D365 Finance & Operations and Dynamics AX Forum

Expand all | Collapse all

Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

  • 1.  Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

    Posted Jun 05, 2018 06:30 PM
    We are trying to figure out our internal policy as to when we will create a PO and when we don't need to create a PO.

    For example
    1. Employees which have credit cards. Which of their expenses do we create PO's for and which do we not?
    2. Employees who run out and purchase a small item. Which of their expenses do we create PO's for and which do we not?
    3. What about purchases of services, where there isn't a physical item being received? E.g. Marketing expenses, repair services, etc. Do you create a PO for these or not? If so, when/how is someone notified to receive the PO line(s)?

    How do other users handle these situations?

    ------------------------------
    Brad Baker
    ------------------------------
    Conference-AXUG_200x200


  • 2.  RE: Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

    MICROSOFT MVP
    Posted Jun 06, 2018 12:04 AM
    Hi Brad,

    Usually purchase orders will be created to order goods. In many implementations it is also used to have a system for registering the commitments. In general, you can create orders when you expect invoices and not mandatory receipts/services.
    When someone is using the credit card for expenses, I do consider it as being directly paid. Using the travel and expense management features to register this and post the cost would be better compared to create purchase orders afterwards.
    If you order services like a "digital advertisement campaign", you don't physically receive the goods. However, you can still post a receipt as part of the process (not mandatory) to let the finance department and budget manager know that the vendor did actually did his duty and the invoice can be accepted.

    ------------------------------
    kind regards,

    André Arnaud de Calavon
    Solution Architect, Microsoft MVP - Microsoft Dynamics Business Solutions
    ------------------------------

    Conference-AXUG_200x200


  • 3.  RE: Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

    MICROSOFT MVP
    Posted Jun 06, 2018 12:45 AM
    Hello Brad,
    For No1, I completely agree with Andre. I would consider this as a kind of direct payment and not create a PO for that.
    For the other No2 and No3, I want to add to what has already been mentioned that also the level of control and budgetary constraints have an influence on the decision on whether to use POs in such circumstances or not.
    That is, do you trust your employees that they are not 'wasting' the company's money by buying small items. If you don't you probably need to use PO to put a formal order and release process in place.
    For service related marketing/repair expense it is similar. Yet, here you might also want to consider monetary thresholds. As an example who is allowed to purchase some marketing materials for what $-amount and how can you ensure that people do not circumvent specified spending limits for example by 'splitting' expenses?
    Hope this helps.
    Best regards,
    Ludwig

    ------------------------------
    Ludwig Reinhard
    Sycor
    Goettingen
    ------------------------------

    Conference-AXUG_200x200


  • 4.  RE: Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

    Posted Jun 06, 2018 05:15 AM
    Hi Brad,

    Totally agree with the previous comments the decision to create PO's or not is dependant on the level of "Control" you wish to have within the business on purchase expenditure.
    I have worked at firms that have less control where employees were allowed to spend/purchases items at any limit without hardly any authorisation, similarly, other firms I have worked for would not allow any purchases over £/$500 without being authorised by the MD.
    Is the fact employees are empowered to make purchases on credit cards etc a critical success factor within the business allowing them to respond to customer demands more easily?
    Do your line managers have budget responsibility over cost centres and need greater control over the spend in those areas, if so, PR's/PO's that require their authorisation would fit.

    These are business decisions that need to be made before you decide on the level of use of Purchase Requisitions/Purchase Orders but certainly for expenses (credit cards/travel, accommodation) are processed more efficiently using the travel & expense module.








    ------------------------------
    Kind Regards

    Mark Bailey
    Annata
    Portsmouth
    ------------------------------

    Conference-AXUG_200x200


  • 5.  RE: Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

    Posted Jun 06, 2018 05:52 AM
    Hi Brad,

    One more consideration to take into account here. As MTI continues to grow, you will likely start running sourcing events for your most common indirect spend items(if you haven't already).  You should absolutely post expenses using the travel and expenses functionality and PO for everything else, including services. However, it is worth encouraging your employees to go through POs rather than expensing things so that you can eventually understand which items and services are worth running sourcing events for.

    It might also be worth taking a look at creating punchouts in AX yo encourage on-contract spend. If you already have a contract with CDW, Grainger, MSC, Office Depot, etc. they all have relatively easy punchout options. The following link includes a sample protocol handler to handle cXML messages. https://organicax.com/2016/09/27/cxml-punchout-protocol-handler-for-ax2012/

    Hope this was helpful!

    ------------------------------
    Doug Everett
    512-361-7029
    SourceDay
    Austin TX
    ------------------------------

    Conference-AXUG_200x200


  • 6.  RE: Purchase Requisition and Purchase Order Policy (When do you create a purchase order and when don't you?)

    GOLD CONTRIBUTOR
    Posted Jun 06, 2018 09:05 AM
    1. Employees which have credit cards. Which of their expenses do we create PO's for and which do we not? ---- Anything that is not travel or entertainment related we need a REQ - we start everything with a REQ -- the purchasing department does the final review and turns into a PO
    2. Employees who run out and purchase a small item. Which of their expenses do we create PO's for and which do we not? ----- only items that are related to a project or that are billed to a client require a PO (non travel)
    3. What about purchases of services, where there isn't a physical item being received? E.g. Marketing expenses, repair services, etc. Do you create a PO for these or not? If so, when/how is someone notified to receive the PO line(s)? ---- those are non receiving PO's. We route the Invoice to the requester to approve the invoice to acknowledge the services were performed and performed correctly.



    ------------------------------
    Barr Snyderwine
    Hargrove, Inc.
    Lanham MD
    ------------------------------

    Conference-AXUG_200x200


If you've found this thread useful, dive deeper into User Group community content by role