In this blog post, I’ll show you how to create a quote, convert it to an order and then create the invoice from the order.
4:10: Quick walk-through on the two ways to process an invoice
There are two documents on the Purchasing side – purchase quote and a purchase order. Based on your approval process, you need to determine which one to use. If you don’t have an approval process, then there is no reason to create a quote. You can just create a purchase order, send it to the vendor and then invoice it. If you do have an approval process, then a user with an Essentials license can create the order and route the order for approval. The approver can approve the purchase order document. This approver can be a user with Team member license.
If you have a more decentralized process for requisitions where it’s not a finance person creating a request (an Essentials user) but it’s an Admin for departments or the actual person within the department that wants to buy the good/service is creating that request, then you may give team member licenses to users to create a request rather than finance creating the request via purchase order. This is typically the case with a larger company.
Most companies use a quote and then convert it to an order because they have a more of decentralized approach. In the short video above, I’ll walk you through this process.
After you have converted the quote to an order, you can process the invoice. There are 2 ways of processing an invoice.
One way is to post the invoice and receipt at the same time. This is the easiest and quickest way, and it automatically goes right to your AP Aging ready to pay. The advantage with this method is speed and efficiency. The downside is that you don’t have the opportunity to edit the invoice. For example, if you want to add Freight or Taxes or some sort of additional charge that was not on the PO and you want to add to the invoice, the only way to accomplish that is to create the receipt from the PO and then create the invoice, match it against the receipt and then add the additional lines.
Another way of processing an invoice is creating the receipt and invoice separately. The main advantages are that you can edit the invoice at a line if needed or you can route it for approval.
In some cases, like Services or a large piece of equipment, you would want to approve the invoice even though you have approved the PO. It is kind of a double approval. In these cases, PO would be more about you approving the purchase is essentially budgeted and management is okay asking the vendor to perform the service or provide the good. Approving the invoice for payment is more about what they provided is to your liking/upto your quality standards and that its okay to pay the invoice.
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– Jason has over 20 years of financial leadership experience in high growth technology companies. He is a Microsoft Certified Dynamics 365 Business Central Functional Consultant Associate. See Credential.
