Scenario:
Creating a purchase order for a non-stock item from a supplier with the option to allow purchase invoice creation without a purchase receipt.
By default, when a purchase order is created, its status will be set to “To Receive and Bill.” If the item is a stock item, we typically receive the stock through a purchase receipt. However, in the case of purchasing legal charges (a non-stock item), we do not need to physically receive the charges, so we can directly create a purchase invoice. Despite this, the purchase order status remains as “To Receive,” which is unnecessary.
How can we address this issue?
Hi @arun_adithya
The purchasing process requires to be validated by Three Way Matching Principle. It is an internal control in procurement and accounting to ensure that any goods or service is valid before payment is released. It compares three documents for every purchase transaction and checks that they agree.
- Purchase Order
- GRN
- Supplier Invoice
When the item is a service instead of stock, the logic of three way matching stays the same but the accounting entries change because there is no inventory but Service Recieved and not Billed provisional account act same as Goods Recieved but Not Billed.
Further The PO status stays uniform in both cases meeting the principle efficiently.