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Best Practice General Overview

Refer to the Best Practice Guides Category page for more information on ABIS Best Practices.

This guide covers the Adjutant best practices for returning materials received on a purchase order. The best practice considerations provided in this wiki cover a wide variety of material types, inventory costing methods, and accounting procedures. The information presented here is intended as a guideline for all customers, but may not apply to every customer's procedures, setup, or practices. This guide assumes best practice setups are in place for each example scenario described.

Best Practice Setup Considerations

Setup Options

The following Setup Options are recommended to support best practices, and are defaulted as enabled for all new implementations:

NEWPOREC – This launches the advanced version of the PO Receipt screen by default. The advanced version of the PO Receipt screen is the only version that supports the Find Return feature that is the recommended best practice for returning received material. The newer, advanced version of the PO Receipt screen contains all of the ongoing enhancements, while the legacy screen is being maintained to support specific processes that are not considered best practice.

PORECUPSOCOST – This option will update the cost for linked sales order line item as long as the PO line item code and the SO line item code match. For example, even with the setup option enabled, if you have an item code of BOLT1001 on the SO, but the linked PO line item is MISC (or anything other than BOLT1001), the cost will not update. As long as the PO and SO lines are both linked when the PO Receipt is processed, and the item codes are a match, the unit cost recorded on the PO Receipt will update the unit cost on the SO. This option helps prevent discrepancies between the PO and the SO systems. This option will also keep the PO quantity linked to the SO line quantity ordered in sync by updating the SO line quantity when the PO quantity is changed

PORECUPSODESC – This option works similar to PORECUPSOCOST and assumes a 1-to-1 linek between the PO line and the SO line. It also requires that the item code match between the PO and the SO. This option will use the PO line item description to update the line item description on the SO. The SO line item description update can happen during a line edit on the linked PO if the item codes match.

POAUTOLOT – This options uses the CID Lot # counter settings to automatically generate lot numbers for lot-controlled material during the PO Receipt process. This help avoid lot number entry mistakes and avoids the need to maintain or track any lot number assignment schemes. Just let Adjutant take care of it.

POCHECKCOST – This adds a layer of protection that checks the current receipt unit cost against the PO line item cost as well as the last received cost recorded in the Item Master. If the current received cost is off by more than 10%, a warning is presented.

POCOILLOTCHK/POCOILLOTCHKWHSE – These options work together to prevent duplicating a coil lot number in the same warehouse. This adds an additional layer of protection against manual lot number overrides causing confusion in lot numbers.

PONOZEROCOST – This option enforces that no item is received without a cost.

POWARNPURUNIT – This warns the user if a PO line item's unit entry doesn't match the item record's purchasing unit. Receiving an item in the wrong quantity/units can cause major reconciliation issues in inventory and accounting. This helps prevent accidental mistakes with unit settings.

Rule Maintenance Setup

Review the Units of Measure (UNITS) rule carefully for any custom units of measure. Carefully test any new units through the material ordering, receiving, and selling process before moving forward with a new unit group. Unit conversions can get complicated and must be accurate when factoring up or down to other units to avoid reconciliation issues.

Attributes/Reports/Forms/Application Setups/Hardware/Other

Catch Weight Item (CW) - Items with the Catch Weight attribute can be configured to dynamically calculate multiple units of measure from a base unit. These items track inventory quantity and value with multiple units (pounds and feet, for example) for receipt transactions. All Catch Weight items should be reviewed carefully and tested to make sure that the inventory value is calculated correctly for receipts and returns.

Coil-Like Item (COILLIKE) - The Coil-Like attribute enables certain features of coil tracking and costing logic that can affect how items are stocked and valued upon receipt. All Coil-Like items should be reviewed carefully and tested to make sure that the inventory value is calculated correctly for receipts and returns.

• Review the 'Qty Dec' values for all coil and/or catch weight type items and make sure that all items of a similar type are set with the same decimal quantity values. The return process will use each item's decimal quantity settings which should match the inventory receipt's values. Similar materials should be set up with the same values so that inventory valuation processes are standard across similar material types.

Best Practice Procedures/Guidelines

PO Receipt Find Return Process

• The PO Receipt screen's 'Find Return' button is the best way to reverse a PO receipt transaction and automatically adjust the purchase order, the inventory, and the associated accounting records correctly.
  • In order to return a received line item, the PO must be open, or re-opened.
  • In the PO Receipt screen, the 'Show All' box must be checked to display received lines.
  • Select the line item you wish to return in the 'Select Line to Receive' Grid and click the 'Find Return' button.
  • A list of receipt transactions associated with the selected line will be displayed.
  • Select the receipts to return, update any purchase quantities (this is the returned amount) as needed and click Close.
    • This screen will also show any previously returned items for the same line - do not interact with these lines
    • DO NOT enter negative quantities in this screen, the quantity should be entered as a positive value, it will be switched to a return automatically
  • The Qty Received should display the negative value from the purchased quantity value in the previous screen.
  • Click Receive, and then Done to process the return

Accounting Transactions Generated

• A normal PO receipt will debit the associated item's inventory GL account and credit the PO Clearing account for the calculated cost.
• The Find Return process creates a reverse of these transactions intended to reverse the original. The original inventory account is credited and the PO Clearing account is debited for the calculated cost.
• On normal AP Invoice creation from the PO, the PO Clearing account is debited for the associated cost of the PO item.
• For AP Invoices created from the the return transaction, where the overall AP amount is negative, the PO Clearing account will be credited.
• For AP invoice creation from a mix of normal receipts and returns, the net effect to the PO Clearing account should be the difference of debit and credit values and should balance against the cost associated with the PO receipt transactions.

Timing Considerations With AP

When processing PO returns, there may already be AP Invoices created and/or paid for the materials shipped from the vendor. Below are some of the scenarios and what should be considered for each. Each of these scenarios assume that the appropriate quantity of material has already been processed through the PO Receipt Find Return action.

• AP Invoice not yet created for the returned material
  • In this scenario, the PO Clearing account reflects the net balance of the original receipt and the return, and a new AP Invoice should be created for the net value.
  • When the Find/Load PO Receipts function is used during the AP Invoice creation, select all received lines (normal, positive receipts and negative return receipts)
  • Enter the AP payable amount as the net of all receipts and returns. The total payable should be the net difference.
  • The amounts posted to PO Clearing should also net out to match the PO receipt and return values

• AP Invoice has been created for original vendor shipment amount, but has not been paid.
  • In this scenario, the existing AP Invoice does not reflect the returned value and the PO Clearing account has been cleared through AP for the original PO amount
  • A new AP Invoice should be created for the negative amount of the return value.
    • Voiding and recreating the original, full amount AP Invoice would put the full amount back into PO Clearing and could cause an imbalance in PO Clearing unless it is manually adjusted/balanced to the correct amount.
  • When the Find/Load PO Receipts function is used during the AP Invoice creation, select only the negative received lines (the return item lines).
  • Enter the AP payable amount as the negative value of the returned lines.
  • This should directly clear the PO Clearing amount and create a negative payable.
  • When it is time to approve AP Invoices for payment, approve both the original and the negative AP Invoice to pay the net balance.

• AP Invoice created and paid for full amount
  • For this scenario, a negative AP Invoice (or AP Debit) should be created for the return value.
  • When the Find/Load PO Receipts function is used during the AP Invoice creation, select only the negative received lines (the return item lines).
  • Enter the AP payable amount as the negative value of the returned lines.
  • This should directly clear the PO Clearing amount and create a negative payable.
  • When it is time to approve AP Invoices for payment, approve the negative AP Invoice along with any other existing invoices to apply the reduction.
  • Otherwise, the AP Debit can be used to clear the vendor payment if they issue a refund.

• The Unbilled PO Receipts report and the GL Distribution Report with DocNo filters should be used to research and validate the amounts involved in any PO to AP reconciliation when looking at PO return items.

• Negative AP Invoices created from PO Returns should not be processed with the '2AR' feature to create a receivable. The accounting details are not compatible.

Best Practice References/Additional Resources

• Purchase Order to Sales Order Cost Update Options