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Dynamics 365 Community / Forums / Finance | Project Operations, Human Resources, ... / PO Invoice Processing
Finance | Project Operations, Human Resources, ...
Suggested answer

PO Invoice Processing

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Posted on by jerhsysacct 67

Hi 

We are on Dynamics AX 2012 R3 and I would like to know the best approach for handling PO invoices when no receipt has been processed.  I come from an Oracle EBS background and standard functionality was to allow the posting of the invoice without a receipt having to already have been processed so the expense gets recorded and AP can post all invoices as soon as they received without having to check PO status.  If the PO was receipted, the invoices could get paid.  If the PO was not receipted the invoice would sit on hold and it was not possible to pay until the PO was received.  We have a large number of invoices on the "backlog" and not posted in AX through lack of receipt; they have to be accrued for manually each month and it is a big overhead for our AP team to manually chase up receipts so they can enter PO invoices.  

We have a plan to upgrade to D365 in 2022/23 and therefore do not want to build in something that cannot be utilised in D365 which is a consideration of any work we do in this area.

thanks

Joe

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: PO Invoice Processing

    Hi Joe,

    In the posting profile you have the arrival and offset account that are doing the accrual for you irrespective of whether you register a PO or expense invoice.

    You can thus either post 'arrival (BS account) vs. offset (BS account)' or use an expense account for the arrival one.

    There is, however, no option to distinguish that accrual based on the nature of the transactions (PO inventory transaction or expense transaction) unless you have specific vendors that only send you expense invoices and other vendors that only send you PO invoices in which case you can setup arrival and offset accounts by vendor in your posting profile.

    Best regards,

    Ludwig

  • jerhsysacct Profile Picture
    jerhsysacct 67 on at
    RE: PO Invoice Processing

    Hi Ludwig

    Is it possible for the invoice approval register to use the PO expense account to do the expense line?  I can only see a way of doing an entry that reverses the posting profile (arrival and offset account) where you have to enter the expense line manually but if your invoice is related to PO you would want it to come from there rather than having to key in manually?

    thanks

    Joe

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: PO Invoice Processing

    Hello Jerhsysacct,

    No.

    If you use the invoice register journal, AX will do the accrual for you when you pre-register the invoice.

    Best regards,

    Ludwig

  • jerhsysacct Profile Picture
    jerhsysacct 67 on at
    RE: PO Invoice Processing

    thanks Ludwig but in both suggestions, neither account for the invoice so at month end we would still need to manually accrue the cost for invoices received with no receipt?  

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: PO Invoice Processing

    Hello Joe,

    Depending on what process you use, you can either (a) record the incoming invoices in the pending vendor invoice form and wait until the product receipts are recorded to match the invoice against them. Alternatively, you can (b) register the incoming invoices in an invoice registration journal in AP. Also here, you need to wait for the product receipt being recorded to match the invoice against it.

    In any case, your invoice would already be pre-recorded in the system.

    Best regards,

    Ludwig

  • jerhsysacct Profile Picture
    jerhsysacct 67 on at
    RE: PO Invoice Processing

    Hi Ludwig

    When you say a pre-recording of invoice and approval - what do you mean?  I have not seen a way of recording a 3 way invoice without a receipt?  (except from register but that does not account for the invoice expense) 

    I agree we can improve our receipting process but we can't be the only company who wants to post invoices (as they are received electronically from our suppliers) in advance of receipts and just hold back from payment until a receipt is processed?

    thanks

    Joe

  • Suggested answer
    Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: PO Invoice Processing

    Hello Joe,

    Many thanks for the update.

    Without knowing more details, I feel that your order, receipt and invoicing process needs to be kind of updated.

    It does not sound like a problem related to AX/D365 but rather a general issue that you receive receipts and invoices not centrally, which might cause delays.

    Also, a prerecording of invoices and approval workflow might help here.

    Yet, I feel that this is not a specific system issue but rather one how you and your colleagues organize this process.

    Might be worthwhile having an internal meeting with all of the parties involved to see what can be streamlined and improved.

    Once you have that information, you can start configuring the process in aX/D365 around that.

    Best regards,

    Ludwig

  • jerhsysacct Profile Picture
    jerhsysacct 67 on at
    RE: PO Invoice Processing

    Hi Ludwig

    We have numerous people in the business responsible for "receipting" and it is not just warehouse staff.  eg Marketing are responsible for receipting things like marketing materials, IT responsible for their purchases etc etc.  We receive most of our invoices digitally and therefore they often arrive before physical goods. Also, it is normally the arrival of the invoice that prompts the requestor that the item/service should be received in the system...in my view, lack of receipt should not prevent AP from processing and accounting for the invoice. It is more prudent to account for it than just have it "sat on a desk" if no receipt has been processed.  We process 1000s of invoices per month, and so even if 5% have yet to be receipted, we have to manage 100s off system and accrue manually as "99 times out of 100" the cost will be recognised if the invoice has been received so we aim to accrue unprocessed invoices.

    The receipt in my view is to allow the invoice to be paid through 3-way matching, rather than prevent the processing of the invoice altogether and remain unaccounted which AX appears to do...unless I have missed something in my understanding of how AX works, I'd appreciate your advice greatly!

    thanks

    Joe

  • Ludwig Reinhard Profile Picture
    Ludwig Reinhard Microsoft Employee on at
    RE: PO Invoice Processing

    Hello Joe,

    Why is it that a lot of your product receipts are not posted?

    Is this because there are too many to post or because people in the warehouse don't do the receipt posting on time or ...?

    Would be great if you could clarify.

    Best regards,

    Ludwig

  • Suggested answer
    MM-20051452-0 Profile Picture
    MM-20051452-0 on at
    RE: PO Invoice Processing

    Hi Joe,

    If you business process requires posting vendor invoices to impact vendor balance without impacting Inventory and/or expenses, I would recommend to follow the invoice register business process docs.microsoft.com/.../invoice-register-and-invoice-approval-journal-configuration-key-vendinvoiceregisterapproval. and to avoid the invoice to be paid after posting you can update the vendor invoice register as "Not Approved" so users won`t be able to see the invoice in payment proposals.

    Regards,

    Momen Mansour

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