Introduction to Purchase Invoices in Books by HansaWorld

The Purchase Invoice register is a record of your company's purchases. Each time you make a purchase, you will receive a Purchase Invoice from the Vendor, which you should enter to the Purchase Invoice register. You will therefore use this register for a number of tasks:
You can record three types of purchase transaction in the Purchase Invoice register:
  1. You will receive standard Purchase Invoices when goods have been delivered or work carried out before you have issued payment. You should record Payments against such Purchase Invoices in the Payment register, described here.

  2. The Cash Note represents your issuing of a payment at the same time as the work is carried out. When you enter a Cash Note to the Purchase Invoice register, Books by HansaWorld will treat it as having being paid, so there is no need to enter a separate payment record in the Payment register. Books by HansaWorld will also look after the General Ledger implications for you (crediting the Cash Account rather than the Creditor Account).

  3. You should use Credit Notes to correct mistakes in Purchase Invoices, or to cancel Invoices that have been raised in error. They are, in effect, negative Invoices that reduce your overall purchase and creditor figures. Again, Books by HansaWorld looks after these General Ledger implications automatically.
If you would like the General Ledger implications of all these types of Purchase Invoice to be looked after automatically as described, switch on the Purchase Invoice option in the Sub Systems setting in the General Ledger.

The use of the Purchase Invoice register, including each of these types of purchase transaction, is now described in detail. Before you start entering Purchase Invoices, however, you must ensure that you have defined the current (accounting) year, using the Fiscal Years setting.

Before working with Purchase Invoices, you should also look at the following settings and registers:

To open the Purchase Invoice register, use the [Module] button in the Master Control panel to enter the Payables module, and then click the [Purchase Invoices] button in the Master Control panel. The 'Purchase Invoices: Browse' window is opened, showing the Purchase Invoices that have already been entered.

Purchase Invoices are given a unique internal identifying code, using a consecutive numbering system. This is in addition to any number allocated to the Invoice by the issuer (the Vendor). The internal number is shown in the left-hand column, followed by a check mark (if the Purchase Invoice is approved), the Vendor's Invoice Number, the issue date, the Vendor Number and Name and finally by the Invoice value.

As in all browse windows you can change the sort order by clicking on the column headings. To reverse any sort, simply click once again on the column heading. You can scroll the list using the scroll bars or the trackpad. Finally, you can search for a record by entering a keyword in the field at the top right-hand corner. Books by HansaWorld will search for the first record matching the keyword in the same column as the selected sorting order. If you are using Mac OS X, you can also change the order of the columns by dragging the column headings, and remove columns altogether using the check boxes in the drawer.

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Entering a Purchase Invoice

To enter a new Purchase Invoice, open the 'Purchase Invoices: Browse' window as described here and click [New] in the Button Bar or use the ⌘-N or Ctrl-N keyboard shortcut. Alternatively, highlight a Purchase Invoice similar to the one you want to enter and click [Duplicate] on the Button Bar.

The 'Purchase Invoice: New' window is opened, empty if you clicked [New] or containing a duplicate of the highlighted Purchase Invoice. In the case of the duplicate, the Vendor Invoice Number will not be copied. Complete the Purchase Invoice record as described below, then save it using the [Save] button and close the window by clicking the close box. Then, close the browse window using the close box again.


No.
Paste Special    Select from another Number Series
The number of the Invoice in your Accounts Payable is provided automatically by Books by HansaWorld. The default is the first unused number in the first valid number sequence in the Number Series - Purchase Invoices setting. You may change this number, but not to one that has already been used.

If you have not defined any number sequences in the Number Series - Purchase Invoices setting, the Purchase Invoice Number sequence will start at 1 and continue consecutively. If you want the sequence to start from another number, change the Purchase Invoice Number of a Purchase Invoice before saving it: Books by HansaWorld will then continue the sequence from there.

If you are working in a multi-user environment, the Purchase Invoice Number will be assigned when you first save the Purchase Invoice.

Invoice Date
Paste Special    Choose date
The date when the Vendor issued the Invoice. This date, together with the Payment Terms, will determine when the Invoice will become due for payment. The date of the previous Purchase Invoice entered is used as a default.

Trans. Date
Paste Special    Choose date
This date will be used as the Transaction Date in the General Ledger Transaction that will result from the Purchase Invoice. You may thus separate Invoice and Transaction Dates in your ledgers.

!

If you enter different Invoice and Transaction Dates, there will be a timing difference between Accounts Payable and the General Ledger so long as the Invoice remains unpaid. This will be apparent when comparing the Accounts Payable report with the Creditor Control Account.

Vendor
Paste Special    Vendors in Contact register
Enter the Vendor Number or use the 'Paste Special' function. When you press Return, the Vendor's name and other information will be entered into the appropriate fields.

Name
The Vendor's Name is brought in after you have entered the Vendor Number.

TOTAL
The total amount to pay for this Invoice, including any taxes. Before you can save the Purchase Invoice, this figure must equal one of the following, depending on the Zone of the Invoice:
Local, Domestic (Post Tax) and Export (Post Tax)
the sum of the Amounts of the rows plus Tax.

Domestic
the sum of the Amounts of the rows.

Export
the sum of the Amounts of the rows. No Tax is calculated in this case.
The Zone is taken from the 'Account' card of the Contact record for the Vendor and can be seen on the right of the Purchase Invoice window.

Tax
As you add rows to a Purchase Invoice, the Calculated Tax field in the footer will be updated with the total Tax value, calculated using the Amounts and Tax Codes in each row.

If the total Tax amount on the Vendor's Invoice is different to the figure the Calculated Tax field, enter that figure here.

This serves two purposes. First, as mentioned in the description of the TOTAL field immediately above, if the Purchase Invoice is in the Local, Domestic (Post Tax) and Export (Post Tax) Zones, you will only be able to save it if the TOTAL is the same as the sum of the Amounts of the rows plus Tax. The Tax figure in this equation will be the figure in this field or, if this field is empty, in the Calculated Tax field. Second, the total figure posted to the Tax Input Account(s) will be the figure in this field or, if this field is empty, in the Calculated Tax field.

If the Invoice is from the Domestic or Export Zones, this field is not filled automatically and you should leave it blank. In the case of the Domestic Zone, Tax is calculated using the Tax Code of each row and is shown in the Calculated Tax field in the footer.

Vendor Inv. No.
The Vendor's invoice number.

Bank A/C
Default taken from    Contact record for the Vendor
The Vendor's bank account number is brought in from the 'Account' card of the Contact record for the Vendor. If necessary, you can change it to allow payment to be sent to a different account.

Pay. Terms
Paste Special    Payment Terms setting, Receivables/Payables modules
Default taken from    Contact record for the Vendor (Purch. Pay Terms)
Payment Terms entered here will be used to calculate the Due Date (below). You can also use Payment Terms to configure a system of early settlement discounts.

Payment Terms are also the means by which Cash Notes and Credit Notes are distinguished from ordinary Invoices. Using 'Paste Special', select a Payment Term record of the "Cash" or "Credit Note" Type respectively. When you then approve and save the Invoice, the appropriate General Ledger Transaction will be created. In the case of Cash Notes, this will credit the Cash Account (as specified in the Payment Term record) rather than the Creditor Account, while in the case of Credit Notes, the Transaction will be a reversal of the original Invoice Transaction.

Cash Notes are immediately treated as paid and so will not appear in your creditor reports. There is no need to enter a Payment against them. If you need to reverse a Cash Note, use a negative Cash Note, not a Credit Note.

When you select a Payment Term of the "Credit Note" type, enter the number of the Invoice to be credited in the Credit of Inv. field, using 'Paste Special' if necessary to bring up a list of open (unpaid) Invoices.

Credit of Inv.
Paste Special    Unpaid Purchase Invoices
If you are entering a Purchase Credit Note (sometimes known as a "debit memo"), enter here the number of the Purchase Invoice being credited. The Purchase Invoice being credited cannot itself be a Credit Note.

Remember to specify a Payment Term of Type "Credit Note" in the Payment Terms field: you must leave the Credit of Inv. field blank when the Payment Term is of any other Type.

Due Date
The date when the Purchase Invoice is to be paid, calculated by Books by HansaWorld using the Invoice Date and the Payment Term. You can change the Due Date, even after you have approved the Invoice. This will be useful if you agree a new Due Date for the Invoice with the Vendor and you need to re-schedule it in your Accounts Payable.

Reference
Record here any additional code associated with the Purchase Invoice. When you pay the Purchase Invoice, this Reference will be copied to the Bank Reference field on flip B of the relevant Payment row. It will then be printed on the Payment Form document provided you have included the "Our Reference" field in your Form design.

Tax Zone
Default taken from    Contact record for the Vendor
These radio buttons show the Vendor's Zone, brought in from the Contact register. The selection of a Tax Code for each row depends on the Zone of the Vendor. You cannot change the Zone in a Purchase Invoice: you should make any necessary changes in the Contact register before entering Purchase Invoices.

Tax is calculated as follows:
Local, Domestic (Post Tax) and Export (Post Tax)
Tax is calculated using the Tax Code of each row. In any General Ledger Transaction resulting from the Purchase Invoice, Tax is debited to the Input Account from the Tax Code and credited to the Creditor Account.

Domestic
Tax is calculated using the Tax Code of each row. In any General Ledger Transaction resulting from the Purchase Invoice, Tax is debited to the Input Account from the Tax Code and credited to the Output Account from the Tax Code. Therefore, it is recommended that you use a dedicated Tax Code for Tax on Domestic Purchases, with an Output Account that is not used in any other Tax Code.

It is usually recommended that you leave the Tax field in the header empty when entering Purchase Invoices from the Domestic Zone.

Export
Tax is not calculated. Any General Ledger Transaction resulting from the Purchase Invoice will not include a Tax element.
The remainder of the Purchase Invoice screen contains a grid that you should use to list the Purchase Invoice Items and Costs. To add rows to a Purchase Invoice, click in any field in the first blank row and enter appropriate text. To remove a row, click on the row number on the left of the row and press the Backspace key. To insert a row, click on the row number where the insertion is to be made and press Return.
Account
Paste Special    Account register, General Ledger/System module
Specify the Cost Account to be debited by the Purchase Invoice. Enter an Account number and press Enter. The Account name will be entered automatically to the Description field.

If the Contact record for the Vendor has a Cost Account specified on the 'Account' card, this will be entered as a default in the first row.

You can also enter the Code of an Autotransaction in this field. You can use Autotransactions to automate the entry of frequently used Transactions, not only reducing labor but also ensuring the correct Accounts are used every time.

Description
Default taken from    Account
The Account Name will be entered here automatically when you specify the Account above. You can change the Description if necessary.

Amount
The amount to be debited to the Cost Account.

A convenient way of quickly entering the correct value is to move the insertion point into the field and then to press the Enter or Return key. Books by HansaWorld will enter the correct value to balance the Purchase Invoice, taking the TOTAL and any previous rows into account.

Tx Cd
Paste Special    Tax Codes setting, General Ledger
This Tax Code will determine the rate at which Tax will be charged and the Input Tax Account to be debited.

The default offered in each row will be chosen as follows:
  1. The Purch. Tax Code for the Vendor will be used.

  2. It will be taken from the Account record.

  3. The Tax Code in the Account Usage A/P setting will be used.
In the last case, the appropriate Tax Code for the Zone of the Vendor will be used.

You can change this default in a particular Invoice row if necessary.

OK
When you check this box and save the record by clicking [Save], the Purchase Invoice will be approved and posted to your Accounts Payable. A corresponding Transaction will also be created in the General Ledger. Because of these consequences, you will no longer be able to make changes to the Purchase Invoice except to the Due Date and Vendor Inv. No. fields.

In multi-user systems, you can use Access Groups to control who can approve Purchase Invoices and Purchase Credit Notes. To do this, deny access to the 'OKing Purchase Invoices' and 'OKing Purchase Credit Notes' Actions respectively.

If you would like a warning to appear every time you save a Purchase Invoice that you have not approved, please refer to the Global Warnings on UnOKed Records setting in the System module.

References in these web pages to approved Purchase Invoices are to Purchase Invoices whose OK check box has been switched on (i.e. an approved Purchase Invoice is one that is no longer a Draft).

Calculated Tax
The Tax sum, calculated from the Purchase Invoice rows. This figure is calculated automatically as you add rows to the Purchase Invoice.

This figure is rounded up or down according to the Tax rounding rules set in the Round Off setting in the System module. In the General Ledger Transaction resulting from a Purchase Invoice, any amounts lost or gained in this rounding process will be posted to the Round Off Account specified in the Account Usage A/R setting.
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Entering a Purchase Invoice - Example

We shall now show how to use the various fields on the Purchase Invoice screen with the help of a few examples.

To open the Purchase Invoice register, first ensure you are in the Payables module and then click the [Purchase Invoices] button in the Master Control panel or use the ⌘-1 (Mac OS X) or Ctrl-1 (Windows) keyboard shortcut. The 'Purchase Invoices: Browse' window appears, listing the Purchase Invoices that are already in the system. Start entering a new Purchase Invoice by clicking the [New] button or using the ⌘-N/Ctrl-N keyboard shortcut. The 'Purchase Invoice: New' window opens, with internal Invoice Number entered. Enter the Invoice Date as shown on the Vendor's paper Invoice and press the Return key twice. The Invoice Date will be copied to the Transaction Date field. In almost all cases, these two dates should be the same otherwise your Creditor Account may not match your Accounts Payable report.

The insertion point is now in the Vendor Number field. Press ⌘-Return/Ctrl-Return: this brings up the 'Paste Vendor' window. Select a Vendor from the list by double-clicking on its name (or by using the cursor keys and pressing Return). Press Return again and Vendor information such as Name and default Payment Term will be placed in the appropriate fields on the Purchase Invoice screen.

The insertion point should now be in the TOTAL field. Enter the total amount payable (inclusive of tax), and, in the Tax field, the tax amount (this latter is optional). Press Return again to move the insertion point to the Vendor Invoice Number field, and enter the number.

Continue and enter the accounting information. Move the insertion point to the Account Number field of the first row in the grid area, and enter the Account Number. Use the 'Paste Special' function to gain access to the Chart of Accounts, from where you can choose the Account that you need. Search among the Accounts in the normal way, by Number or by Name. Highlight the relevant Account in the 'Paste Special' list and press Return or choose it by double-clicking. The Account will be brought into the Purchase Invoice row. Press Return again twice and enter the row amount (excluding Tax). In the last row, pressing Return in the Amount field will cause the Amount to be calculated for you so that the Invoice balances.

When you have added all the items and have checked the Invoice, approve it by checking the OK box. When you save the Invoice, it will be committed to your Accounts Payable.

Save the Invoice by clicking [Save] or [New]: use the latter option to continue with the next invoice. The TOTAL must equal one of the following before you can continue, depending on the Zone of the Invoice:

Local, Domestic (Post Tax) and Export (Post Tax)
the sum of the Amounts of the rows plus Tax.

Domestic
the sum of the Amounts of the rows.

Export
the sum of the Amounts of the rows. No Tax is calculated in this case.
If this is not the case, Books by HansaWorld will display the error message: "Transaction out of balance" when you try to save.

Until you have approved the Invoice by checking the OK box and saving, you can still change it.

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Inspecting and Approving Purchase Invoices

If you did not approve a Purchase Invoice when you entered it, you must approve it at a later time in order to commit it to your Accounts Payable, and, if so defined in the Sub Systems setting in the General Ledger, for the General Ledger Transaction to be generated. Approval also causes the Invoice record to be locked, so that you cannot change it after this point. You can only issue Payments against approved Purchase Invoices.

There are two ways to approve an Invoice:

  1. When viewing a Purchase Invoice, click the OK check box and then [Save]; or

  2. Highlight one or more Invoices in the 'Purchase Invoices: Browse' window and select 'OK' from the Operations menu.
In multi-user systems, you can use Access Groups to control who can approve Purchase Invoices and Purchase Credit Notes. To do this, deny access to the 'OKing Purchase Invoices' and 'OKing Purchase Credit Notes' Actions respectively.

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General Ledger Transactions from Purchase Invoices

When you approve and save a Purchase Invoice, a General Ledger Transaction will be generated automatically if you have so determined in the Sub Systems setting in the General Ledger. An example is illustrated below:

The Purchase Accounts (also known as Cost Accounts) in the General Ledger will record the levels of purchases of different types of Items. When you enter Purchase Invoices, you should enter a Purchase Account in each row (in the column marked 'Account'). Different rows can have different Purchase Accounts.

In some instances a default Purchase Account will be placed in the Account field in the first row of a Purchase Invoice. This default will appear if you have specified a Cost Account on the 'Account' card of the Contact record for the Vendor. You might specify such a default for Vendors of services (such as electricity or telephone services), whose Purchase Invoices are always posted to the same Account.

For each row in an Invoice, the Tax Account will be taken from the specified Tax Code. This will be chosen as follows:

  1. The Purchase Tax Code in the record for the Vendor in the Contact register will be used. If you do not, or if you have not specified a Purchase Tax Code for the Vendor in question:

  2. The Tax Code will be taken from the relevant Account record in the Account register. If this is blank:

  3. The Tax Code specified in the Account Usage A/P setting is used.
In the cases of point 3, the relevant Tax Code for the Zone to which the Vendor belongs will be used. Each of the three Zones can have a different Tax Code.
The Creditor Account is chosen as follows:
  1. The Creditor Account specified on the 'Account' card of the Contact record for the Vendor is used. If this is blank:

  2. The Creditor Account in the Vendor Category to which the Vendor belongs is used. If this is blank, or the Vendor does not belong to a Category:

  3. The Creditor Account will be taken from the Account Usage A/P setting.
If the Purchase Invoice is a Cash Note, the Cash Account in the relevant Payment Term record or in the Account Usage A/P setting will be used in place of the Debtor Account.

Once the Transaction has been generated, you can look at it straight away using the 'Open GL Transaction' function on the Operations drop-down menu.

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Cash Notes

A Cash Note is an Invoice that is to be treated as being paid. It differs from a normal Invoice in that it does not affect your Creditor Account or appear in any of your credit management reports: instead, a credit posting for the Invoice value is made directly to your Cash Account.

To enter a Cash Note, follow the procedure described here for entering Invoices, with just one exception: change the Payment Terms (using the 'Paste Special' function if necessary) to refer to a Payment Term record of Type "Cash". You can register such a Payment Term in the Contact records for Vendors you will always pay immediately (using the Purch. Pay. Terms field in the Contact register), so that you don't have to make this change every time.

Click the OK check box when you are sure the Cash Note is correct. As with ordinary Invoices, you must approve Cash Notes by checking the OK check box and saving, for them to be posted to your Accounts Payable and for General Ledger Transactions to be created.

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Crediting Purchase Invoices (Debit Memos)

If you want to credit a Purchase Invoice that has been sent to you, follow these steps:
  1. Create a new Purchase Invoice record, or duplicate the Purchase Invoice you want to credit. Duplicating will ensure that the correct Purchase Account(s) will be credited.

  2. Fill in the data in the normal way, but change the Payment Terms to refer to a Payment Term record of Type "Credit Note" and enter the number of the credited Invoice in the Credit of Inv. field. Use 'Paste Special' from this field to search for the correct Purchase Invoice Number. The Invoice to be credited must be approved.

  3. When you approve and save the Invoice, the Accounts Payable will be updated, and a new General Ledger Transaction will be generated.
In multi-user systems, you can use Access Groups to control who can approve Purchase Credit Notes: they need not be the same members of staff as those who can approve Invoices. To do this, deny access to the 'OKing Purchase Credit Notes' Action.

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Crediting Purchase Invoices - Purchase Credit Notes and Cash Notes

If you need to reverse a Cash Note, you cannot follow the standard crediting procedure. A Credit Note will debit the Creditor Account, while reversing a Cash Note should debit the Cash Account. Instead you should enter a new Cash Note (i.e. with a Payment Term of Type "Cash") with a negative value.

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Crediting Purchase Invoices - Invalidating Purchase Invoices

In some circumstances it can be appropriate to invalidate a Purchase Invoice using the 'Invalidate' command on the Record menu. This function will remove the Invoice from your Accounts Payable; any associated General Ledger Transaction will be removed as well. An invalidated Invoice is easily distinguished because all fields have red lines drawn through them. These red lines are also shown in the 'Purchase Invoices: Browse' window.

You cannot invalidate a Purchase Invoice if it has been paid or credited (in part or in full) or if it has not been approved.

In multi-user systems, you can use Access Groups to control who can invalidate Invoices. To do this, deny access to the 'Invalidating Purchase Invoices' or the 'Invalidating Purchase and Sales Invoices' Actions.

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Operations Menu

The Operations menus for Purchase Invoices are shown above. On the left is the Operations menu for the 'Purchase Invoices: Browse' window: highlight one or more Purchase Invoices (hold down the Shift key while clicking) in the list before selecting the function that you need. On the right is the Operations menu for the 'Purchase Invoice: New' and 'Purchase Invoice: Inspect' windows.

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Operations Menu - OK

This command is only available on the Operations menu for the 'Purchase Invoices: Browse' window. It allows you to approve a Purchase Invoice and is therefore the equivalent of checking the OK box in a Purchase Invoice record and saving it. You can also select several Purchase Invoices (hold down the Shift key to select a range of Purchase Invoices in the list) and approve them all at once. Remember that, if so defined in the Sub Systems setting in the General Ledger, this action causes General Ledger Transactions to be created for each Purchase Invoice in the selection and that therefore once it has been carried out you will no longer be able to modify those Purchase Invoices.

In multi-user systems, you can use Access Groups to control who can approve Purchase Invoices and Purchase Credit Notes. To do this, deny access to the 'OKing Purchase Invoices' and 'OKing Purchase Credit Notes' Actions respectively.

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Operations Menu - Invoice Status

This command prints a report to screen summarizing all aspects of the Invoice, including Accounts and payment history. In the illustration below, the Purchase Invoice in question has been paid with a Payment.

In the Invoice History section showing the payment history, you can click on a transaction number (Purchase Invoice Number or Payment Number in the example above) to view that Invoice or Payment.

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Operations Menu - Balance

Before you can save a Purchase Invoice, the amount in the TOTAL field in the header must equal the sum of the Amounts of the Invoice rows plus the Tax. If this is not the case, an error message 'Transaction out of balance' will appear when you try to save. You can then use this function to balance the figures.

Before you use the function, you should place the insertion point either in the TOTAL field in the header or in the Amount field of one of the Purchase Invoice rows. Selecting the function will cause the value in the field containing the insertion point to be adjusted so that the Purchase Invoice balances, allowing you to save it.

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Operations Menu - Open GL Transaction

When you approve and save a Purchase Invoice, a General Ledger Transaction will be created. This function allows you to view that Transaction.

On selecting the function, the Transaction will be opened in a new window.

In multi-user systems, you can use Access Groups to control who can open Transactions from Purchase Invoices. To do this, deny access to the 'Open Transactions from Operations Menu' Action or to the General Ledger altogether.

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