Purchase Workflow Documentation
A best-practices guide on how purchasing, inventory, and supplier ledgers interact within Inventorypro.
Understanding Purchase Orders
A Purchase Order (PO) is just a request. When you send a PO to a supplier, you are merely saying, "I want to buy these items." You do not legally owe them money yet because they haven't delivered anything, and you haven't received an official bill.
Note: If you post POs directly to the supplier ledger, your accounts payable will be artificially inflated, making it look like you owe money for goods you haven't even received yet.
In Pay Kar, Purchase Orders DO NOT impact the supplier ledger. Currently, only Purchase Invoices impact the ledger, which aligns with standard correct accounting behaviors.
🌟 The Perfect Working Workflow (Standard Accounting Practice)
Here is the correct chronological flow you should follow for purchasing:
1
Step 1: Purchase Order (PO)
What happens: You create a PO and send it to the supplier.
Inventory Impact: Increases "Expected Stock," but Physical Stock remains unchanged.
Ledger Impact: NONE. The supplier ledger is not updated because you don't owe money yet.
2
Step 2: Goods Receipt Note (GRN)
What happens: The truck arrives, and you physically receive the goods in your warehouse. You link this GRN to the PO.
Inventory Impact: Physical Stock Increases.
Ledger Impact: Typically NONE. You acknowledge receipt of the goods, but the official bill (Invoice) hasn't arrived or been processed yet.
3
Step 3: Purchase Invoice (Bill)
What happens: The supplier sends you the official bill for the goods you received. You enter this into the system by linking it to the GRN or PO.
Inventory Impact: NONE (because the physical stock was already added by the GRN).
Ledger Impact: CREDIT the Supplier Ledger (+). This is the exact moment you recognize that you legally owe the supplier money. Your Accounts Payable (liability) increases.
4
Step 4: Payment Voucher / Bill Payment
What happens: You issue a check or bank transfer to pay the supplier for the Purchase Invoice.
Inventory Impact: NONE.
Ledger Impact: DEBIT the Supplier Ledger (-). This reduces your Accounts Payable, showing that you have cleared your debt to the supplier.
What if you pay the supplier before creating the Purchase Invoice?
If you pay the supplier in advance (before they ship goods or send an invoice), this is considered an Advance Payment.
- 1. Advance Payment: You create a Payment Voucher first -> DEBIT Supplier Ledger (Now the Supplier owes you goods/services).
- 2. Final Settlement: Later, the goods arrive and you create the Purchase Invoice -> CREDIT Supplier Ledger (This effectively cancels out the advance payment, settling the balance automatically).