A Purchase Invoice is a bill you receive from your Suppliers against which you need to make the payment.

The Purchase Invoice mirrors the Sales Invoice but in reverse, as it involves accruing expenses from your Supplier. Creating a Purchase Invoice follows a similar process to creating a Purchase Order.

To access the Purchase Invoice list, go to:

Home > Accounting > Accounts Payable > Purchase Invoice

 

1. Prerequisites

Before creating and using a Purchase Invoice, it is advised to create the following first:

• Item
• Supplier
• Purchase Order
• Purchase Receipt (optional)

2. How to create a Purchase Invoice:

A Purchase Invoice is typically generated from either a Purchase Order or a Purchase Receipt. It automatically retrieves the Supplier’s Item details. However, you also have the option to create a Purchase Invoice directly.

To automatically populate a Purchase Invoice, click on “Get Items from” to fetch details from a Purchase Order or Purchase Receipt.

For manual creation, follow these steps:

1. Navigate to the Purchase Invoice list and click on New.
2. Select the Supplier.
3. The posting date and time are initially set to the current values, which can be edited after checking the checkbox below Posting Time.
4. Set the Due Date for payment.
5. Add Items and quantities in the Items table.
6. The Rate and Amount will be retrieved automatically.
7. Save and Submit.

2.1 Additional options when creating a Purchase Invoice

• Is Paid: You can mark this checkbox if the amount has been settled either partially or in full via an Advance Payment Entry.
• Is Return (Debit Note): Check this box if the customer has returned the items. For further information, refer to the Debit Note page.
• Apply Tax Withholding Amount: If the chosen supplier has a Tax Withholding Category configured, this checkbox will become active.

2.2 Statuses

• Draft: A draft has been saved but not yet submitted to the system.
• Return: The items have been returned to the supplier.
• Debit Note Issued: A Debit Note has been issued against the invoice for the returned items.
• Submitted: The purchase invoice has been submitted to the system and the general ledger has been updated.
• Paid: The supplier has been fully paid the invoice amount, and the corresponding Payment entries have been submitted.
• Partly Paid: The supplier has been partially paid the invoice amount, and the corresponding Payment entries have been submitted.
• Unpaid: The purchase invoice is awaiting payment.
• Overdue: The payment due date has passed.
• Canceled: The invoice has been canceled for some reason.

3. Features

3.1 Accounting Dimensions

Accounting Dimensions lets you tag transactions based on a specific Territory, Branch, Customer, etc. This helps in viewing accounting statements separately based on the criteria selected. To know more, visit the Accounting Dimensions page.

Note: Project and Cost Center are treated as dimensions by default.

3.2 Holding the Invoice

Occasionally, you might need to delay the submission of an invoice.

Hold Invoice: Activate this checkbox to place the Purchase Invoice on hold. This action can only be taken before submitting the invoice. Once ‘Hold Invoice’ is activated and the Purchase Invoice is submitted, the status will change to ‘Temporarily on Hold’.

If you need to adjust the ‘Release Date’ after submitting the purchase invoice, you can utilize the ‘Hold Invoice’ button located at the top right corner.

To hold a submitted purchase invoice, you can use the ‘Block Invoice’ option. If you wish to unblock it later, you can use the ‘Unblock Invoice’ option.

This is invoice level holding; Suppliers can be put on hold. Learn more here.

3.3 Supplier Invoice Details

3.4 Address and Contact

• Supplier Address: This refers to the billing address of the supplier.
• Contact Person: If the Supplier is a company, the designated contact person’s information is retrieved from this field if it’s provided in the supplier’s form.
• Shipping Address: This is the address to which the items will be shipped.

For transactions in India, the following details can be recorded for GST (Goods and Services Tax) purposes:

• Supplier GSTIN (Goods and Services Tax Identification Number)
• Place of Supply Company GSTIN

3.5 Currency and Price list

You have the option to designate the currency for the Purchase Invoice order. This currency setting is typically obtained from the Purchase Order. If you’ve established a Pricing List, the item prices will be retrieved from that list. By selecting ‘Ignore Pricing Rule’, any Pricing Rules configured in Accounts > Pricing Rule will be disregarded.

Read about Price Lists and Multi-Currency Transactions to know more.

3.6 Subcontracting or ‘Supply Raw Materials’

Setting ‘Supply Raw Materials’ option is useful for subcontracting where you provide the raw materials for manufacturing an Item. To know more, visit the Subcontracting page.

3.7 Items table

• scan barcode: You can add Items in the Items table by scanning their barcodes if you have a barcode scanner. Read documentation for tracking items using barcode to know more.
• The Item Code, name, description, Image, and Manufacturer will be fetched from the Item master.
• Manufacturer: If the item is produced by a particular manufacturer, you can specify it here. This information will be retrieved if it is configured in the Item master.
• Quantity and Rate: Upon selecting the item code, its name, description, and unit of measure (UOM) will be retrieved. The ‘UOM Conversion Factor’ defaults to 1, but you can adjust it based on the UOM received from the seller, as discussed further in the next section.The ‘Price List Rate’ will be fetched if a standard buying rate is specified. The ‘Last Purchase Rate’ reflects the rate of the item from your most recent purchase order. Additionally, the rate will be fetched if it is configured in the item master. You can also apply a specific tax rate to the item by attaching an item tax template.
• Item weights will be fetched if set in the Item master else enter manually.
• Discount on Price List Rate: You can apply a discount on individual Items percentage-wise or on the total amount of the Item.
• Item Weight: The Item Weight details per unit and Weight UOM are fetched if set in the Item master, else enter manually.
• Accounting Details: The Expense account can be changed here you wish to.
• Deferred Expense: If the expense for this Item will be billed over the coming months in parts, then tick on ‘Enable Deferred Expense’. To know more, visit the Deferred Expense page.
• Allow Zero Valuation Rate: Ticking on ‘Allow Zero Valuation Rate’ will allow submitting the Purchase Receipt even if the Valuation Rate of the Item is 0. This can be a sample item or due to a mutual understanding with your Supplier.
• BOM: If there is a Bill of Materials created for the Item, it’ll be fetched here. This is useful for reference when subcontracting.
• Item Tax Template: You can set an Item Tax Template to apply a specific Tax amount to this particular Item.
• Page Break will create a page break just before this Item when printing.

Update Stock

If you wish for BizCentric to automatically adjust your inventory, please ensure the “Update Stock” checkbox is selected. This eliminates the necessity for a Delivery Note.

3.8 Taxes and charges

The Taxes and Charges will be fetched from the Purchase Order or Purchase Receipt.

The total taxes and charges will be displayed below the table.

To add taxes automatically via a Tax Category, visit this page.

Make sure to mark all your taxes in the Taxes and Charges table correctly for an accurate valuation.

Shipping Rule

A Shipping Rule helps set the cost of shipping an Item. The cost will usually increase with the distance of shipping. To know more, visit the Shipping Rule page.

3.9 Additional Discount

Any additional discounts to the whole Invoice can be set in this section. This discount could be based on the Grand Total i.e., post tax/charges or Net total i.e., pre tax/charges. The additional discount can be applied as a percentage or an amount.

3.10 Advance Payment

For high-value items, sellers may request an advance payment before fulfilling the order. Utilize the “Get Advances Received” button to access a popup where you can retrieve orders for which advance payments have been received.

3.11 Payment Terms

The payment for an invoice may be made in parts depending on your understanding with the Supplier. This is fetched if set in the Purchase Order.

3.12 Write Off

3.13 Terms and Conditions

In sales and purchase transactions, specific terms and conditions may govern the provision of goods or services by the supplier to the customer. These terms and conditions can be applied to transactions and will be displayed when printing the document. To know about Terms and Conditions, click here.

3.14 Printing Settings

Letterhead

You can print your Purchase Invoice on your Company’s letterhead.

‘Group same items’ will group the same items added multiple times in the Items table. This can be seen when your print.

Print Headings

3.15 GST Details (for India)

The following details can be set for GST:

• GST Category
• Invoice Copy
• Reverse Charge
• E-commerce GSTIN
• Eligibility For ITC
• Availed ITC Integrated Tax
• Availed ITC Central Tax
• Availed ITC State/UT Tax
• Availed ITC Cess

3.16 More Information

• Is Opening Entry: Choose ‘Yes’ if this entry is part of the opening balance adjustments for your accounts. For instance, if you are transitioning from another ERP system to BizCentric during the fiscal year, you may need to use an opening entry to reconcile account balances.
• Remarks: Use this field to include any additional comments or notes relevant to the purchase invoice.

3.17 After Submitting

On submitting a Purchase Invoice, the following documents can be created against it:

1. Journal Entry
2. Payment Entry
3. Payment Request
4. Asset

 

4. More

4.1 Accounting Impact

Much like a Sales Invoice, when creating a Purchase Invoice, you need to allocate an Expense or an Asset account for each item listed in your Items table. This helps identify whether the item is categorized as an Asset or an Expense. Additionally, you can adjust the Cost Center as needed. These settings can also be configured in the Item master, and the Cost Center can be defined at the Company level.

The Purchase Invoice impacts your accounts as follows:

Accounting entries (GL Entry) for a standard double-entry “purchase”: Debits:

• Expense or Asset (net totals, excluding taxes)
• Taxes (or assets if VAT-type, or expense again) Credits:
• Supplier

4.2 Accounting When Is Paid is checked

If Is Paid is checked, BizCentric will also make the following accounting entries:

Debits:

• Supplier

Credits:

• Bank/Cash Account

To see entries in your Purchase Invoice after you “Submit”, click on “View Ledger”.

4.3 Is purchase an “Expense” or an “Asset”?

If the item is immediately consumed upon purchase or if it represents a service rendered, then the purchase is categorized as an “Expense.” For instance, expenses like telephone bills or travel costs are considered immediate expenses as they are already consumed.

In the case of inventory items that possess a monetary value, these purchases are not immediately classified as “Expense” since they retain value while in stock. They are recognized as “Assets.” When such items are raw materials utilized in a production process, they transition to “Expense” at the point of consumption in the process. Similarly, if they are intended for sale to a customer, they are deemed as “Expense” upon shipment to the customer.

4.4 Deducting Taxes at Source

In various countries, legal regulations may mandate the deduction of taxes when remitting payments to suppliers. These taxes often adhere to standard rates. In such schemes, if a supplier surpasses a specified payment threshold and the product type is taxable, you may be obligated to withhold a certain tax amount (which you then remit to the government on behalf of your supplier).

To comply with this requirement, you’ll need to establish a new Tax Account under “Tax Liabilities” or a similar category. You would credit this account by the percentage you are required to deduct for each transaction.

4.5 Hold Payments for A Purchase Invoice

There are two ways to put a purchase invoice on hold:

• Date Span Hold
• Explicit Hold

Explicit Hold

To explicitly hold a purchase invoice indefinitely, you can follow these steps:

1. In the “Hold Invoice” section of the purchase invoice form, tick the “Hold Invoice” checkbox.
2. Provide a comment in the “Reason For Putting On Hold” text field, explaining why the invoice is being put on hold.

If you need to hold a submitted invoice, proceed as follows:

1. Click the “Make” button.
2. Select “Block Invoice”.
3. In the dialog that appears, add a comment detailing because the invoice is being put on hold.
4. Click “Save” to confirm the action.

Date Span Hold

5. Related Topics

1. Sales Invoice
2. Payment Entry
3. Payment Request
4. Purchase Order
5. Purchase Receipt