Controlling the PO Status for Purchase Orders that include services

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Posted on by Bob Callanan

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When using the PO module for service items, we are either struggling to make sure the PO status doesn't go to completed to soon or we're spending time manually closing a PO. When I refer to a PO for Services, I'm talking about a PO for a set dollar amount of services but an unknown quantity (number of invoices, hours etc). Let's assume we have create a PO for $10,000 of services. We can enter that as Quantity 1 and unit cost $10,000 or we could enter quantity 10,000 and unit cost $1.00 or anything in between. It would be nice if we could enter quantity 1 and unit cost $10,000 but the PO would only close once the 10,000 of invoiced dollars was reached -no matter how many invoices are matched to it. Any have suggestions on how best to handle that?

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Redbeard 12,931 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Bob,

Frank has reminded folks in previous posts, a PO is a Legal Document. If the amount authorized by the Purchase Order is consumed by WIP on a project, the proper change process would involve issuing a change order or new Purchase Order for continuing efforts on the project, which would, in my opinion, be far more accurate than increasing the amount of the PO or adding additional lines.

We work with a number of clients in the Oil and Gas Services sectors, and they live and die by the purchase order. When a Purchase Order closes, and additional time needs to be authorized, the create an additional PO with a suffix, so we can tie the PO together and see the difference between budget and actual.
Mahmoud Saadi 32,738 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Now I am lost as It seems I don't fully understand the problem.

There are stated and explicit conditions when met, the PO is closed. You can simply and manage accordingly.
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Frank Hamelly | MVP... 4,029 Super User 2024 Season 2 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Bob, what do you mean, the 'PO close too soon'? Once you've matched the total PO value, technically, you should either change the PO value or issue a new PO because the contract amount on the original PO has been reached.
Bob Callanan 785 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Thanks again - however, we don't want to have to mange the quantity field, just the extended cost.
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Mahmoud Saadi 32,738 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Hello Bob

Let me propose another method then.

Since the total amount of the purchase order is approved, it becomes approximately fixed. Then you will have to play around with the quantity which should be used; as we discussed and agreed according to the milestones.

How about setting up an service item with 2 decimal places. Accordingly, your purchase order will have a quantity of (1) representing 100% of the service. In this essence, you can receive and invoice in a changeable manner.

For instance, two receiving transactions; one with 20% of the service, then 80%. (Quantity is 0.2 then 0.8). This way, the quantity is representing a percentage of the service being provided.

Your feedback is highly appreciated,
Bob Callanan 785 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Thanks - that describes the situation we have and is what we are doing today. In many cases we don't have a good idea of milestones or number of invoices that we will receive and therefore can't accurately set the quantity. Instead, we go back to the PO and adjust the quantity or add a new line item to the PO. When the PO was approved, the dollar amount of the PO was approved, rather than the number of units. We're hoping to find a way to get away from having to mange the quantities and instead just manage the dollar amount of the PO line item. There many not be a better solution than this but thought I'd ask.
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Mahmoud Saadi 32,738 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Soma, Apologies as I have mistakenly flagged your post ! This is the second time that I encounter this problem in the forum as the "Actions" menu pops up as the mouse cursor moves over the "Actions".

Back to the original question, I have always used the service items on the purchase orders, and the quantity-cost concept is highly dependent on the type of service you are purchasing. Let me give few actual examples:

Suppose that a company is receiving a consultation service, the project is divided into several three milestones with which project deliverables are agreed upon. The PO is issued to a quantity of 3 with the associated unit cost (which is usually the payment agreed and included in the agreement with the service company). This way, each time a milestone is met, deliverable are provided and the payment is issued, you receive a quantity (1) out of the (3) included in the purchase order.

Otherwise, which is quite common as well, you can just include a quantity of (1) consulting service and receive accordingly. Upon receiving and invoicing the project will be closed.

Please let us know if you have any further inquiries,
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soma 24,406 on at

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RE: Controlling the PO Status for Purchase Orders that include services

Have you checked the below link?

community.dynamics.com/.../220906.aspx

Also have a look on the below as well.

support2.microsoft.com/.../861607