Summary: Frequently-asked questions about
purchase orders. Purchase Orders are used to track what you have ordered
from vendors. It's an easy way to control costs in two ways: it prevents
a staff member from placing unapproved orders, and it keeps vendors
from overcharging for their services. This FAQ answers some frequently-asked
questions about purchase orders.
Q.
Do we have to use purchase orders?
No, but it's a good business practice to use them. Unless you issue
purchase orders to vendors as a standard practice, you're leaving the
agency vulnerable to inaccurate deliveries and overcharges.
Q. Does a purchase order have to have a job and task?
No. POs can be added for non-job purchases, like letterhead and business
cards. In these cases you'd enter "NONE" as the job number.
Q. Can I issue a purchase order to anyone, or do I
have to use a vendor?
Purchase orders can only be added for a vendor. This helps Clients &
Profits keep track of purchases, since purchase orders are integrated
with Accounts Payable. If the PO was issued to a non-vendor, you couldn't
reconcile it with the supplier's invoice.
Q. What is the difference between a purchase order,
insertion order, work order, change order, and a broadcast order?
Insertion orders and broadcast orders are used for buying media from
magazines, newspapers, radio stations, and TV stations. Purchase orders
are used to order goods and services, such as printing. Work orders
are used by in-house agencies to order things that are charged against
a blanket PO issued by the accounting department. Change orders are
distinct forms that modify a purchase order, such as when you're increasing
the print quantity. All types of orders update jobs and are added and
printed in the same way.
Q. How do purchase orders affect jobs and job
reports?
Purchase Orders are commitments to a job ticket, not actual costs. They
appear in a separate "commitments" column on the job summary, and do
not appear with costs (i.e., time, payables, expenses, and checks).
The Job Commitment Report is printed from Job Tickets > Print Reports
> Job Reports. On this report, these titles mean the following:
- Net Cost: The net amount that the PO was entered for; what you
should pay the vendor.
- Gross: The gross amount that the PO was entered for; what you
could bill the client.
- Net PO's: The net balance on the PO = PO's net cost - AP invoices'
net amounts.
- Open PO's: The gross balance on the PO = PO's gross - AP invoices'
gross amounts.
A balance on a PO means that the vendor's A/P invoice has not been
received or added into Clients & Profits. In addition, a balance
can mean that an invoice came in for more or less than the PO amount.
A negative balance on a Purchase Order means that the A/P invoice
was for more than the purchase order.
Q. I haven't received the vendor's A/P yet, but I
need to bill the client now. What can I do?
Since the amount of the commitments you've made is on the job ticket,
you can easily bill the job's purchase order total. The Progress/Final
billing option lets you choose to include commitments on the job's
invoice. You will see the option to Bill this job's "Open PO's and
Insertion Orders" or "Unbilled Tasks + Open PO's." If you select one
of these options, any PO for that job with a gross balance will be
billed on the invoice. Another option is to create the Accounts Receivable
invoice directly from the Purchase Order. Find the purchase order,
then choose Edit > Pre-bill this PO/Insertion Order. It then creates
an unposted A/R invoice for the gross amount of the purchase order.
Q. How do I reconcile a purchase order with the vendor's
invoice?
When you add an A/P invoice, the first field you're prompted to enter
is the purchase order number. As you tab past the "line number" field,
the PO's vendor, amount, job number, and task are copied to the invoice.
When the invoice is posted, its amount will be applied to the purchase
order automatically. For step-by-step instruction, see the Job Costing
chapter of the user guide.
Q. What do I do when a purchase order has a balance,
but we've received all of the vendor's invoices?
Close the purchase order by clicking on the Closed checkbox, which
clears the PO's balance. Any leftover balance is removed from the
job ticket.
Q. How can I tell which invoices were posted for
a particular purchase order?
It's easy. Find the purchase order, then choose File > View PO's
Invoices.
Q. Which reports are commonly used to track
purchase orders?
The Over & Under Budget PO's report shows you all purchase orders
with a balance, which is helpful for tracking down errant invoices
from vendors. The Open PO list report shows Purchase Orders that have
a positive balance, which mean the vendors probably haven't sent you
the invoices yet. All of these reports can be printed from the Purchase
Order window (Choose File > Print PO Reports).
Q. I want to see a purchase order, but the menu
is grayed out. What's wrong?
If the menu command is disabled, it means you don't have access privileges
to see, add, and print purchase orders. It's a setting in the Users,
Access, & Passwords window that only system manager-level users
can change. The Access Privileges window has a dollar amount that
limits how high someone can write a purchase order. If the amount
is zero, the user won't have any access to purchase orders.
Q. When adding a purchase order I get a budget
warning, then can't save the PO. Why?
The budget alert means your purchase order is busting the job task's
budget. This warning is a user-defined option that can be set up for
individual C&P users, and is maintained by your system manager.
You'll need to talk to your system manager to have the budget alert
removed or decreased.
Q. Can I redesign the printed purchase order?
No. The format is an industry-standard design, based on extensive
research with hundreds of agencies over the last ten years. The fields
are arranged in a way so that the purchase order doesn't print on
two pages, unless its specifications are very long.
Q. How should I number purchase orders?
Clients & Profits automatically numbers purchase orders. The numbering
series is set up in Preferences (see Setup > Preferences > Purchase
Orders). You define the first number, which is incremented each time
a new order is saved. Each purchase order number must be unique; as
you tab past the PO number, Clients & Profits checks it for duplicates.
You can also manually number a purchase order by simply editing the
number. Insertion orders (for both print and broadcast) have their
own numbering series in Preferences.
Q. Are there any other shortcuts that save time
when adding purchase orders? Yes. There are two shortcuts: cloning
and templates.
If you're constantly adding the same kind of purchase order (for delivery,
for example), then consider "cloning" a purchase order. Cloning makes
an exact duplicate of any purchase order, which you can then freely
modify. A cloned PO gets the next sequence number, as if you'd added
it yourself. The PO template is simply a collection of standard, or
default, information for a certain kind of purchase order. When you
add a PO, you can choose a template from the Use Template pop-up menu.
Choosing a template copies its details to the new purchase order,
which you can change. Templates are easy to set up and can be changed
any time (see Setup > PO Templates).
Q. What is the purchase order status?
The status field describes what's happening with the purchase order
at any time. It's user-defined, so will be empty unless someone edits
it. The status also appears in red (if you have a color printer) on
the printed purchase order, so it's an ideal spot to write in "***
REVISED ***" or some other alert to the vendor. The status also appears
on the PO lookup list. The status has no affect on Accounts Payable,
the job ticket, or on client billings. Editing the PO status is easy:
From the Purchase Order window, choose Edit > Specifications. Or
choose Edit > Update Status to update many orders at once.
