What is a Purchase Order?

A Purchase Order (PO) is a write-up of goods and/or services procured from a vendor. You can use this module to select a vendor, add goods/services you would like to purchase, finalize the order, and then release it in preparation for receiving.

A Purchase Order can have these statuses:

  • Open: After creating a PO, it is in open status. This means it has not been finalized and changes can be made to it.
  • Released: After you release a PO, it will be sent to the warehousing department where it will be prepared for receiving. Make sure a PO has been finalized before releasing.
  • Partially Received: If there are items that are back-ordered from the vendor, a PO will be in Partially Received status.
  • Received: All items of a PO are fully received and thus the order has been fulfilled.
  • Closed: A Purchase Order can be closed once it is fully Received or if it is no longer valid.
  • Canceled: A Purchase Order can also be canceled and it can no longer change statuses once it is.

Purchase Order Fields

Use the Purchase Order page to create and edit purchase orders.

Purchase Order Header – Purchase

  • Store: This is the store where the items are going.
  • Vendor: Select the vendor you are purchasing from. Click for more details on the selected vendor.
  • Vendor Request Date: The date that these goods have been requested from the vendor.
  • Expected Delivery Date: The expected delivery date of the items purchased, is usually an estimate. You can then click to apply or remove this date to all items in the order. Delivery dates for individual items can be different and in that case, this date is typically the earliest one.
  • Order Date: The date the order took place.
  • Ship To: This field will be populated once a store is selected. It can be edited using the  icon.
  • Vendor Address: This address will be populated once a vendor is selected. It can be edited using the icon.
  • Vendor Tax Code: The tax code of the vendor.

Purchase Order Header – Other Info

  • Vendor Contact: Enter any extra vendor contact information.
  • Shipping Terms: The vendor’s shipping terms for this PO.
  • F.O.B: Select the freight on board for this PO.
  • Project/Class: Select a project or class to associate this purchase order with.
  • Payment Terms: The payment terms for this PO. This field automatically gets selected based on the vendor chosen.

Purchase Order Details

  • Add Item (Alt+A): Clicking this button opens a new window where you can add items to the purchase order. Search for the item in the “Item Number” field, enter a Qty, and fill in any other details. Now click Add (Enter) to add the item. Repeat this process for adding additional items.

The Options button gives the 2 features below:

  • Batch Discount: Use this feature to apply the same discount to multiple items on the PO. Select all the discounted item(s) with a checkbox, then click Options -> Batch Discount. In this window you can enter an absolute or percent discount, then click OK.
  • Delete Selected Row(s): Use this feature to remove multiple items from the PO. Select all the items you would like to remove with a checkbox, then click Options -> Delete Selected Row(s).

The descriptions below refer to the column headings of the items:

  • Description: An item’s description that can be edited by clicking on it.
  • Unit Price: An item’s unit price that can be edited by clicking on it.
  • Discount: An item’s discount that can be edited by clicking on it.
  • Qty: An item’s quantity that can be edited by clicking on it.
  • Qty Received: This is the quantity that has been received (onto an item receipt or a bill). It can be less than or equal to “Qty”.
  • Qty in Receiving: This is the quantity that is in the process of being received (onto an ASN). It can be less than or equal to “Qty”. Its value is controlled by the warehousing department.
  • Tax: The tax code applied to this item.
  • Delivery Date: This is an individual item’s delivery date. Edit this date if an item on an order needs to be received earlier or later than the other items. Once released, this field is seen by the warehousing department so that item(s) can be delivered on a separate date.
  • Project/Class: Select a project or class to associate this purchase order line with.
  • Amount: Unit Price * Qty – Discount
  • Exchange Rate: If the order is for a foreign vendor, the exchange rate can be edited here.
  • Customer Message: A message for the vendor can be entered here or you can select one of the pre-written messages.
  • Memo: A memo for the Purchase Order can be written here.
Video tutorial

Purchase Order FAQs

  • What is a PO?

Ans: Purchase Order, is an Order of goods and/or services given to a vendor/supplier. It’s in the form of a write-up, that is released and received by the buyer. 

  • Difference between Open and Released PO?

Ans: An Open PO is an unfinalized order in which the changes can still be made.

A Released PO is a finalized Order that is sent to the warehousing department for releasing it. Changes cannot be made to it any further. 

  • What does “Received” PO status mean?

Ans: When all the items of a PO are fully received and hence the order has been fulfilled, then the PO is in the “Received” status.

  • What does “Partially Received” PO status mean?

Ans: When “not all” the items mentioned in a PO are received, but only “some of them” are received in the ASN, the PO is in “Partially Received” status.

  • Can you duplicate a PO?

Ans: Yes, we can duplicate a PO, we can do it from the options menu. 

  • Can you create an SO from a PO and why it is required?

Ans: Yes, and SO can be created from a PO. It is required when right away wish to sell our goods/services that we just received in the inventory through the PO. 

  • What does “Closed” PO status mean?

Ans: “Closed” PO status means that it is no longer available.

  • Can you email the PO to the vendor? If yes, which email it gets sent to, Billing or Main?

Ans: Yes, it will get sent to the Billing Email first if both the Billing and the main emails are available. 

  • What is Vendor Prepayment?

Ans: Vendor Prepayment, is an advanced payment that is paid to the vendor when a Purchase Order is created. It can be applied to the Bill at a later stage.

  • Can the same Vendor Pre-payment apply to multiple PO’s?

Ans: Yes, only in case when the vendor is the same in both cases. 

  • What is the significance of Vendor Currency?

Ans: It is important to know the currency that the vendor is using so that the payments can be made in the same currency. 

  • Where can you see the outstanding Vendor Balance?

Ans: a. In the Vendor info module. 

  1. AP Aging by Vendor section in Purchase dashboard.
  2. Report Library module -> Purchase module-> Vendor Balance Summary
  • What is the difference between the AP Aging Summary and AP Aging detail?

  Ans: In the AP Aging detail, payment-related information(IR, Bill) about all the vendors is visible, on the other hand in the AP Aging summary, information about a particular vendor can be seen.

  • If you want to see all the shipments that are received against a PO? How would you see that?

Ans: We can see them in the IR.

  • Define ASN? And What is the significance of ASN in Logistics?

Ans: Advanced Shipment Notice. ASN shows the details of pending delivery. ASN can be created by adding single or multiple PO lines. Once ASN is closed, it will automatically generate an item receipt.

        Significance in Logistics –

        The details on ASN facilitate the planning for Material Handling, Transportation,     Inventory Management, etc. 

  • Are ASN’s auto-generated?

Ans: ASN can be auto-generated when PO is directly converted to Item Receipt when Warehousing Module is turned off. 

  • Can you add multiple POs to the same ASN? If yes, how many IRs get generated? If not, Why?

Ans: Yes, we add multiple POs to the same ASN by going to the create ASN module. In this case, the number of IRs will be equal to the number of POs. 

  • Can we receive the PO without generating the ASN?

Ans: Yes, if the warehousing module is turned off, we can receive the PO without generating the ASN by directly converting the PO to IR from the “Options” menu. 

  • How do you un-receive the PO?

Ans: To un-receive the PO, we have to Void the Item Receipt. After voiding the Item Receipt, ASN comes in Void status. Once ASN is deleted, the PO comes in un-receive status.
 

  • What happens when you receive less than what’s on the ASN?

Ans: The status of the ASN will be “In-Receiving”. 

  • Can you receive more than what’s on the ASN?

Ans: Yes, we can receive more than what’s on the ASN

  • What happens when you close the ASN?

Ans: When we close the ASN, the shipment is finally received and the Item Receipt is generated. Available quantity increases by the number of units received on ASN.

  • What transaction in the Receiving process hits the GL (General Ledger)?

Ans:  When ASN is received, Item Receipt is generated. At this point, Available Qty increases by the number of units received on the ASN. Thus Inventory Asset Account is debited and the Accounts Payable Account is credited with the same amount. 

  • Is PO a posting or Non-posting transaction?

Ans: PO is a Non-posting transaction. It doesn’t hit the GL. 

  • What is the “In Receiving” inventory level?

Ans: When the ASN is partially received, the inventory level goes to “In Receiving”.These are Items that are on an Advanced Shipping Notice (ASN), so they are in the process of being put away into their storage locations. Once an ASN is closed they will become “Available” inventory.

  • Can you close the ASN with 0 quantity? What happens if you do that?

Ans: Yes, we can close ASN with 0 Qty. In this case, the Item Receipt does not get generated.

  • What is IR?

      Ans: Item Receipt: An IR is an acknowledgment of received goods into inventory. They are generated when an ASN is closed. Also, they can be directly converted from a PO or manually entered.

  • What is the function of Merge Receipts?

Ans: Different Item Receipts from the same Vendor can be merged and can be converted into Bills once they are finalized. Thus the payments can be applied collectively.

  • What is the difference between an IR and a Bill?
  1.  An IR is created after the Items are received on an ASN and a Bill can be created by converting IR to the Bill.
  2.        An IR can only be created after receiving the items on ASN whereas a Bill can be created directly.
  3.        An IR is a module that shows the inventory items that are received whereas a Bill is where all inventory and non-inventory items are received.
  4.       IRs can be merged whereas Bills cannot be merged.
  • Can you pay the IR?

Ans: No, we can’t pay an IR, it has to be first converted to a Bill to pay it. Although we can convert some selected lines of an IR to a Bill and pay it.

  • Can you pay the Bill?

Ans: Yes, a Bill can be paid. 

  • Describe the typical AP or Bill payment process?

Ans: Credits and Prepayments can be applied during a Bill Payment. 

To apply credits to a bill:

  1. Navigate to Purchase → Payment → Bill Payment.
  2. Select the Account and the Vendor and hit ‘Refresh’.
  3. Click on the credit amount value on the vendor line.
  4. From the pop-up window, select the credits/prepayments you wish to apply and click on ‘Apply Credit’
  5. Finally, click ‘Pay Selected Bills’.

Prepayments can also be applied in a similar manner.

  • Can you overpay the Bill?

Ans: No, we can’t overpay a bill.

  • What happens to the Bill Status if you underpay the Bill?

Ans: The bill goes in the “Partially Paid” status if we underpay it. 

  • What’s is the “Payment Term”? What date triggers the payment term?

Ans: These are the conditions applied to the payments to be made by the customer. This is to know that by when the customer will pay for the Sales Order. For example – Cash in advance, 100% payment before shipping, 50% Deposit upon Order, Cash on Delivery.

  • Define Shipping Terms (Prepaid, Collect, Prepaid, and Billed, Collect, and Allowed?)

Ans: Shipping Terms are the payment terms for the shipping. These are of 5 major types in Xoro –

  1. Prepaid – this term is used when payment is already done by the seller and it is not charged on the Sales Order/Invoice.
  2. Collect – in this, the Carrier itself collects the funds from the customer and the payment is not charged on the Sales Order/Invoice.
  3. Prepaid & Billed – like Prepaid term, in this case also the payment is already made by the Seller but the payment is charged on the Sales Order/Invoice.
  4. Collect & Allowed – like Collect, Carrier collects the payment from the customer but the shipping payment is charged on the Sales Order.
  5. Third-Party Billed – The customer is charged shipping on their own Freight Accounts which will not be charged on the Sales Order.

 

  • What is the difference between the Ship service and Ship Method?

     Ans: Ship Service – It is the shipping service used for delivering the Order. The Service( Carrier) name can be added from the “Create Carrier & Ship service” module in Xoro. 

     Ship Method(carrier) – It is the method by which the shipping are be made. There are 3 Ship Methods in Xoro –

  1. Pick Up – When customers themselves pick up the goods.
  2. Delivery (Own Truck) – When the company itself makes the delivery with its own truck.
  3. Delivery (Third Party) – When an external company is hired to ship the goods.
  • Can you apply a Vendor prepayment to a Bill? If Yes, how? If not, why not?

Ans: Yes, a Vendor Prepayment can be applied to a Bill. 

  • In the ‘Options’ menu click on Pay Bill.
  • In the Bill Payment Window, click on the Credit amount and apply Prepayments.
  • Can you apply a Vendor Credit to a Bill? If Yes, how? If not, why not?

Ans: Yes, same as Vendor Prepayments, a Vendor Credit can also be applied on a Bill.

  • From the ‘Options’ menu click on Pay Bill.
  • In the Bill Payment Window, click on the Credit amount and apply for Vendor Credits.
  • What is the Quickest way to write a cheque to a Vendor? Please explain the process?

      Ans: A cheque can be quickly written to a Vendor while Paying the Bill. The cheque number can be manually assigned. 

  • What is the Item Receipt Reconciliation Process? 

Ans: In this process, all the “Job costings” such as shipping charges, custom duties, etc. are added to the IR.

  • What is a Short Inventory Planner?

Ans: If the inventory falls short, it could be quickly checked and fixed with the help of the Short Inventory Planner module. It suggests the quantity to order, based on Sales, Purchasing, Manufacturing, and Warehousing allocation. Also, PO and MO can be generated from the Shor Inventory Planner.

  • What is Item Vendor Mapping? Which App config turns on the functionality?

Ans: An Item Vendor Mapping maps an Item to a Vendor so that whenever a Purchase Order is created with that particular Vendor and Item, the mapped rate and discount are retrieved. From the App Config Module, under the Purchase section, the Vendor Mapping functionality can be turned ON. 

  • Can you create PO’s from SO? How many POs can be generated from one SO and what are the criteria?

      Ans: Yes, POs can be created from SOs. Navigate to the “Options” menu under the SO header, from the “Options” menu open the “Copy” dropdown, you will find the options like: “Copy to Purchase Order”, “Copy to POs by Vendor”, “Copy selected lines to PO”, “Copy to Transfer Purchase Order”, “Copy selected lines to TPO”. 

Multiple POs can be generated from one SO. 

  • I want to see how much inventory for a certain item is coming on a PO or different PO’s, how can I see that?

Ans: It can be seen from the Item Inventory Snapshot, under the “On PO” column.

  • What is the difference between ATS and ATS including PO?

     Ans: ATS – These are the units of Inventory that are Available To Sell after deducting on release Items from the Available Items.

 ATS (including PO) – These are the units of Inventory gained by adding the On PO items to the ATS.

  • How can you over-receive Qty on the ASN? Report the numbers in the “In Receiving” Status? 

ANS: In the Receive ASN module, go to the “actions” in the right corner of the item line.  

Enter the location and fill in the new quantity. 

After increasing the quantity in the ASN module, there won’t be any change in the “In Receiving Status” of the Inventory Snapshot. The quantity will be still the same as in the PO.

  • What if I received an incorrect Qty on ASN and Closed the ASN? How do I Fix at this point? Also, List the On PO, On PO draft, In Receiving, and Available Inventory at this point? 

ANS: We can change the quantity in the Item Receipt- Add/Change Item Receipt Quantity function.

The On PO, On PO draft, In Receiving and Available Inventory at this point are as follows:

The “Available quantity” will increase, with no change in others.

  • What is the use of Landed Cost?

ANS: Landed cost is the final cost of the item after adding all the expenses, such as shipment charges, packing charges, etc.

  • Can you use duplicate cheque numbers? if yes, how do you restrict them? 

ANS: Yes the cheque numbers can be duplicated, in order to restrict this we need to change the settings in the “App Config”. 

Go to the Accounting section in the App Config module. 

Turn Off the setting: “Duplicate Cheque Numbers”.

  • What is the difference between “Add to Vendor Bill” and not adding to the vendor bill? 

ANS: “Adding to vendor bill” refers to the addition of the calculated reconciled amount in the total amount to be paid to the vendor. 

On the other hand, if “Not added to the vendor bill” the reconciled amount will be excluded from the accounts payable for the vendor and a separate liability entry will be created.

  • List at least 3 methods to find outstanding vendor balance? 

ANS: One method is to find in the “Vendor Info” module.

The second way is to see in the “Report Library”.

Go in the Purchase-Vendor Balance Summary

Look for your Vendor and find the Balance.

Another method is: By looking in the AP Aging by Vendor in the Purchase Dashboard.

  • What is the difference between Vendor Pre-payment and Vendor Credit in terms of Accounting Transactions? 

ANS: Vendor Prepayment is the payment that is made to the Vendor in advance. After the PO is created, the Vendor could be paid either the full amount or partial amount. 

Vendor Credit is the Credit amount that is created with the Vendor after the Customer returns an Item. This credit can be utilized in the future to pay the bill of another Item purchased. 

  • How do you apply Vendor Credit to Bill Payment? What is the difference between IR and Bill? What is the use of Vendor Bill # and how do we restrict duplicate Vendor Bill #?

Ans: To apply Vendor Credit to Bill Payment;

Go to the Bill Payment, – Pay Bill- Select Vendor Credit and apply it.

IR: Item receipt is a kind of receipt that is created after ASN is closed. It is an acknowledgment that the goods ordered are received. 

An IR is converted to Bill and then the Bill is finally paid.

To restrict Duplicate Vendor Bill, change the permission settings in the purchase module of “App Config”. 

The setting name: “Allow duplicate Vendor Bil numbers in Bill”.

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