taxes and Charges Template page to know more about taxes.
The total taxes and charges will be displayed below the table.
To add taxes automatically via a Tax Category, visit this page.
Make sure to mark all your taxes in the Taxes and Charges table correctly for an accurate valuation.
A Shipping Rule helps set the cost of shipping an Item. The cost will usually increase with the distance of shipping. To know more, visit the Shipping Rule page.
For example, you buy Items worth X and sell them for 1.3X. So your Customer pays 1.3 times the tax you pay your Supplier. Since you have already paid tax to your Supplier for X, what you owe your government is only the tax on 0.3X.
This is very easy to track in OneOfficeERP since each tax head is also an Account. Ideally you must create two Accounts for each type of VAT you pay and collect, “Purchase VAT-X” (asset) and “Sales VAT-X” (liability), or something to that effect.
Other than recording discount per item, you can add a discount to the whole purchase order in this section. This discount could be based on the Grand Total i.e., post tax/charges or Net total i.e., pre tax/charges. The additional discount can be applied as a percentage or an amount.
Read Applying Discount for more details.
Sometimes payment is not done all at once. Depending on the agreement, half of the payment may be made before shipment and the other half after receiving the goods/services. You can add a Payment Terms template or add the terms manually in this section.
Read Payment Terms to know more.
In Sales/Purchase transactions there might be certain Terms and Conditions based on which the Supplier provides goods or services to the Customer. You can apply the Terms and Conditions to transactions to transactions and they will appear when printing the document. To know about Terms and Conditions, click here
You can print your request for quotation / purchase order on your company's letterhead. Know more here.
'Group same items' will group the same items added multiple times in the items table. This can be seen when your print.
Titles of your documents can be changed. Know more here.
The seller's Additional Discount, Payment Terms, Terms and Conditions can be recorded in your Purchase Order.
This section shows the status of the Purchase Order, percentage of items received, and percentage of items billed. If this is an Inter Company Order, the Sales Order can be linked here.
Once you “Submit” your Purchase Order, you can trigger actions these actions: