Purchase Processing

The Purchase Cycle

Purchase Document Flow

Purchase Quote ──→ Purchase Order ──→ Posted Receipt ──→ Posted Invoice
       │                                                       ▲
       └────────────────→ Purchase Invoice ────────────────────┘
                          (skip order stage)

• Purchase Quote — Request pricing from a vendor. No financial impact. Can convert to Purchase Order.
• Purchase Order — Commitment to buy. Supports partial receiving and invoicing.
• Purchase Invoice — For simple purchases where you receive and invoice at the same time (no separate receipt tracking needed).

Managing Purchase Quotes

Nina needs pricing for 500 units of packaging material from three vendors. She creates a purchase quote for each.

Steps:

1. Search for Purchase Quotes and create a new quote
2. Select the vendor
3. Add items with quantities on the lines
4. Send the quote to the vendor (print or email)
5. When the vendor responds with pricing, update the quote

Converting a quote: Once Nina selects a vendor, she opens the winning quote and clicks Make Order. BC creates a purchase order with all the line details carried over. The original quote is archived.

Creating and Processing Purchase Orders

A purchase order is the core purchasing document. It tracks what you ordered, what you have received so far, and what has been invoiced.

Key fields on a purchase order:

Field	Purpose
Vendor No.	The supplier you are buying from
Vendor Invoice No.	The vendor’s invoice number (for matching)
Order Date	When the order was placed
Expected Receipt Date	When you expect delivery
Location Code	Where the goods will be received

Order lines include Item No., Description, Quantity, Direct Unit Cost, and Line Amount.

Receiving Items

When goods arrive at the warehouse, you post a receipt against the purchase order.

Full Receipt

Set Qty. to Receive equal to the full quantity, then click Post and choose Receive. This creates a Posted Purchase Receipt and updates inventory.

Partial Receipt

If only part of the order arrives (e.g., 300 of 500 units), set Qty. to Receive to 300 and post. The order stays open for the remaining 200 units. BC tracks:

Field	After partial receipt
Quantity	500 (original order)
Qty. Received	300
Qty. to Receive	200 (remaining)

You can post multiple receipts against the same purchase order until the full quantity is received.

Over-Receipts

Sometimes the delivery truck brings more than you ordered. Rather than refusing the excess or creating complex manual adjustments, BC has the over-receipt feature.

Setting Up Over-Receipt Codes

1. Search for Over-Receipt Codes
2. Create a code (e.g., “ORC-10” for 10% tolerance)
3. Set the Over-Receipt Tolerance % (e.g., 10)
4. Optionally enable Approval Required for over-receipts

Assigning the Code

Assign the over-receipt code on:

• Item Card — applies to all purchases of that item
• Vendor Card — applies to all purchases from that vendor

Processing an Over-Receipt

Nina ordered 500 bolts, but 540 arrive. The over-receipt code allows 10% (50 bolts tolerance).

1. On the purchase order, set Qty. to Receive to 540
2. BC automatically calculates the Over-Receipt Quantity as 40
3. Post the receipt — the order quantity is not changed, but the received quantity reflects what actually arrived

💡 Exam tip: Over-receipts and blanket orders

Over-receipts are not allowed on lines created from blanket purchase orders. This is a favourite exam trap — if the scenario involves a blanket order, over-receipt is not an option.

Reversing a Receipt (Undo Receipt)

Mistakes happen — maybe the goods were counted wrong, or the delivery was for the wrong order.

Steps to undo a receipt:

1. Open the Posted Purchase Receipt
2. Select the line(s) you want to reverse
3. Click Undo Receipt

BC creates a negative receipt entry that reverses the inventory impact. The Qty. Received on the original purchase order is reduced, and the line re-opens for receiving.

Limitations:

• You can only undo receipts that have not yet been invoiced
• If the items have already been consumed (e.g., sold or used in production), you cannot undo the receipt

Creating a Posted Invoice from a Purchase Order

After receiving goods, you need to record the vendor’s bill. Two approaches:

Option 1: Invoice Directly from the Purchase Order

1. Open the purchase order
2. Set Qty. to Invoice for each line
3. Click Post and choose Invoice (or Receive and Invoice for simultaneous posting)

This creates a Posted Purchase Invoice and updates vendor ledger entries and G/L entries.

Option 2: Separate Purchase Invoice

1. Create a new Purchase Invoice
2. Use Get Receipt Lines to pull in posted receipt lines
3. This is useful when one vendor invoice covers multiple purchase orders

ℹ️ Scenario: Nina's multi-order invoice

Nina receives one invoice from a packaging supplier covering three different purchase orders delivered over the past month. She creates a single Purchase Invoice, uses Get Receipt Lines to pull in the receipts from all three POs, and posts one invoice that matches the vendor’s billing.

Recurring Purchase Lines

If you buy the same items from the same vendor regularly (monthly office supplies, weekly cleaning services), set up recurring purchase lines to auto-populate order lines.

Setup:

1. Open the Vendor Card
2. Navigate to Related > Purchases > Recurring Purchase Lines
3. Add lines with Item No., Description, Quantity, and Cost
4. Set the Recurrence settings (e.g., start date, frequency)

Usage:

When Nina creates a new purchase order for that vendor, she clicks Get Recurring Purchase Lines and the standard items populate automatically — no retyping needed.

This is different from a blanket order (which is a committed agreement). Recurring lines are simply a convenience template.

Blanket Purchase Orders

A blanket purchase order is a framework agreement for purchasing large quantities over time, with deliveries in smaller batches.

When to Use

• Long-term supply agreements (e.g., “We will buy 10,000 units over the next 12 months”)
• Agreed pricing locked in for the duration
• Actual deliveries released as needed

How They Work

1. Create a Blanket Purchase Order with the full agreed quantity and price
2. When a delivery is needed, use Make Order to create a regular purchase order for a specific quantity
3. The blanket order tracks how much has been released vs remaining

Example: Summit Distribution agrees to buy 10,000 bolts from a supplier over 12 months at a locked-in price of 0.12 per unit. Raj creates a blanket PO for 10,000. Each month, Nina releases 800-900 units by creating purchase orders from the blanket. The blanket order shows the remaining committed quantity.

Aspect	Purchase Order	Blanket Purchase Order
Purpose	One-time or ad-hoc purchase	Long-term framework agreement
Quantity	Exact quantity for this delivery	Total agreed quantity over time
Pricing	Set per order	Locked in for the agreement duration
Deliveries	Single delivery (or partial receipts)	Multiple releases over time via Make Order
Inventory impact	Yes — when received	No direct impact — only when released POs are received
Over-receipts allowed?	Yes (if configured)	No — not allowed on blanket order lines
Typical use	Standard purchasing	Annual supply contracts, bulk agreements

Deferrals on Purchase Documents

Not every cost belongs in the month you receive the invoice. Office rent paid quarterly should be spread across three months. This is where deferrals come in.

Deferral Templates

Set up deferral templates that define how costs are spread:

Field	Example
Deferral Code	RENT-3M
Deferral Account	Prepaid Rent (balance sheet)
Calc. Method	Straight-line
No. of Periods	3
Period Description	Monthly rent deferral

Applying Deferrals to Purchase Lines

1. On a purchase order or invoice line, set the Deferral Code field
2. Click Deferral Schedule to view/adjust the period breakdown
3. When posted, BC automatically creates G/L entries that spread the cost across the defined periods

Example: Nina receives an annual software licence invoice for 12,000. She applies the deferral template “SW-12M” to spread 1,000 per month across the financial year.

ℹ️ How deferrals post

When the purchase invoice is posted, BC creates:

• A credit to the vendor (full amount)
• A debit to the deferral account (full amount) — e.g., Prepaid Expenses
• Monthly journal entries that move 1/12th from Prepaid Expenses to the expense account

This ensures each month’s P&L reflects the correct expense, regardless of when the invoice was paid.

Question

What is the purchase document flow in Business Central?

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Answer

Quote (optional) to Purchase Order to Posted Receipt to Posted Invoice. Alternatively, you can skip the order stage entirely and go from Quote directly to Purchase Invoice, or create a Purchase Invoice without a quote for simple purchases.

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Question

What is an over-receipt and how is it configured?

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Answer

An over-receipt allows receiving more items than ordered, within a defined tolerance percentage. Configure it by creating an Over-Receipt Code with a tolerance %, then assign the code to items or vendors. Over-receipts are NOT allowed on blanket purchase order lines.

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Question

How do you reverse a posted purchase receipt?

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Answer

Open the Posted Purchase Receipt, select the line, and click Undo Receipt. This creates a negative entry reversing the inventory impact. You can only undo receipts that have not yet been invoiced.

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Question

What is a deferral template and when would you use it?

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Answer

A deferral template defines how to spread a cost across multiple accounting periods (e.g., straight-line over 12 months). Apply it on purchase lines for prepaid expenses like annual licences, quarterly rent, or insurance premiums. BC automatically creates the period-by-period G/L entries.

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Question

How do recurring purchase lines differ from a blanket purchase order?

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Answer

Recurring purchase lines are a convenience template — they auto-populate standard items when you create a new order for a vendor. A blanket purchase order is a committed agreement with a fixed total quantity and locked pricing, where you release partial orders over time.

Click to flip back

Knowledge Check

Knowledge Check

Nina ordered 200 units from a vendor. The delivery contains 220 units. The item has an over-receipt code with a 15% tolerance. What happens when Nina enters 220 in Qty. to Receive?

ABC rejects the receipt because 220 exceeds the ordered quantityBBC accepts the receipt. The Over-Receipt Quantity shows 20 and the order quantity stays at 200CBC automatically increases the order quantity to 220DBC creates a separate purchase order for the extra 20 units

Check Answer

Knowledge Check

Summit Distribution has a 12-month agreement with a bolt supplier for 10,000 units at a fixed price. They want to release 800-900 units each month as needed. Which document should Raj create?

AA purchase order for 10,000 units with partial receipts each monthBA blanket purchase order for 10,000 units, releasing monthly purchase ordersC12 separate purchase orders, one per monthDA recurring purchase line on the vendor card for 850 units

Check Answer

Knowledge Check

Nina posts a purchase receipt for 500 items but then discovers the delivery was actually for a different purchase order. The receipt has not been invoiced yet. What should she do?

ADelete the posted purchase receiptBCreate a purchase credit memo to reverse the receiptCOpen the Posted Purchase Receipt and use Undo ReceiptDAdjust the Item Journal to remove the 500 items

Check Answer

🎬 Video coming soon

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Next up: The purchasing cycle complete, let’s mirror it on the selling side — sales quotes, orders, shipments, and invoices, plus blanket sales orders and deferrals.