Purchase Orders for Services and Status Reporting in Dynamics NAV

July 2, 2019New View Strategies

I’m often asked, “What should we be using Purchase Orders for, besides the obvious inventory purchases”? Unfortunately, the answer is that it depends. It depends on who is responsible for Purchase Orders (POs). It depends on what your internal processes are for managing POs for non-inventory purchases. It depends on what your company’s goal is with POs.

I’m a firm believer in using POs for more than just the standard inventory purchases. Did you know a PO can be used to purchase Inventory, a G\L Line, Item Charges and even Fixed Assets? The one thing I’d really love to see Microsoft add in is the ability to purchase a Resource, but for now we can work around that small detail.

So, what would I use a PO for, if not just Inventory? A long-term service contract is another great use of the PO. Let’s say you have a 12-month contract for $1,000 per month to provide advertising clicks. Creating the PO as a single line, quantity of 12 and a unit price of $1,000 allows monthly receipt and invoicing of a service. It provides an outstanding amount expected to be paid over the 12 months.

Reporting on outstanding POs monthly will elevate awareness to the purchasing, accounting, and other related teams for departmental expenses expected, liabilities outstanding for signed contracts and will help ensure proper clean-up of outstanding POs. Three great reports to review are the Outstanding Order Purchase Stat. by PO, Outstanding Purch. Order Status, and the Outstanding Purch. Order Aging. Each provide a slightly different insight to your outstanding POs.

The Outstanding Purchase Stat. by PO lists all POs where the Quantity Remaining on a line is greater than zero, in PO order. It provides a quick, detailed list of the outstanding quantity as well as the outstanding amount, providing insight to future cash requirements.

The Outstanding Purch. Order Status is very similar to the report above. The prime difference of this report versus the previous is the sorting. In this report, the POs are grouped by the vendor, providing a quick view of future liabilities with each vendor.

The Outstanding Purch. Order Aging report lists all POs where there is Quantity Remaining on a line greater than zero. Selecting the Begin Aging on Date will create the time buckets to review and the amount represented in the aging buckets is calculated on the Expected Receipt Date (by line). In the example from above, the PO was created on January 1st, however since it is for 12 months, the Expected Receipt Date has been setup for December 31st. This provides an expected end time for the contract.

Ultimately, a PO can be used for just about anything you want. If you haven’t begun using POs for expenses other than inventory purchases, now is a great time to review your processes and determine how else you might utilize the system to manage information you’re tracking outside NAV or in your head.

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The experts at New View Strategies are experienced Dynamics NAV and Business Central trainers and business process consultants who have walked in your shoes as former Corporate Controllers, Directors of IT, and Solution Architects, and believe increased utilization of your business systems is critical to the continued success of your company.
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