After the base Advantage Financial system accepts a Purchase Requisition, the next step is to enter and process one or more Purchase Orders against the requisition. (A Purchase Order may also be entered without referencing a prior requisition.) Purchase Orders capture descriptive information such as Commodity Code, Delivery date, and Vendor information as well as the accounting and item detail information.
A Purchase Order for procurement recognizes the obligation for procuring an item. Purchase Orders for Inventory transactions may be recorded in the system as memo references, as a true encumbrance, or with no accounting impact at all. This decision depends on the Accounting Method that is established for the Warehouse.
In general, purchase orders generate encumbrance transactions, which increase total obligations and reduce unobligated account balances. They record obligations prior to the point at which goods are received or services are rendered.
In order to process Inventory transactions using the Purchase Order, users have to enter the valid Warehouse on the Purchase Order (PO) Header and valid Commodity code and Stock Item suffix (Optional) on the Commodity Line. The following validations will be performed on the PO transactions, when the user enters the Warehouse:
Entered Warehouse is valid on the Warehouse Table
Entered Commodity code is marked as “Inventory Commodity” on the Commodity Table
Entered Commodity code and Stock Item suffix are valid and Active on the Inventory Table
Entered Commodity code and Stock Item suffix are not to be marked as Parent Stock Item on the Inventory Table
The Unit of Measure entered on the Commodity line must be valid on the Unit of Measure by Vendor and Item (UOMV) table for the Vendor Code on the PO.
The Accounting method on the Warehouse and the Accounting method on the Event Type Requirements table for the entered Event Type are the same.
The Line Type is Item
Once the PO transaction is finalized, it updates the On Order from Vendor field on the Inventory Table with the Ordered Quantity as follows:
When the Smaller Unit for the entered stock item is “Purchase,” then the On Order from Vendor Quantity is updated with the quantity on the PO transaction divided by the Multiplier entered on the Inventory Table.
When the Smaller Unit for the entered stock item is “Issue,” then the On Order from Vendor Quantity is updated with the quantity on the PO transaction multiplied by the Multiplier entered on the Inventory Table.
In addition, the following fields are also updated when the PO is finalized: Currently Requested Quantity field is reduced by the amount liquidated on the Requisition, the Next Delivery Date will be updated with the Expected Delivery Date of the PO, and the Last Ordered date is updated with the Transaction date of the PO.
For more information on the Purchase Order transaction, please refer to the Advantage Procurement User Guide, "Understanding the Award State' topic.