From purchase order to payment

Order or invoice

You can record purchases with a purchase invoice or a purchase order. Microsoft Learn recommends purchase orders if you need to receive partial quantities or use drop shipment. Otherwise they work the same. Create an order by choosing the vendor, and add lines with item number and quantity. Direct unit cost and line amount are filled in automatically if they are set up.

Receipt

Enter the received quantity in the Qty. to Receive field, and choose Post. The Quantity Received field is updated. If the receipt is a partial quantity, the value is lower than Quantity. If you use warehouse handling, a warehouse employee posts the receipt, so you do not post it from the order.

If you receive more than ordered, you can use over-receipt. This requires an over-receipt code with a tolerance in percent on the item or vendor. Over-receipts can require approval through a workflow. BC does not handle the financial consequences of over-receipt for you, so agree with the vendor whether a new or corrected invoice will come.

Invoice and matching

You can receive and invoice at the same time or separately. You can also partially receive and partially invoice with Qty. to Receive and Qty. to Invoice. You cannot invoice anything that has not been received. Microsoft Learn also warns against posting a purchase invoice for physical items before the items have been received and the final price is known. Otherwise inventory value and margin will be wrong.

Therefore match three things: the order, the posted receipt and the vendor's invoice. Use the Vendor Invoice No. field, and check whether External Document No. should be mandatory in Purchases & Payables Setup, so duplicates are detected. If the invoice arrives as a separate document, you can pull receipt lines into it.

Payment

Posted invoices sit as open vendor ledger entries. Payments are posted in the Payment Journal. Here you can use Suggest Vendor Payments to find amounts that are due, and after posting you can export a payment file to the bank. When the bank has paid, the payment must be applied to the open entries, manually or by importing a bank statement.

Corrections

If the invoice is unpaid, you can correct or cancel it. If it is paid, you use a credit memo or a return order. Many fields on posted documents can be corrected without resetting the posting, but fields that affect the audit trail require you to reverse or undo.

Check along the way

Use Preview Posting before you post. It shows the entries the posting will create, and is a good habit for larger invoices. If you want to post many orders at once, there is Post Batch, but it can block other users, so plan it outside peak hours.

Also look at differences between invoice and receipt: price, quantity and freight. Agree a fixed workflow for who may approve a difference and who contacts the vendor.

Remember that a purchase order can also come from a worksheet in planning or from a sales order. Whatever the source, the same rules for receipt and invoicing apply, so you use the same checks.

Next steps

Addverk builds its own apps for Business Central, but they are not on Microsoft AppSource yet. On the apps page you can see what we are working on. If you want help with the setup in standard BC, you will find the services and the open prices on the prices page.