OpenPro Application Guide - Purchase Order (PO)
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=====Application Guide - Purchase Order=====
====Chapter 1 Understanding Purchase Order====
===Introduction===
This chapter lists and defines key words used in this guide.
The OpenPro Software Systems' Purchase Order module is designed to manage a company's entire purchasing process. It is an accrual system with a complete vendor master file, vendor items and interface with inventory control. Purchase Order can assist in the management of inventory by scheduling receipts dates and by keeping track of vendor performance and payment terms.
Vendor Accounts: Each vendor is assigned a 15 digit alphanumeric code and is entered into the system only one time. An unlimited number of vendor accounts can be maintained.
Purchase orders new, creates new purchase orders. OpenPro handles many different types of purchase orders, blanket, regular, drop ship. OpenPro purchase order module interfaces to Inventory Control, General Ledger, Manufacturing, Job Cost and Sales Order Processing.
The Payables system does Payments and Check Printing: The vouchers can be paid by either system generated or manually written checks. A voucher can be paid in part or full. Purchase Order will keep the balance open until the voucher is paid or a debit memo is issued to relieve the balance. System and manual checks and the information required to produce bank reconciliation's are recorded. The Purchase Order module prints checks in standard check format and the forms for the checks are available from a national supplier.
Reports: A variety of reports are available in Purchase Order including a listing of all vendors and their current balances, selected vouchers subtotaled by vendor, vouchers selected for payment, aging and cash requirements, and a listing of checks—both system generated and manual checks.
If you are upgrading from a previous release refer to the OpenPro Installation and System Guide.
===Keywords===
**Accounting**\\
is the function that provides quantitative information about your company through the collection, categorization, and presentation of financial records.
Purchase Order
is the accounting area dealing with the purchases and disbursements of your company and with the money you owe. As used here, means, “a record of financial activity.” means, “that should be paid,” or “due to another.” Purchase Order is often abbreviated P/O or AP.
**Voucher**\\
is the number assigned to invoices received. It is an internal number assigned to invoices received from vendors and is used to control and verify payment accounting area dealing with the purchases and disbursements of your company and with the money you owe.
**Vendor**\\
A is a person or company from whom you purchase the goods and services used in your business. For example, the telephone company is one of your vendors. You purchase a service from them.
**Accrual**\\
is a term that describes one of the two methods of accounting for revenues and expenses that are commonly used and approved by the Internal Revenue Service (in the United States). The other method is called the method.
Under the accrual method:
* You count a sale as revenue when you deliver on the sale, not when you actually get paid for it (which can be weeks or months later).
* You count a purchase as an expense when you receive goods or purchases, not when you actually pay for it (which can be weeks or months later).
Under the cash method:
* You count a sale as revenue only when you get paid for it.
* You count a purchase as an expense only when you pay for it.
**Transactions**\\
As used in accounting, means a business event involving money and goods or services. For example, a transaction occurs each time you gas up your car: you pay money in exchange for gasoline (goods).
Because computer software deals primarily with business events that have already taken place, in OpenPro software, means the record of a completed business event involving money and goods or services.
The records of sales made and payments received are examples of transactions from the accounting area called . The records of your purchases and the payments you make for such purchases are transactions from the accounting area called . The records of quantities of goods received or sold are transactions from the accounting area called .
**Payables**\\
In OpenPro.com Purchase Order, a is an P/O transaction. When a vendor sends you an invoice, you enter this invoice into your computer system as a using the Payables function.
**Open Item**\\
In Purchase Order, an is an unpaid invoice. After a payable has been entered and verified as correct, it is posted and becomes an until it is fully paid. (Also, any unused credit or debit memo from a vendor is an open item.)
**Prepaid**\\
In Purchase Order, means a bill that has been paid before the good or service has been received. In this case it is not necessary for the computer to print a check paying this bill. In OpenPro.com P/O, a prepaid entry is called a entry because it does not affect the P/O account (although it still
affects other accounts).
**Manual Payment**\\
A is a payment made using a handwritten check instead of a computer-printed check. A manual payment differs from a non-P/O (prepaid) transaction in that the nonP/O transaction was paid prior to entering into the computer system. A manual payment can be made for an unpaid open item already entered into the system.
**Immediate Payment**\\
A special case is a method of entering an unpaid bill and having the system immediately and automatically, print a check for that bill. The bill is then considered paid. An example of this is paying for a COD shipment.
**Aging**\\
To means to determine how old a payables document is. You may select to age either by or by .
The software enables you to use the above aging periods, or to define your own. When aging is done by invoice date, a document becomes 1 day old on the first day after the vendor’s invoice is posted. An invoice entered with a date of January 1 would be 30 days old on January 31, regardless of the due date.
When aging is done by due date, a document becomes 1 day old on the first day after the due date. A vendor’s invoice due for payment on January 1 would be 30 days old on January 31, regardless of the invoice date.
**General Ledger**\\
When your company receives payables and makes payments, this activity affects not only Purchase Order, but also the accounting area called . General Ledger is the area of accounting where all accounting records are brought together to be classified and summarized. Financial statements are printed based on this data. As used here general means pertaining to many areas. Ledger means a book where accounting records are kept. This term evolved from pre-computer times when accounting records were kept exclusively by hand in large books called ledgers. General Ledger is often abbreviated G/L or GL.
**General Ledger Account**\\
A is a specific category under which all financial activity of a certain kind is classified. For example, you might have a general ledger account called telephone expenses under which you categorized your telephone bills. Typically, an independent business has a hundred or more G/L accounts. In OpenPro.com accounting packages, each time any financial activity occurs in any area of accounting, the dollar amount is recorded under the appropriate G/L account numbers.
**Account Number**\\
An can be fairly extensive. You can create an account number with up to four segments or many combinations of the four. If all four segments are used the first two segments are reserved for cost centers, the third segment is always the main account number and the fourth segment is always the sub-account number. An account number must consist of at least one segment.
Refer to the Company Information chapter in the Installation and System Guide for complete information on General Ledger Account Numbers.
**Distribution**\\
As used in OpenPro.com Purchase Order, means either:
* The act of allocating amounts, such as purchase or disbursement amounts, to G/L accounts; or
* An amount allocated to a G/L account.
For example, when you purchase office supplies on credit, you enter information into the computer about how much you owe, who you owe it to and when it is due.
In addition, you distribute (allocate) the amount of the purchase to your G/L Purchase Order account and to your G/L office supply expenses account.
The OpenPro.com P/O package collects all distributions to G/L accounts and prints a report summarizing these distributions. These distributions can be automatically transferred into OpenPro.com General Ledger, if you use it.
**Debit and Credits**\\
In addition to handling a particular area of accounting, as described above (such as accounts receivable or Purchase Order), each OpenPro.com package also keeps track of the effect of those transactions on G/L. For example, when you make sales to, or receive payment from your customers, this activity affects not only A/R, but also G/L.
These transactions must be recorded both in the proper A/R customer accounts and in G/L under the proper G/L account numbers.
The terms and refer to the types of transactions that must be recorded in G/L accounts to accurately reflect the activity occurring in all accounting areas.
In P/O, a debit memo issued by a vendor to you increases what you owe that vendor, and a credit memo decreases what you owe.
Unfortunately, debit does not always mean and credit does not always mean . In some accounting areas, such as most asset and expense accounts, a debit increases a G/L account and a credit decreases a G/L account. In other areas, such as most liability and sales accounts a debit decreases, and a credit increases, a G/L account.
A minus entry changes the effect of most transactions. Where it is allowed, a minus credit becomes a debit.
This occurs because of the system called (also called ) which is the standard method of accounting used today.
**Double Entry Accounting**\\
The concept behind is that every entry (transaction) results in balancing debit and credit entries into the General Ledger. Let’s look at the debits and credits involved when a typical independent business pays for goods or services bought earlier on credit:
* The debit: The disbursement (payment you make) results in a debit transaction that decreases your account (usually called the account). This is a .
* The credit: The payment also causes a credit transaction that decreases one of your accounts. This is a .
So two entries are made into G/L that balance each other. These balancing entries form the basis of double entry accounting. If you or your accountant ever find your G/L accounts , it means that the proper balancing entries were not made.
No attempt is made in this guide to teach you accounting, especially about what types of transactions cause debits or credits to what accounts. Unless you are an accountant or fully responsible for maintaining your company’s general ledger, you need not remember whether a debit increases or decreases a particular type of G/L account.
When using OpenPro.com accounting software, you are occasionally asked to enter the G/L account to be debited or credited. Just refer to the appropriate chapter in this User Guide, where you will find exact instructions about what to enter.
Within OpenPro.com General Ledger, Accounts Receivable, Purchase Order, Payroll, Order Entry/Billing, Job Cost, Inventory Control, Purchase Order, and Check Reconciliation, the software automatically takes care of all double entry accounting as you enter the required information on the screen.
**Function**\\
As used here, means one or more programs that accomplish a specific task. Each selection on the main menu for a OpenPro.com package is a function. When you select a function from the menu, one or more programs automatically execute, thereby allowing you to accomplish the task you selected.
**Integrated**\\
When a set of accounting packages is , any information generated in one area and which is needed in another area is automatically supplied to that other area. You do not have to enter the information twice.
OpenPro.com accounting software is fully integrated. When OpenPro.com Purchase Order is used with OpenPro.com General Ledger, any information recorded in P/O that should be known to G/L can automatically be transferred into G/L.
G/L account distributions are created each time payables or checks are posted. The Payables Distributions to G/L Report can be printed on request. This is normally done at the end of each accounting period.
Similarly, when OpenPro.com Accounts Receivable is used with OpenPro.com Check Reconciliation, information on checks written or voided can be actually transferred to C/R. If you use OpenPro.com Job Cost and/or Purchase Order, Purchase Order automatically interfaces to one or both packages.
**Data Organization**\\
Most of the information you enter into your computer is stored on your disk. In order for computer programs to locate specific pieces of data (within large masses of data) and to process data logically, data must be organized in some predictable way. OpenPro.com accounting software organizes your data for you automatically as it stores it on your disk. Similarly, when OpenPro.com Purchase Order is used with OpenPro.com Check Reconciliation, information on checks written or voided can be automatically transferred to Check Reconciliation.
There are five terms you should understand about the way the data is organized:
* **Character:** A is any letter, number, or other symbol you can type on your computer keyboard.
* **Field:** A is one or more characters representing a single piece of data. For example, a name, a date, and a dollar amount are all fields.
* **Record:** A 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 .
* **Entry:** A record in a data file is often referred to as an .
* **Data File:** A is a group of one or more related records. A data file is often referred to simply as a (without the word ). Each file is kept separate from other files on the disk. (There are other types of files in addition to data files. For example, programs are stored on the disk as . However, references to in this User Guide mean unless specifically stated otherwise.)
**Enter**\\
To means to record in the computer. For example, in P/O vendor names and addresses must be entered into the P/O Vendor File and purchases must be entered into a transaction file.
**Post**\\
To means to take payables transactions from a temporary file and move them to a permanent file (where other transactions probably already exist). For example, in P/O, purchases from vendors are initially entered into a temporary transaction file. After payables transactions have been entered and verified as correct, they are posted to the permanent P/O Open Item File.
Often, during transaction posting, information in other data files is also updated. For example, in P/O, when payables are posted, the account balance and historical figures in the Vendor File are also updated.
**Register**\\
A is a formal report of transactions approved for posting. Registers should be retained like journals would be in a manual accounting system.
**Alphanumeric**\\
When the manual refers to , it means letters of the alphabet, numerals (numbers), special symbols (*, &, $, etc.) or any combination of all three kinds. In contrast, (or ), means only numbers.
**Multi-Company**\\
refers to the capability to do accounting functions for multiple companies with the same set of software. A user wanting to do accounting functions for more than one company on OpenPro.com packages can select Define Multiple Companies (refer to this chapter in the Installation and System Guide).
**Help**\\
refers to descriptions of functions that appear on your screen by pressing a designated Help. The text gives you a quick reference to the highlights of functions while you are running them.
**Spool**\\
SPOOL is a computer term meaning . Spooling is a technique that allows a report to print 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).
**Check Reconciliation**\\
means, “bringing into agreement.” When reconciliation is applied to checkbooks, it means, “bringing into agreement the balance of your checkbook and the balance shown on your bank statement.”
**Auxiliary Files**\\
An easily maintainable control file allows you to define various parameters that control many of the characteristics of the package.
**Vendor File**\\
P/O contains programs to maintain the Vendor File, including entering, changing, and deleting information. In addition to the usual name and address information, the vendor record contains information about the normal terms offered by the vendor and year-to-date and last year purchases and discounts. The Vendors by Vendor # Report and Vendors by Vendor Name Report can be printed on request.
**Payables (P/O transactions)**\\
With the Payables function, you can enter, edit, and post payables (P/O transactions). A is automatically assigned to each new payable entered. This number is used as an internal reference for each invoice and requires no extra work by the user.
As each payable is entered, P/O automatically calculates the due date, discount amount, and discount date, based on the terms stored in the vendor record, and presents them as default values that can be used while entering information. Payables can be entered for vendors, so that one-time vendors can be used without having to maintain Vendor File records for them.
Payable distributions can be made to an unlimited number of G/L accounts. Credit vouchers, adjustments, and prepaid can also be entered through this function.
The Payables Edit List is available on request as an aid in the editing process. On request, new payables are posted to the P/O Open Item File and a Payables Register is printed.
**Recurring Payables**\\
You can also enter and edit recurring payables. A recurring payable is one that you know occurs at some regular time interval. You only have to enter the recurring payable once. Then you simply select the recurring payables that are currently due. Regular P/O transactions are created for them automatically.
**Aged Open Items Report**\\
The Aged Open Items Report can be printed on request for all or selected vendors. Two formats are available. The detailed format shows all open items, by invoice, with aged totals for each vendor. The summary format shows only the aged totals for each vendor. Four user-defined aging periods are provided, and aging can be done by either the invoice date or the due date.
**View Open items**\\
You can view all open items for a selected vendor.
**Cash Requirements Report**\\
You can print the on request for all or selected vendors. This report is useful in determining which vendors’ items to pay. It shows past and current items due with any valid discounts. It also shows items not yet due, but on which the discount would be lost if they were not paid before the next
anticipated payment date.
**Manual Payments and Modifications**\\
P/O handles manual payment of open items already entered as regular vouchers. A manual payment is a payment made using a handwritten check instead of a computer-printed check. You can also edit due dates, discount dates, and discount amounts for existing open items.
**Payment Preparation**\\
A very flexible payment preparation procedure is provided. In the selection mode, all current and/or past due items can be selected for payment at once. You can also choose to pay items whose discount would be lost if not paid prior to the next payment date. You can select for payment individual invoices, or all invoices for a specified vendor, or you can defer them from payment. Partial payments can be made on any open item. A Pre-Check Writing Report can be printed, showing all selected vouchers and what the payment amounts plus discounts are, so that any needed adjustments can be made prior to actually printing checks.
**Check Printing**\\
At any time after payment preparation has been done, P/O checks can be printed. For COD and other special cases, P/O may write the check immediately on entry.
Multiple check formats are provided, allowing increased flexibility in the format of the check stub. A reference field may be printed on the stub for each voucher paid. One line per voucher may be printed using compressed format. Checks can purchased through the www.openpro.com website.
Provisions are included for restarting check printing from any specified point if necessary to recover from a printer jam.
After printing checks, the P/O Check Register is automatically printed, showing all computer-written checks, as well as all manual checks and prepaids entered since the last Check Register was printed. The vouchers paid by each check are also shown.
**Automatic Check Voiding**\\
A simple check voiding procedure is provided. Distributions for checks are reversed and vouchers are reinstated to the Open Item File automatically. (This requires that Vendor History be used.)
**Vendor History**\\
A complete history of all transactions and payments for all vendors is kept on file for as long as desired. At any time, you can print various reports showing this vendor history information. These reports include the Open Payables by Date Report and the full Check Register, showing all checks printed for any date range. The history of any particular invoice can be inquired into on request.
**Purchases/Discounts**\\
The Purchases/Discounts Report shows the total purchases and discounts (yearto-date and last year) for each vendor shown.
**Password Protection**\\
You have the option to specify that passwords are required. A password is a unique code you assign to each individual using your OpenPro.com software. When passwords are required, each potential user must first enter a valid password before being 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 files to a format that can easily be interfaced to common database and word processing programs. For more information, refer to the Installation and System Guide.
**Printers**\\
You can easily configure your OpenPro.com software to work with any of the most popular printers. Additionally, instructions are given to allow you to configure the software to use virtually any other printer.
===Product description: OpenPro.com Purchase Order===
Here is a summary of major P/O features:
* Provides maintenance and lists of the vendors.
* Provides maintenance of request for purchase order.
* Provides maintenance for purchase orders.
* Provides receivers for purchasing.
* Allows entering, editing, and posting of new payables, prepaid, adjustments, and cancellations with edit list and journal.
* Allows you to enter, edit and select recurring payables to turn into vendor invoices.
* Recurring payables can be selected by cut-off date and group, allowing automatic selection.
* Prints an P/O open item report.
* Allows on-line vendor account inquiry.
* Prints a cash requirements report.
* Prints a cash disbursements projection report.
* Allows flexible payment selection, including partial payments, with a check selection edit list.
* Prints P/O checks and a check register.
* Many check formats are provided—may print COD checks immediately on entry.
* Automatic check voiding is provided.
* Prints a report showing P/O distributions to the general ledger.
* Keeps a full vendor history showing the details of all entry and payment activity for as long as you want to keep it.
* Prints a vendor analysis report.
* An unlimited number of P/O accounts and cash accounts may be used.
* Allows vendor terms based on days or on day of month.
* Allows aging of accounts based on days or on day of month.
* May be interfaced to OpenPro.com General Ledger, Job Cost and/or Purchase Order, or used stand-alone.
* May be interfaced to OpenPro.com Check Reconciliation to reconcile the checkbook from which payments to vendors are made.
* Vendor addresses are maintained for use with OpenPro.com Purchase Order.
* Allows storing of reports on disk for printing at a later more convenient time.
* Allows use of multiple printers.
Includes password protection, extensive data file integrity checks and backup/restore facilities.
Provides on-line , which is available to the user at the touch of a key.
Can be used with either multi-level menus or a