Capital Projects, POs, and Invoices

We keep running into an issue with our capital projects, where we have a PO with special items on it, fully received, that we then receive partial invoices on. These partial invoices match, are approved, and close the line, and then we receive an invoice for the rest of the amount. Our current business process is to have our Procurement staff re-open the PO at this point, change the original line to the partial invoice amount, and then put the new invoice amount onto a second line. When they try to release the PO, they get an over budget message and cannot release the PO (all our Capital projects are locked down to avoid going over budget), even though the PO total hasn't changed, and exactly equals the remaining budget. As far as I can tell, by re-opening that closed line, it tries to release the whole PO amount against a budget amount that only equals the total of the new line.

I keep thinking there has to be a better business process than what we are doing, but I'm not sure. How are others handling capital PO's and invoices?

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Comments

unknown

Instead of using item type Special, use Service. This will allow you to "eat away" at the line, no matter how many invoices you get for the line you can apply them, also you can skip a step because you don't have to receive the line. The only down side is monitoring the open POs for ones that are not billed in full and need to be short closed, it is much easier then re-opening and dealing with the over budget message.

The other option, and I do not recommend this option but it is a work around, is called a "poor mans blanket PO", which basically is switching the qty and dollars. Your qty is the amount of the services/goods and the dollar amount is 1, but your AP staff needs to understand this because if not it will become an issue when they enter qty 1 and the actual dollar value.

We use the Service item type method even for goods when we know we need to eat away at the PO, it makes life much easier.

unknown

Hi Sarah, we try to only use Service type for items that won't cross the dock because of accruals, etc, and its not always apparent that we will receive partial billing for an item. This doesn't happen often, but when it does, we run into the problem that Dan is referencing.

unknown

For the few POs that have the problem, you can issue the PO as a Special item. But when the invoice is received and you see that it will be an issue, you can change the PO item type to service before receiving (or un-receive the PO and make the change).

The other option is the "poor mans PO" as I mentioned above. Or maybe you could receive less then 1? I have never tried that, therefore, I am not sure how that would work.

Or adjust the PO to a qty greater than 1 and adjust the unit price to reflect the new qty, and only receive the value of the invoice?

unknown

No - there's no way with product to "pay down" an invoice. We use services with a PO Code so the invoice will route for additional approvals in our process or we break apart a capital item into multiple lines - so for a $10000 piece of equipment

1 - 20% Deposit @ $2000 EA

2 - 80% Delivery @ $8000 EA

3 - 10% Acceptance @ $1000 EA

The PO lines are for what each invoice total will be and a comment to see quote for details.

Also very NOT ideal.

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