How to Create a Purchase Order, Receive It, and Convert It to a Vendor Bill

This workflow ties together the three stages of buying inventory from a vendor. First you raise a purchase order, which records what you intend to buy, from whom, and at what price. When the shipment arrives you receive the order, which updates inventory on-hand, records item cost history, and posts the inventory and accrual journal entries. Finally you convert the receipt into a vendor bill, which is the payable that flows into the check-writing and aging process. Each stage hands off cleanly to the next, so you do not have to re-key the order details.

Requirements

Depending on what you record, this workflow can use the Requested Ship Date, Item Identifiers & Tracking (Serial Numbers), Cost Codes For AR/AP, and Special Check Size With GL On Stub features.

Step 1: Create the Purchase Order

Where: Expenses -> Purchase Orders -> New Purchase Order

1) On the header step, choose the Vendor Name (required). The terms, shipping method, and due date pre-fill from the vendor.

2) Set the Inventory Location (shown when more than one location exists), and adjust the PO #, Due Date, or Issue Date if needed. Leaving the PO number blank assigns the next number in the sequence.

3) Optionally link a customer order with For Sales Order, set Drop Ship options, or add a Main Page Note.

4) Click Next to move to the line items step.

5) Add each line: pick the Item (which fills in the description, price, and GL account), enter the Quantity (Stock Units), confirm the Price, and adjust the GL Account if needed. Use Add Line Item for more rows.

6) Click Complete PO to save the order. After saving, a button is offered to receive against this PO.

Step 2: Receive the Items Against the PO

Where: Expenses -> PO Receipts -> Receive Items on PO

1) Use the search form to find the PO (by Vendor Name, PO #, or other filters). Submit with no filters to list all open POs.

2) On the receive form, every open line is listed. Check the lines you are receiving.

3) Enter the Quantity Received per line (defaults to the remaining undelivered quantity). Record any Damaged Quantity, adjust Unit Cost if editable, and add Line Notes.

4) If serial or lot tracking applies, enter the values in the Item Identifiers table under each line.

5) Enter one or more Tracking # values, and check PO Complete if this receipt closes out the order.

6) Save the receipt. On-hand inventory and cost history update immediately.

7) After a successful receive, the confirmation offers a Pass to AP button; click it to create a vendor bill from the received PO and continue into payables.

Step 3: Convert the Receipt to a Vendor Bill

Where: Expenses -> Vendor Bills -> New Vendor Bill

1) On the header, confirm the Vendor Name, enter the Invoice # from the vendor's paperwork, the Total (including any sales tax), and the Invoice Date.

2) Click Next to reach the details and line items page. (If you came in through Pass to AP from a received PO, the next page first lists that PO's received lines with an Include? column so you can pull them onto the bill.)

3) Review the Discount Date, Due Date, and Discount Amount (all calculated from the vendor's payment terms; editable).

4) Distribute the bill across the Amount and GL Account lines so the line totals equal the bill total minus sales tax. The first line typically auto-fills with the remaining amount.

5) Optionally enter Sales Tax rows, a Description, or expand Attached Files to upload the vendor invoice.

6) Click Complete Bill. This button is always available; when you click it the page checks the entry and warns you if the line amounts do not add up to the bill total minus tax, if a line with an amount has no GL Account selected, or if no line has an amount at all. The live Current Total, Needed Total, and Difference figures at the bottom of the grid help you balance the lines before you click.

7) After the bill saves, the confirmation screen offers Back, Edit, and Pay buttons. Edit reopens the new bill so you can change it, and Pay opens the Write Checks screen pre-filled for that vendor and invoice so you can pay it right away.

Notes

• The PO number is assigned from the company sequence at save time when left blank; when configured, the inventory location code is appended automatically.
• On receipt, damaged items still count toward the received quantity and update on-hand inventory; the damaged amount is recorded separately for reference.
• Receiving posts a journal entry debiting inventory and crediting accrued purchases; if accrual mode is in use, the unit cost is locked to the PO price during receiving.
• The Complete Bill button is always shown; when you click it the page validates the entry and warns if the line item amounts do not add up to the bill total minus sales tax, if a line with an amount has no GL Account, or if no line has an amount. Live Current Total, Needed Total, and Difference figures show at the bottom of the grid.
• A duplicate invoice number for the same vendor triggers a warning and blocks the save, so each vendor invoice is entered only once.
• If the PO was prepaid by credit card and the prepaid amount does not match the PO total, the PO Complete option on the receive form is replaced with an error message.