Understanding Purchase Order

This chapter contains the following topics:

Purchase Order Product Description

Purchase Order Concepts

 

Purchase Order Product Description

Passport Business Solutions Purchase Order includes those features most asked for by users whose experiences since 1980 have helped refine it to its current level.

PBS Purchase Order Features

Prints a Purchasing Advice Report and Purchasing Worksheet to help you identify what should be purchased.
Allows entering, editing, printing, and posting new purchase orders.
Allows numeric or alphanumeric purchase order numbers up to 15 characters in length.
Allows entering, editing, printing, and posting changes to posted purchase orders.
Prints an Expedite Shipment Report.
Prints a Follow-Up Past Due Shipments Report.
Allows entering, editing, and posting receivings.
Informs you of incomplete shipments, both on the screen and on reports.
Prints a Receipts in Excess of Quantity Ordered Report.
Forms may be printed to a PDF file and can be emailed to the vendor.
Handles multiple drop purchase orders if you receive goods at more than one location.
Handles blanket purchase orders and releases from them.
Allows up to 999 lines per purchase order
Allows up to 200 characters of description for any line item.
Allows up to 99 notes per purchase order line.
Handles order quantities up to 10,000,000 or down to 0.00001.
Allows different units to be used for stocking, ordering, and receiving.
For any line item, allows up to four separate deliveries to the same or different locations.
Allows for receiving of goods on a line-by-line basis or for the entire purchase order at once.
Allows for receivings of goods not previously entered on a purchase order
Keeps track of prices that were unknown at the time goods were received.
Works with the Passport Business Solutions Accounts Payable and, optionally, with Passport Inventory Control and Job Cost.
Allows reports to be stored on disk to save computer time, then printed later at your convenience.
Includes password protection.
Includes on-line Help, available to you at any time by pressing a single key.
Supports multiple companies.
Supports multi-user computer systems.
Supports thin client.
Supports SQL

Purchase Order Reports

The Purchase Order module prints more than 30 different reports. Examples of reports are included at the end of chapters. These example reports (as well as the examples in the text) are based on the Inventory Control module being interfaced with P/O.

The reports include (in addition to the reports mentioned above):

Open Purchase Order Report

Shows all purchase orders that are open (purchase orders for which receipt of goods is still expected).

Cash Disbursements Projection Report

Shows approximately the cash you will need to disburse over the near to medium-range future. You can look at your cash needs for up to seven consecutive periods. This report includes open purchase orders, goods received but not yet invoiced, and goods received and invoiced (in the Accounts Payable module), but not yet paid for.

Uninvoiced Receivings Report

A valuable report at month-end to show you your approximate liability for goods you have received, but for which you haven't yet received the vendor’s invoice.

Purchase Order Distribution Report

Breaks down your purchases by G/L account number and/or job number. This is particularly valuable if you are using Passport Job Cost. It shows exactly what purchase orders are pending on any job.

Vendor Item List

Shows all vendors for any selection of items, or all items sold by any particular vendor.

Purchase Order Purge Report

It is up to you how long you want to keep closed purchase orders. You make the decision to purge them. When you do purge a purchase order, you can print this report, which shows the final state of the purchase order and all of its receivings at the time it is purged.

Interface to Other PBS Modules

P/O with Accounts Payable

P/O works with Passport Accounts Payable, which is required to run this module. P/O uses Vendor s from Accounts Payable (A/P). A/P verifies the purchase order numbers and receiver numbers that you enter for the vendor’s invoice in the A/P Payable (Enter) function. If you choose to do so, the distributions entered for the purchase order lines in P/O are transferred to the A/P payable transaction entered for the vendor’s invoice.

PBS Inventory Control Interface

If P/O is interfaced to Inventory Control, the P/O module uses information from I/C Items and Warehouses. P/O Purchasing Addresses and I/C Warehouses are actually the same set of data.

P/O also updates inventory information in Inventory Control (I/C). When a purchase order is posted to permanent Purchase Orders, the quantity on order for each inventory item ordered is updated in I/C. When receivings are posted in P/O, inventory transactions for the receivings are automatically created in I/C Inventory Transactions.

PBS Job Cost Interface

If P/O is interfaced to Job Cost, P/O uses Job Cost information to verify the validity of job numbers and cost item numbers entered on purchase orders.

The P/O module can also be used to automatically update the outstanding purchase order amount for cost items on jobs. This figure is one of the key ingredients on the Job Status Report, which compares actual to budgeted costs for your jobs.

Other Modules

Purchase Order does not interface with the Manufacturing Inventory Management module. Use the Product Purchasing module to interface with Inventory Management.

Purchase Order does not interface directly with General Ledger. Distribution information that starts in Purchase Order goes through Accounts Payable, Inventory Control (if used) and Job Cost (if used) before it ends up in General Ledger.

PBS Shared Features

Some of the features P/O has in common with other Passport Business Solutions modules are:

Password Protection

A password is a unique code you assign to each individual using your Passport software. Each potential user must first enter a valid password before he or she will be allowed to use a protected function.

File Recovery Procedure

This function provides the capacity to recover corrupted data files. You can also use it to convert important data files to a format which can be easily interfaced to common data base and word processing modules. This procedure does not apply for SQL installations.

Printers

You can easily select any one of the most popular printers.

Purchase Order Concepts

This section defines key words and concepts used in this documentation.

Key words and concepts

Major concepts in Purchase Order are identified in alphabetical sequence below.

Accounting

Accounting is the methodical collection, categorization, and organized presentation of financial records.

Blanket Purchase Order

A blanket purchase order is a statement to a vendor that you want to buy a (large) total quantity of an item, but don't want it delivered all at once. You want it delivered in stages over the course of several months or a year.

A company issues a blanket purchase order for one or more reasons:

One reason is to take advantage of a lower price by ordering a larger quantity, even though the deliveries are spread over time. The vendor gives the lower price because he knows you have committed to a large volume.
Another reason is that you sell or use this item at a certain rate per month and don't want to keep more than one month’s supply in your warehouse; so you arrange for regular shipments of a fixed or varying amount at regular intervals.
A third reason is that you want to insure that the item will be available when you need it over the course of the year, so you enter into a long-term contract with the vendor which commits you to buy an overall amount, so that the vendor knows he can produce this amount and you will pay for it.

Company Information

Company information is a collective term for the choices you make about how you will configure Passport Business Solutions to your business applications. These decisions relate to all your PBS modules, and control such matters as the account structure format. They are made when the system is installed and seldom changed thereafter.

Confirming Order

A printed purchase order sent to a vendor as a follow-up to a verbal order (made over the phone or in person) is called a confirming order. It confirms a verbal order.

Confirming Order Status

Every purchase order entered into Purchase Order must have a confirming order status to indicate whether the purchase order is a confirming order. The confirming order status can have one of four possible conditions:

Yes, this is a confirming order.
No, this is not a confirming order (it is an original purchase order sent to the vendor).
For internal use only; this is not to be sent to the vendor.
Don't print this purchase order.

Control Information

To customize PBS P/O to the P/O needs of your business you must make choices which are collectively called control information. These decisions relate to all applications in the module, such as whether or not you use alphanumeric purchase order numbers. They are made when the system is installed and seldom changed thereafter.

Control Information differs from Company Information. The former controls matters specific to the P/O module. The latter controls matters common to all Passport modules.

Data Organization

Most of the information you enter into your computer is stored on disk. In order for computer programs to locate specific pieces of data (within large masses of data), data must be organized in some predictable way. Passport accounting software organizes your data for you automatically as it stores it on your disk.

The following are terms that are associated with the structure of data.

Alphanumeric

Alphanumeric characters are letters of the alphabet, numerals (numbers), special symbols (*, &, $, etc.) or any combination of all three. In contrast, numeric characters (or digits), are only numbers.

Bitmap

A set of bits that represents a graphic image, with each bit or group of bits corresponding to a pixel in the image.

Purchase order forms can be in the Bitmap file format.

BMP

See Bitmap.

Character

A character is any letter, number or other symbol you can type on your keyboard.

Data file/Table

A data file is a group of one or more related records. A data file is often referred to as a file. When using PBS SQL the same set up data is referred to as a table.

The Vendor file is an example of a data file. Such a file is made up of several records, each of which contains the name, address, etc. for one vendor.

Each file is kept separate from other files on the disk.

There are other types of files in addition to data files. Programs are stored on the disk as program files. However, references to files in this user documentation mean data files unless specifically stated otherwise.

Entry

A record in a data file is often referred to as an entry.

Field

A field is one or more characters representing a single piece of data. For example, a name, a date and a dollar amount are all fields. A column is the same as a field in PBS SQL.

Record

A record is a group of one or more related fields. For example, the fields representing a customer’s name, address and account balance might be grouped together into a record called the customer record. A record is usually refered to as a row in PBS SQL.

F.O.B.

This stands for Free-On-Board. It means the physical location where the ownership of goods ordered by you and shipped by a vendor actually changes hands. It is also called the F.O.B. point. Until the goods reach that point, they and any damage to them are the vendor’s responsibility. After they reach that point, they and any damage to them are your responsibility.

F.O.B. also refers to the location after which you must pay for freight charges, and before which the vendor pays for freight charges. For example, suppose you are ordering goods from Hong Kong, your company is located in New York, and the F.O.B. point is Los Angeles. The vendor pays the freight charges to Los Angeles and is responsible for the goods until they arrive there. After that, it is your responsibility to get them from Los Angeles to New York.

Function

As used here, function means one or more programs that accomplish a specific task.

Each selection on a menu of a Passport module is a function. When you select a function from a menu, one or more programs automatically execute, thereby allowing you to accomplish the task you selected. In fact, the term selection is often used interchangeably for function.

Help

Help refers to descriptions of functions which appear on the screen by pressing a designated key <F8>.The Help text gives you a quick reference to the highlights of functions while you are running the application.

Using graphical mode the <Ctrl+F1> keys access help.

Look-ups

Look-ups refer to a list of available entries for a particular field. There are two kinds of lookups: data lookup and date lookup.

Data Lookup

Many fields allow you to press a designated key <F8> to show all available data on file. For instance, when entering an invoice you may press this key at the Account number field to bring up a list of all G/L accounts on file. Selecting an entry from this list is often easier and faster than remembering the account number or stepping through all possible entries until the right one is reached.

Date Lookup

The date lookup provides a point and click window for finding and entering date fields.

In Graphical mode the date lookup is available via the <F4> key. In Character mode (Windows only) you may access the date lookup via the <F7> key.

Note 

Depending on where you press <F8>, this function will return a Look-up window or context sensitive Help. If a Look-up window is returned, pressing <F8> a second time will display Help for the field if available.

Integrated

When a set of computer modules is integrated, any information generated in one module which is needed in another module is automatically supplied to that other module. You don't have to enter it twice.

Passport Business Solutions accounting software is fully integrated. When P/O is used with other PBS modules, any data recorded in those other modules which P/O should know about is automatically made available to P/O.

Jpeg

Stands for Joint Photographic Experts Group. Jpeg is an image file format that uses a compression technique for color images. Depending on the degree of compression some details in the image are compromised yet even at higher compression settings the image quality is quite good. Purchase order forms can be in the Jpeg file format. The extension for a jpeg file is .jpg.

JPG

See Jpeg.

Multi-Company

Multi-Company refers to the capability to do accounting functions for multiple companies with the same set of software. A PBS administrative user wanting to do accounting functions for more than one company on Passport Business Solutions modules can use the Define multiple companies function.

Multi-drop Order

This is a purchase order that specifies to the vendor that some of the items on the order are to be delivered to one location and other items are to be delivered to another location. There can be several locations at which the goods are dropped off—multiple drops.

PDF

Short for Portable Document Format, a file format developed by Adobe Systems. PDF captures formatting information from a variety of desktop publishing applications, making it possible to send formatted documents and have them appear on the recipient's monitor or printer as they were intended. To view a file in PDF format, you need Adobe™ Reader™ or Adobe™ Acrobat™.

Purchase Order reports and forms may be written to the PDF file type. Forms stored as PDF files can be emailed to vendors.

Period

A period is a regular interval of time which you use for evaluating your operation and comparing current information to historical data. At the expiration of a period, standardized reports are usually printed and running totals are reset to zero. This is called closing the period.

You define the length of your periods, which may (but need not) correspond to the accounting periods you use in your General Ledger system. Regardless of your choice, each period remains open until you explicitly close it. For illustrative purposes this documentation assumes that you use monthly periods.

Post

To post means to take transactions from a temporary data location and move them to a permanent location (where other transactions probably already exist). For example, in P/O, receivings are initially entered as a temporary transaction in a file or table. After receivings have been entered and edited, they are posted to the more permanent P/O Receivings.

Often, during transaction posting, information in other data files/tables is also updated. For example, when receivings are posted, the inventory amounts in Inventory Control are also updated.

Purchase Order

A purchase order is an order by you or your company to a vendor, telling the vendor that you want to buy certain goods.

Purchase Order module

Passport’s Purchase Order (P/O) is a control module, rather than an accounting module. The Purchase Order module is separate from the Product Purchasing module which is used only with the manufacturing modules.

An accounting module, such as Accounts Receivable, Accounts Payable, or General Ledger, records the flow of money in a business and has an immediate and intimate tie into your company’s general ledger. Information entered and posted in an accounting module is used directly on your company’s financial statements. Extreme care is taken to see that debits and credits are always in balance. Reports from such modules determine various aspects of the financial condition of your business.

A control module is different. P/O is a control module. It is related to the accounting modules, but doesn't immediately involve the financial transactions and condition of your business. Reports from this module are more related to future financial transactions than to immediate financial transactions.

A control module helps you control the operations of your business, such as taking orders from customers (Order Entry) or ordering from vendors (Purchase Order).

Another example of a control module is a personnel module (sometimes called Human Resources). This would be used to hire, allocate, and fire personnel. It would be related to the Payroll module, but it is obviously not an accounting module. It would help you make operational decisions about employees, rather than accounting or financial decisions.

Purchase Order Distribution Information

This information goes with each line item of the purchase order Each line item has its own distribution information which tells the purpose of the line item: is it for inventory, for a job, or for something else? The distribution information does this by giving the specific G/L account numbers or job numbers that the item was ordered for.

Purchase Order Header Information

The header includes all information about a purchase order except for the information about what is being ordered. The header includes the purchase order number and date; the vendor’s number, name, and address; and how and where the goods are to be shipped.

A purchase order has only one header, but it can have any number of line items (up to 999 in the PBS Purchase Order module).

Purchase Order Line Item Information

This is the information about what is being ordered. There is one line on a purchase order for every item being ordered. The full description of an item being ordered, including the quantity ordered, the price, and when it is supposed to be delivered, is called a line item of the purchase order

Receiver

A document filled out by the Receiving Department, listing the goods received in a particular shipment.

Receiver #

The number (usually preprinted) on the receiver.

Receiving

Receiving means accepting delivery of goods or items that have been sent from or purchased from elsewhere. A receiving is one particular instance or transaction of getting goods from an outside source. The goods must arrive at your warehouse or business location before they can be classified as a receiving. Receivings is the plural of receiving.

Release

A release from a blanket purchase order is a specific quantity of the item (or items) on the blanket purchase order that you now want delivered. It is the CURRENT periodic shipment for the blanket order.

The vendor was originally informed of the total quantity that you wanted over the course of the year. The release is the specific part of the total quantity that you want shipped now.

Screen

A screen is the image you see on your computer monitor. Each screen in the system has a standard format, and each is discussed and (with trivial exceptions) illustrated in this documentation.

The two main types of screens are:

Menus

These allow you to choose which application you wish to execute.

Data-entry screens

These allow you to enter new data into the system, or to change existing data. PBS screens are interactive. They respond to each item of data as you enter it, without waiting for you to enter the entire screen. Data entry screens can be used in graphical mode or the classic character mode.

Selection

Selection is the name given to the choice which you make from the options available on a menu. Making this selection will either lead you directly into the desired application, or it will bring up a submenu requiring you to narrow your selection further. In this documentation, all references to selections are spelled exactly as they appear on the screen, but are printed in italics.

Spool

SPOOL is a computer word meaning Save Printer Output Off-Line. Spooling is a technique that allows a report to be printed at a later time. Instead of reports going directly to a printer, they are saved as a disk file (which is usually a lot faster). When a printer is available, all or some saved reports can be printed in one long run (for example, overnight).

Transaction

As used in accounting, a transaction is a business occurrence involving money and goods or services. For example, a transaction occurs each time you gas up your car. You pay money in exchange for goods (gasoline).

In Passport software, transaction is the record of a completed business occurrence involving money and goods or services.

The records of sales made and payments received are examples of transactions from the area of accounting called Accounts Receivable. The records of purchases and the payments you make for such purchases are transactions from the accounting area called Accounts Payable. The records of quantities of goods ordered are transactions from the area of accounting called Purchase Orders.

Uninvoiced Receivings

Goods that have been received, but for which no vendor invoice has yet been received or entered.

Vendor

A vendor is someone who sells something that you need or want.

Vendor Item Information

This is the information about which vendor sells which item, what the vendor calls the item (it may be different than what you call it), how much it costs, and in what units and minimum quantities the vendor sells it. In P/O, vendor item information is kept in a separate data file.

View

To view information is to examine it on a screen. This is a rapid alternative to obtaining a printed report. View screens are designed to display information more compactly than data-entry screens, but without permitting the information to be modified.

Upgrading From Earlier Versions

The functions and instructions to enable you to upgrade from an earlier version of this same module are described in the Vision Release and Installation Guide and the SQL Release and Installation Guide.