Procurement

Money promised, money spent, and the difference between them.

For buyers, procurement managers, storekeepers and accounts payable.

Printable: Procurement user guide (PDF) — the same guide laid out for a desk, a cab or a workshop wall.

What this module is for

This module shows what you have promised to spend: the orders that are out, not yet delivered and not yet invoiced, but every bit as committed as money already gone. That figure is commitment.

It also reconciles three records that rarely agree to the cent: what was ordered, what was received, and what was invoiced. Where they disagree, it says which of the three is out and who needs to have a conversation about it.

What it does not do

• It does not hold your requisitions. The request that starts a purchase is a form. Once a requisition is approved, the buyer raises the order here by hand; the order does not record which requisition it came from.
• It does not move stock. Booking a delivery in against an order records what arrived, when, and who took it in. That brings the commitment down and lets an invoice match. Goods go into stock on a form.
• It does not pay anybody. It ages what is payable and records that a payment was made. The payment itself happens in your bank.

Requisitions and stock movements stay on your forms. What this module adds is the two figures nothing else can produce: commitment, and the three-way match.

Setting it up

1. Add your suppliers

Open Procurement → Orders and choose Add a supplier (the briefcase in the card header). A supplier needs a Name and a short Code. Payment terms (days) starts at 30 and decides when each of their invoices falls due. Choose Add supplier to save. The supplier appears on Procurement → Suppliers.

2. Know your tolerances

A match is rarely exact. A delivery short by a kilogram on a tonne, or a price out by a cent on a unit, is not a dispute: it is rounding. Tolerances say how much difference is not worth anybody's attention:

• Quantity tolerance: how many units short a delivery may be and still count as matched.
• Price tolerance: how far the invoiced rate may sit from the ordered rate per unit.

Both are held on each supplier, both start at zero, and both show on Procurement → Suppliers. The Add a supplier panel does not set them.

TIP

While a supplier's tolerances are zero, every rounding difference is reported as a variance, just like a real one. Read the line detail under the verdict before querying the supplier, and where the difference is only rounding, approve it with Pay anyway and say so in the reason.

The screens, one at a time

Each screen appears in the menu for the levels that can read it: Orders and Suppliers from level 2, Invoices from level 3, Commitment and Payables from level 6 (see Who can do what).

Every figure is shown per currency. An account that buys in dollars and rand sees a dollar figure and a rand figure, never one sum of both.

Commitment

Procurement → Commitment

The overview: how much is committed, how much has arrived, what is owed to suppliers, and how many invoices disagree with their order or receipt. The open commitments are listed largest first, ten on screen, each with its currency; the export in the card header carries every one of them, closed by a totals row per currency, with what is owed in each currency and the exception counts.

Underneath sits what needs a conversation: the failed matches, counted by kind so that each one goes to the person who can resolve it.

Each section reads at its own level. A section your level does not read says which level it needs, and shows no figure in place of one.

Orders

Procurement → Orders

Every purchase order in one register: number, supplier, status, how many of its lines have arrived (Lines in), what was ordered, what has been received, what it still commits, and, for an order closed short, what closing it released. Showing narrows the register to open orders (issued or part received) by default, or to everything, drafts, received or closed. The register searches, sorts and exports like every other register in Trackapt.

Click an order to open it. The window lists every line with what was ordered, what has been received and what is still to come, and every delivery booked in against it: when, how much, and who took it in. It is also where you:

• issue a draft,
• book a delivery in against an issued or part-received order, and
• close short an order that will never be completed.

Invoices

Procurement → Invoices

Supplier invoices as they arrive. Book an invoice captures one line by line, and the match against the order and the receipts runs as it is booked, and again each time a delivery is booked in against its order. There is no separate step. Showing filters the register by verdict.

Payables

Procurement → Payables

What is owed to each supplier, in each currency, aged into current, 30, 60 and 90-plus days from each invoice's due date. A supplier owed in two currencies has a row for each. The register searches, sorts and exports like every other, and its export closes with an All suppliers totals row for each currency. Record a payment sits below it.

Suppliers

Procurement → Suppliers

Every active supplier: code, name, contact, email, Payment terms (days), currency, and the Quantity tolerance and Price tolerance their invoices are matched within. The register searches, sorts and exports like every other. A supplier is added from Orders.

Everyday tasks

Raising an order

1. Open Procurement → Orders and choose Raise an order (the page icon in the card header).
2. Pick the Supplier. The order takes the supplier's currency.
3. Under Lines, enter each line's Description, Qty, Unit and Price. Add a line adds another; Remove asks before it takes one away. The figure beside the heading is what the order commits once issued.
4. Choose Raise draft order. It is saved as a draft and commits nothing yet.
5. When the order goes to the supplier, open it from the register and choose Issue. Issuing needs level 6, and the member who raised an order does not issue it.

An order commits money from the moment it is issued

Not when it is invoiced. A draft order commits nothing; an issued one commits everything not yet received.

Booking a delivery in

When goods arrive against an order, the storeman, or whoever is at the store desk, books them in. It needs level 2.

1. Open Procurement → Orders and click the order. Open orders are listed by default.
2. Against each line, enter how much of it came on this delivery. Leave a line empty if none of it came: part of an order at a time is fine.
3. Check Received on (it starts at today and cannot be a day still to come) and enter Received by, the name of whoever took the goods in and counted them. Delivery note is optional: the supplier's note number, if there was one.
4. Choose Book in delivery.

The order moves to part received until every line has arrived, then to received. Its commitment comes down by what arrived, at the ordered price, and any invoice on the order that said nothing booked in is matched again straight away.

More than was ordered is booked and flagged, not refused

If what you enter takes a line past its ordered quantity, the window says so before anything is booked. Book it anyway: goods on a lorry go into the store whatever the paperwork says. The extra is reported as an over-receipt. It commits nothing further, and an invoice for it does not match.

Booking an invoice

Booking an invoice needs level 3.

1. Open Procurement → Invoices and choose Book an invoice (the plus in the card header).
2. Pick the Supplier and, where there is one, the Order. The order list offers that supplier's issued, part-received and received orders. If there is no order, leave it at No order — maverick spend: the invoice is booked and flagged.
3. Enter the Invoice no. and the Date. The due date follows from the supplier's payment terms, so there is no field for it.
4. Under Lines, enter each line's Description, Qty and Price, and pick the Order line it bills for. A line that names no order line is reported as having no order behind it. On a credit note, enter the quantity as a negative.
5. Choose Book invoice. The verdict appears in the Match column.

Reading a match

Every line reports its own verdict, and the failing ones are listed under the invoice's verdict by their reference, so a buyer can go straight to the line that is wrong rather than re-checking the whole invoice.

Verdict	What it means, and whose problem it is
Matched	Ordered, received and invoiced agree within tolerance. Approved for payment straight away.
Billed for more than arrived	A quantity variance: billed for more than arrived, or for more than was ordered however much arrived, since an over-receipt is not something anybody agreed to pay for. The buyer, with the supplier.
Wrong price	A price variance: billed at a different rate than ordered. The buyer, against the contract.
Nothing booked in	Invoiced, but no receipt against the order line. The storekeeper: book the delivery in on Orders and the invoice matches again by itself. Or it never came.
No order behind it	Maverick spend. The procurement manager.

The worst line decides the invoice's verdict, because an invoice is approved for payment or not as a whole. One failing line holds up the whole invoice.

A match only ever gets better as goods arrive: booking a delivery in never takes away an invoice's approval, whether it was approved by matching or with Pay anyway.

Paying an invoice whose match failed

An invoice that did not match, or that has no order behind it, is not approved for payment, and a payment recorded on Payables passes over it. Such an invoice is never paid until a level-6 member approves it with Pay anyway:

1. Choose Pay anyway on its row.
2. Say why in Why this should be paid.
3. Choose Approve for payment.

The member who booked the invoice does not approve it with Pay anyway. The reason stays on the invoice for good, and goes into its export.

Recording a payment

Recording a payment needs level 6.

1. Open Procurement → Payables.
2. Under Record a payment, pick the Supplier and enter the Amount. Method and Reference are optional.
3. Choose Record. The payment is applied to that supplier's approved invoices, oldest first, and never past what an invoice still owes; anything left over is reported as not applied to any invoice.
4. The ageing updates, and an invoice fully settled drops out of its bucket.

Recording a payment does not move money. It records that somebody did.

Closing an order short

Sometimes an order will never be fully delivered: the supplier cannot supply, or the balance is not needed. Until it is closed, its undelivered balance counts as committed. Closing it short needs level 6.

1. Open the order from Procurement → Orders.
2. Choose Close short. It is offered on an issued or part-received order that still commits something.
3. The confirmation names the order and the balance being released, line by line. Enter Why it is being closed short: a reason is required.
4. Choose Close short, or Keep it open to change nothing.

The order moves to closed, stops committing, and shows what it released in the register's Released column. Nothing more can be booked in against it, and it cannot be reopened.

Why a reason is required

The difference between what was ordered and what arrived is either a saving or a supplier failure, and only a person knows which. The reason stays on the order for good.

Correcting a record

Nothing in this module is deleted. A correction is a record of its own beside the original, with who made it and why: a delivery or a payment is reversed, an invoice is voided, an order with nothing received is cancelled, and a supplier is edited or deactivated. A draft order is edited until it is issued. See Who can do what for the level each one needs.

How the figures are worked out

Commitment

For each order line: the quantity still outstanding, multiplied by the unit price. Summed across the order, and across all open orders for the total. A draft commits nothing; a closed order commits nothing, and what it would have committed is reported as released.

Commitment is never negative

Where more arrived than was ordered, that line commits nothing further, and the over-receipt is reported separately as a variance. It never nets off another line's commitment, so the total never understates what is promised.

Ageing

Payables are bucketed by how long they have been outstanding (current, 30, 60 and 90-plus days) on the same basis as arrears in the property module.

When something looks wrong

What you see	Why, and what to do
Commitment is higher than expected	Look for issued orders whose deliveries were never booked in, and for orders that will never be completed. Book the deliveries in, and close short the orders that will not be finished.
An order shows nothing committed	It is still in draft (only issued orders commit) or it is closed short.
A section on Commitment says it needs a level	Your level does not read that section. Commitment and what is owed need level 6; the match exceptions need level 3.
A procurement screen is missing from the menu	Your level does not read it: Orders and Suppliers need level 2, Invoices level 3, Commitment and Payables level 6.
There is no Book an invoice button	Your clearance is below level 3.
There is no Book in delivery button	The order is a draft, fully received or closed, or your clearance is below level 2.
There is no Close short button	The order is not issued or part received, commits nothing, has lines you are not whitelisted to see, or your clearance is below level 6.
Everything is a variance	The supplier's tolerances are zero (see Suppliers), so rounding differences are reported alongside real ones. Read the line detail, and approve a rounding difference with Pay anyway and a reason.
An invoice line says no order behind it	Either the invoice was booked without its order, or the line was not given an Order line.
An invoice line says nothing booked in	Nothing is booked in against that order line. Check with the store (often the goods arrived and the receipt did not) and book the delivery in on Orders; the invoice matches again by itself.
I booked the delivery in and the invoice still disagrees	The invoice line must name the Order line the goods came on. If it bills for more than arrived, for more than was ordered, or at another price, that is a real variance: booking extra goods in never approves an invoice for them.
Over-delivery reduced my commitment total	It does not. Over-receipts are reported separately and never net off another line.

Reference

Order status

Status	Meaning
Draft	Being prepared. Commits nothing.
Issued	Sent to the supplier. Commits everything not yet received.
Part received	Some goods delivered. Commits the balance.
Received	Fully delivered. Commits nothing.
Closed	Closed short, with a reason. Commits nothing; what it would have committed is shown as released.
Cancelled	Withdrawn before anything arrived. Kept, not deleted.

Who can do what

Action	Clearance
Read the order book and the supplier register	Level 2
Book a delivery in	Level 2
Book an invoice	Level 3
Raise a draft order, add a supplier	Level 3
Edit a draft order	Level 3
Read invoices and the match exceptions	Level 3
Issue an order	Level 6
Close an order short	Level 6
Pay anyway: approve an invoice whose match failed, or that has no order	Level 6
Read commitment and payables	Level 6
Record a payment	Level 6
Correct a record: reverse a delivery or a payment, void an invoice, cancel an order, edit or deactivate a supplier	Level 6
Everything above	The account holder

Two acts are kept apart, whatever your level. The member who raised an order does not issue it, and the member who booked an invoice does not approve it with Pay anyway. The account holder may do both.

Words this module uses

Term	Meaning
Commitment	Money promised by an issued order but not yet spent.
Three-way match	Reconciling order, receipt and invoice.
Tolerance	How much difference is not worth reporting.
Receipt	A record of goods that arrived against an order line: how much, when, and who took them in.
Over-receipt	More arrived than was ordered.
Close short	Finishing an order that will never be completed, so its balance stops counting as committed.
Released	What an order closed short would otherwise still have committed.
Maverick spend	An invoice with no order behind it.
Payable	An invoiced amount not yet paid.

Taking the data with you

Orders, invoices, payables and suppliers are registers: each offers reading-mode preview, Excel, PDF, print and share, and exports what you have filtered to. So does an order's own window (its lines, its deliveries and its value as one document) and the Commitment screen, whose export carries every open commitment with a totals row per currency, what is owed, and the exception counts. Figures export as numbers, so they sort and add up in Excel, and each currency has its own totals row. See Taking data away.