Using Item Receipts

What’s it for?

The Item Receipt records the physical receipt of Items as a transaction to the Balance sheet. In Salesorder, the Item Receipt can model these use cases:

  • Bills (Purchase Invoices) for a Purchase Order arrive before the Items are received.
  • Bills for a Purchase Order arrive after the Items are received.
  • Any combination of the above.

If there are differences between the cost stated on the Purchase Order and the cost on the Bill. The system will automatically make adjustments.  See ‘Automatic cost discrepancy adjustment’ at the end of this document.

The system can be configured to record Item Receipts in two ways:

  1. Independent from a Purchase Order
  2. Directly from a Purchase Order
 

Item Receipt walkthrough

Independent from the Purchase Order

Bills will always increase the balance of physical stock. 

Use this method if: 

  • you don’t always use a Purchase Order to purchase and receive stock. 
  • your Supplier sends you a Bill for multiple Purchase Orders.

Using this method you can:

  • create Item Receipts from the Supplier Master, but not from the Purchase Order. 
  • create a Bill from the Item Receipt. However the Item Receipt will not be affected by this action. The only relationship will be the subsequent Bill will have a link back to the respective Item Receipt.

Directly from the Purchase Order

Bills will not increase the balance of physical stock. If the Item Receipt is created before or after the Bill, the Bill will credit the Pending Item Receipt account.

Use this method if:

  • you always use Purchase Orders to purchase and receive stock.

You can:

  • create Item Receipts from the respective Purchase Order.
  • create Item Receipts automatically from the receipt of a Purchase Order into Goods In in the WMS (warehouse management system).

By default the Item Receipt is not automatically created. To configure the automated creation of the Item receipt see below.

  • Track the Qty Received (from Item Receipts) and Qty Billed (from Bills) on the Purchase Order.

Interlinking Bills and Item Receipts

Bill to Item Receipts

To create explicit relationships between a Bill and its associated Item Receipts, use the Action > Linked Item Receipts.

Item Receipts to Bills

To create explicit relationships between Item Receipt and its associated Bills, use the Action > Linked Bills.

Configure Item Receipts

CONFIGURE > Receiving Stock section of the Purchase Order. The options are:

Use Item Receipts? = Yes

  • If you record a Bill (Purchase Invoice) before the stock arrives it will not increase the physical balance of stock.
  • Adds Create Item Receipt to the Action menu on the Purchase Order. This creates an Item receipt which directly inherits from the Purchase Order. A link is created to the parent Purchase Order and displayed in the Our Ref field on the Item Receipt.
  • Adds Create Item Receipt on the Action menu on the Supplier master.

Use Item Receipts? = Yes, but only via the PO

  • If you record a Bill (Purchase Invoice) before the stock arrives it will not increase the physical balance of stock.
  • Adds Create Item Receipt to the Action menu on the Purchase Order. This creates an Item receipt which directly inherits from the Purchase Order. A link is created to the parent Purchase Order and displayed in the Our Ref field on the Item Receipt.
  • Removes Create Item Receipt from the Action menu on the Supplier master.

Use Item Receipts? = No

  • If you record a Bill (Purchase Invoice) without a Purchase Order it will increase the balance of physical stock.
  • Disables and removes the ability to create Item Receipts from the Supplier master and the Purchase Order. 

Configure Item Receipt accounting

Setup GL clearing account

The Item Receipt credits a preset, current liability clearing account Pending Item Receipts. This is the system default and can be changed in:

CONFIGURATION > Accounting > Accounts > Default Accounts > Pending Item receipts

Auto create Item Receipt when receiving Items into a Warehouse

The WMS (warehouse management system) Goods In workflow can be configured to automatically create the Item Receipt from the received Purchase Order. 

You can change this setting here:

SITES > WMS > Config > WMS Scan Workflows > Receive with PO >

Automatic cost discrepancy adjustment

In the majority of cases the Line Item costs on the Purchase Order will match those on the Bill or Item Receipt. When this is not the case, it will result in a discrepancy between the average cost calculated via the Item Receipt, and the actual given cost on the associated Bill. 

When this happens the system creates account entries on the Bill that compensate for the difference in the stock value. 

This automatic stock adjustment re-values the stock at the new cost on the Bill, which in turn accounts for the discrepancy. Here’s an example:

Item XXX on a Purchase Order has a quantity of 10 and costs $100. When we create the Item receipt, the account entries are:

Item Receipt Debit Credit
Stock Asset 100
Pending Item Receipt 100

The stock has now been received.

When the Bill is received, the cost of XXX is now 90. The account entries as a result of entering this Bill are:

Bill Debit Credit
Accounts Payable 90
Pending Item Receipt 90

There is now a discrepancy in the accounts between the Item Receipt and the Bill.

The system will automatically adjust the Stock Asset account, and associated Pending Item Receipt account by the difference as compared with the associated PO Line Items.

Auto adjusted Bill Debit Credit
Accounts Payable 90
Pending Item Receipt 90
Adustments
Pending Item Receipt 10
Stock Asset 10

Important Notes

  • If the Bill specified a fractional quantity of the related Purchase Order and Item Receipt. the values will be calculated pro-rata.
  • The discrepancy is calculated relative to the associated Purchase Order Line Item (and not the Item Receipt Line Item). The system guarantees the Item Receipt Line Item will be the same as the corresponding Purchase Order Line Item since Item Receipt Line Item amounts cannot be edited.

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