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Purchasing invoice for IT

so let's now have a look at the purchasing process that you'd find in many organizations so the first step in the purchasing process is that the buyer or the customer raises a document called a purchase order and purchase orders have unique numbers as do invoices and goods receive notes and they detail the items that are to be bought and they also detail the price of the items once this is sent to the supplier the supplier will send out the order along with a delivery note when the goods then rece are received by the buyer the buyer checks the goods against the delivery note and raises a good received note now if there's any damages or if there's any shortfalls these all should be marked on the actual delivery note and the delivery note should be signed and delivery notes are usually two part dely notes one part goes back to the supplier and the other part STS with the purchaser the supplier then sends out the invoice and we looked at invoices in the sales section in the last section and the purchase invoice that you receive is the sales invoice that your supplier generates and when you reive this invoice you need to check this invoice against the purchase order that you're ra because this contains details of the goods that were ordered the pricing and the quantity and you also need to check this against the goods receed note because the goods receed note will detail the exact quantities that were actually received checking invoices is extremely important does it make sure that you're not paying for goods that you've been overcharged for or paying for goods that you haven't actually received so what we're going to do is we're going to look at this checking process in a little bit more detail so here is a purchase order that Jake's Palace has raised to drinks Inc for some bottles of Coke and bottles of wine and we can see from this some details on the purchase order the purchase order date the purchase order number and every purchase order is going to have a unique number there's also going to be the supplier details the supplier code and if there's a contact person that can go in there too we then have the detail of the purchase order and a purchase order is always priced and we've got the product code we've got the descriptions we've got the rate we have the quantity ordered and we also have the date that it's required this then gives us a total and we also pull in any trade discount to our purchase order as well so we send this purchase order to drinks Inc and drinks Inc then dispatches the goods and when they dispatch the The Goods the next document that we raise is a Goods Reed note and here's a sample Goods Reed note that Jake's Palace has for the purchase order that we just looked at and you'll see that the goods received note details the purchase order number and it also details the product code the description and the quantity ordered then it details the quantity received and we can see here that the quantity ordered of 500 isn't the same as the quantity received of 400 bottles of Coke so there's a 100 in the difference this Goods receive node is then held for the invoice and is then also matched to the invoice along with the purchase order so Along Comes the invoice from drinks Inc and we can see this invoice contains much the same detail as the sales invoices that we prepared but as we're receiving it it's a purchase invoice for us so we have the date we have the invoice number the due date we are the customer so that's who it's to our account code and our purchase order number it then gets into the detail of the invoice and you can see that although we only received 400 bottles of Coke we were actually invoiced for 500 bottles of Coke now the quantity of wine is fine because what we ordered we received what else do we need need to check on this invoice we need to check the rates now the rates whereing done the goods received note but they were on the purchase order so let's check the rates so we have bottles of Coke at 57 Cent and wine at 620 and that matches our purchase order so our net of 1370 on our purchase order matches their net of 1370 on our invoice along with the trade discount and the that everything matches but the problem that we have is the quantity so what would we do when we have a situation like this well there's a number of resolves you would contact the supplier first of all and the supplier could decide oh I'm going to send you out them bottles of Coke we were short stocked they're on the way you'll get them in two hours in a situation like this when the second order comes along you will receive that under a different Goods Reed note will also be a separate delivery note for this we would then only have one invoice which is this invoice here for two goods receive notes and one purchase order but if the supplier has not going to redispatch the goods and you actually need a credit note the supplier will then raise a credit note for the 100 bottles of Coke along with the trade discount that you didn't receive and here's the credit note that we actually received from drink sync and we can see that we have all the same details on a credit note that you would expect to see we then in our detail have our product code our description our rate so we need to check this credit note again so is our rate correct well on our purchase order our rate was 0.57 for the Coke and is it the same rate that we were invoiced for yes 0.57 it is so that's the first check that we need to do the second check that we need to do is the quantity check and have we been credited for the right quantity but we know from our Goods receed note that we ordered 500 but we only got 400 so we should be credited for 100 now some accounting systems some computerized accounting systems will allow you put a purchase invoice on hold for payment or on hold for waiting or pending a credit note so it doesn't allow you to actually pay the invoice until any problems have actually been resolved and this is a very good and useful feature of accounting packages if you're accounting manually you need to put a note on your in on your invoice to say that it's been held for credit and then when the credit Noe comes in you can then process this into your actual de books but before you process little into your daybooks you also need to code purchase invoices and purchase credit notes and that's what we're going to look at in the next lesson