Purchase orders and bills – most common use cases

Purchase order (PO) is a document that can be used in a couple of ways during the purchase process. Simply put, a PO is a buyer's request to a seller (supplier) to order goods.  

Depending on a country, a PO can also be a binding document for both the buyer and the supplier. With a PO, the buyer is stating that they will indeed purchase (at a certain price point), and the supplier is committing to provide the requested product/service with a specified price by the agreed deadline.

PO-s also give you a prognosis of your expenses before you have created the actual bills and spent any money. Bills document the expenses you make – when a supplier sends you an invoice based on the purchase order, you can enter it to your system as a bill to keep track of your actual purchases.

Even though PO-s are a great way to manage your stock during the buying process – you can easily keep track of what, when and how much you have ordered – they do not affect the warehouse functionality. Quantity changes in a warehouse are triggered by bills (a.k.a. purchase invoices).

 

Here are a few common purchase-related workflows:  

Flow No. 1

1. Quote/Order created for a client stating your offer
2. Quote confirmed by the client
3. PO created from the Quote, prices amended according to selling prices (your margin added, so ideally the buying price on the PO should be less than on the quote sent to your client), PO sent to the supplier
4. Supplier confirms the PO
5. Invoice created from the quote to the client
6. Goods delivered, a Bill created from the PO for accounting and to take the goods into your stock (steps 5 and 6 may vary in order)

 

Flow No. 2

1. PO created for the supplier (for example, you need some products to fill an order for a client)
2. The supplier confirms the PO
3. Quote/Order created and sent to the client
4. Client confirms the order
5. Invoice created from the Quote and sent to the client
6. Goods delivered, a Bill created from the PO for accounting (steps 5 and 6 may vary in order)

 

Flow No. 3

1. Email exchange/call/meeting with a supplier regarding needed products
2. PO created and sent to the supplier to confirm agreement

 

 

What is a difference?

Difference indicates the sum/amount that still needs to be settled. For example, you order 1000 glasses, receive 500 and create a bill for the received amount. You still need to receive the other 500, so that is considered a difference.

If you receive products in a larger quantity than ordered with a PO and decide to keep them (accept and create a bill), it will be displayed as such.

1. A PO is created

 

2. Half of the amount (of the ordered 1000) is received, a bill is created to Scoro.

  

3. You can see the bill created and the difference (that still needs to be settled) in the PO view. 

 

  
The Settled checkbox on the PO should be left untouched in most use cases. When compiling a bill (or multiple as the services are provided or products are taken into stock, etc.) from the purchase order, the products/services on the purchase order will be marked as settled automatically. In some cases, you do need to settle purchases manually. For example, you order 10h of development, the work gets finished in 5h and is billed for 5h – you can mark the remaining 5h on the PO as settled by hand, so you know that this PO really is all finished and doesn't need to be dealt with.

Read more on purchase orders and bills.