Is it possible to issue PO's for items that are not in Inventory? Items such as office supplies?
The Purchase Order module has the capability to handle non-inventory items. Go to PO Setup / Options and open the Processing Tab. Turn on the option 'Allow non-inventory items'. Next to go PO Setup / GL Integration on the Integration tab. There are three items here which need attention.
1. Create G/L Entries for Non-Inventory Expenses from Receipt/Return - If this option is turned on, then when a receipt is entered for a non-inventory item, an entry is sent to the General Ledger, which debits the expense account and credits the non-inventory payables clearing account. If this option is not turned on, receiving the goods will generate no entry at all.
2. Non-Inventory Payables Clearing Account - if the option to create GL entries from receipts & returns is turned on (item 1), this is the account the credit side of the receipt entry goes to.
3. Default Inventory Expense Account - this is the account that is defaulted as the expense account in the Purchase Order, or the PO Receipt or the PO Invoice, when non-inventory items are ordered, received, or invoiced. This is a default only, and the account can be changed on any of these documents at the time of entry depending on the setting in item 1. If the option (in item 1) to create entries for receipts is turned on, the account can be edited at the PO and Receipt level, but not on the Invoice. If the option to create entries for receipts is not turned on, the expense account can be edited during the PO, receipt, or invoice entry.
Here are a couple of examples: (using the default GL accounts in the screenshot above)
A. 'Create GL entries for non-inventory expense from receipt/return' is turned on. PO is issued for a carton of paper. Carton of paper is received. Entry sent to the GL is DEBIT 6380, CREDIT 2045. PO invoice is entered and applied against the receipt. Entry is sent to AP and becomes a trade payable: DEBIT 2045, CREDIT ap trade account.
B. 'Create GL entries for non-invenotry expenses from receipt/return' is NOT turned on. PO is issued for a carton of paper. Carton of paper is received. No entry is sent to the GL. PO invoice is entered and applied against the receipt. Entry is sent to AP and becomes a trade payable: DEBIT 6380, CREDIT ap trade account.
Note that entering a non-inventory item is as simple as typing in anything (that is not an inventory item) in the item field. When a detail line for a non-inventory item is added to a Purchase Order or a Receipt, a warning message will popup on the screen stating that the item does not exist. If the option to allow non-inventory items is turned on, simply close this warning and continue. If the option to allow non-inventory items is not turned on, closing this warning will return the cursor to the item number field and a valid item number (from Inventory) must be added before being allowed to continue.