Buy/Pay for raw materials based on yield after processing

My company picks up raw materials from a supplier, processes them, then pays for the materials based on the yielded amount after that process. How would I account for that in ERPNext?


  1. Create Items. Purchase and a yeilded item will be two different item codes.
  2. Create BOM where purchased item will be raw-material and processed item will be finish good.
  3. Create Stock Entry (Material Receipt) to inward raw-material.
  4. Create Purchase Order of type Subcontracting for yeilded item.

If you don’t have standard proportion for raw-finished item, then BOM will have to be created after each processing. Another alternative would be to create Repack Entry, and then do billing for the yeilded item.