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Operations

Purchase Cycle

Purchase order, goods receipt, purchase invoice and payment.

The flow

The purchase cycle mirrors sales, from the supplier's side. It runs from ordering goods through to paying the supplier, with each document converting into the next.

Purchase OrderGoods ReceiptPurchase InvoicePayment

Purchase Order

A purchase order (PO) is your formal request to a supplier: what you are buying, at what price, and when. It has no ledger or stock impact on its own. Send it to the supplier and use it as the basis for receiving goods and matching the supplier's invoice.

Goods Receipt Note (GRN)

The goods receipt records what physically arrived. Receiving against a PO increases stock and values it at the purchase cost, so inventory reflects reality as soon as goods land — before the supplier invoice arrives.

Stock moves on the goods receipt

On-hand quantity goes up when you post the GRN, not when you enter the purchase invoice. You can receive partial shipments and receive the balance later against the same PO.

Purchase Invoice (Bill)

The purchase invoice is the supplier's bill. Match it to the PO and the goods receipt so quantities and prices agree (three-way matching). On finalisation it:

  • Posts a journal recording the expense or asset and the payable.
  • Recognises input VAT, which offsets output VAT on your VAT return.
  • Adjusts inventory value if the billed cost differs from the receipt.

Payment

A payment records money paid to a supplier and is allocated to open purchase invoices. Select the payment mode and bank or cash account; the payment posts a journal moving value from payables to the paying account and clears the supplier balance.

Pay several bills at once

A single payment can settle multiple purchase invoices for the same supplier. The supplier ledger shows the running outstanding balance.

Debit notes

To return goods or correct an over-charge after a purchase invoice is finalised, raise a debit note against it. Like a credit note on the sales side, it reverses the relevant amounts and VAT rather than editing the original document.