At Qoblex, we continually strive to align our solutions with industry standards and provide our customers with tools that enhance efficiency and accuracy. Our latest iteration of the Purchase Order module, referred to as POV2, reflects significant advancements over its predecessor (POV1). Here, we delve into the changes and the reasoning behind these improvements.
Key Changes to POV2
1. Separation of Receiving and Billing Steps
- In POV1, approving a purchase order automatically generated one single bill in Xero, and no bills were recorded in Qoblex. This process lacked the flexibility required by many procurement workflows.
- In POV2, receiving and billing are now treated as distinct processes. This change introduces the Goods Receipt/Invoice Receipt (GR/IR) concept in Xero’s settings, which Qoblex refers to as the Purchases Account in Xero settings.
2. Enhanced Support for Complex Workflows
Users can now manage multiple Goods Receipt Notes (GRNs) and multiple bills for a single purchase order. This flexibility allows for:
- Receiving goods in one or more deliveries.
- Billing all goods at once or in separate invoices, even for partial deliveries.
3. Improved Handling of Landed Costs
Previously, costs associated with landed items were harder to categorize accurately. POV2 introduces a more robust system:
- Costs can be labeled as either landed costs or expenses.
- Landed costs are distributed proportionally across line items by value, adding to their stock on hand (SOH) values.
- Expenses are recorded directly in Xero’s Profit & Loss (P&L) account, bypassing line-item distribution.
4. Undo Billing Option
- POV2 introduces a new feature to undo billing, allowing users to correct mistakes more easily without disrupting their workflows.
Alignment with Industry and Accounting Standards
According to industry standards, a purchase involves three key processes:
1. Initiating a Purchase Order
- The purchase order (PO) is a document summarizing the quantities and prices of goods ordered from a supplier. It does not impact accounting unless accompanied by a goods receipt or invoice.
2. Receiving Goods
- Goods can be delivered in one or multiple deliveries, and each delivery can be recorded separately.
3. Billing
- A supplier can bill the entire PO at once, bill each delivery separately, or bill in different batches.
POV2 ensures that Qoblex aligns with these standards by separating these processes. Here’s how:
PO Creation and Approval
- When a PO is approved in Qoblex, it syncs to Xero as a PO, reconciling information without impacting accounting entries.
Goods Receipts and Billing
- Goods receipts and bills are managed independently. This ensures accurate reconciliation and supports various workflows.
Accounting Entries in POV2
1. Goods Receipt
When goods are received, Qoblex pushes the following entries to Xero:
- Debit: Stock on Hand (SOH)
- Credit: Purchases Account (GR/IR as per Xero settings)
2. Billing
When a bill is received from a supplier, Qoblex pushes the following entries to Xero:
- Debit: Purchases Account
- Credit: Accounts Payable
This structure ensures that discrepancies between goods receipts and bills are easily identifiable. The Purchases Account balance will not reset to zero if discrepancies exist, highlighting areas that require reconciliation.
Why We Made POV2 the Default
POV2’s design reflects a deep investment in aligning with accounting best practices and providing greater flexibility in procurement processes. By addressing the limitations of POV1, Qoblex ensures that:
- Users can manage complex workflows efficiently.
- Accounting entries are accurate and compliant with standards.
- Customers experience fewer discrepancies, enabling smoother operations.
One of the highlights in POV2 is the new right-side bar, which gives a clear and quick summary of each purchase order. This sidebar pulls together key details like Goods Received Notes (GRNs), bills, returns, and more, so users have everything they need in one place without switching screens. It’s designed to save time and help users make better decisions.
We’re also excited to share that soon, users will be able to amend goods receipts and sync these changes with Xero. This will make it easy to fix mistakes or add costs to purchase orders, even after items have been received and sold. This new feature will give users more flexibility and help keep records accurate, no matter the situation.
