Blog · Procurement and supply chain · Procurement
Reconcile purchase commitments, posted invoices and cash paid without adding the same purchase several times. Show partial receipts and unpaid balances.
A procurement team quotes the value of approved purchase orders. Finance quotes posted invoices. Treasury quotes payments. They can all describe the same purchases and still disagree, because approval, receipt, invoicing and settlement happen at different times.
This guide owns the procurement document chain. It does not replace general accounting policy or the SUM definition owner. Its purpose is to name each view and reconcile the differences before comparing category totals.
Purchase orders record ordered commitments under the organization's approval policy. Receipts record delivered goods or accepted services. Posted invoices record supplier charges in the selected accounting/reporting perimeter. Payment applications identify which invoice balances were settled.
Record source company, document and line keys, supplier, currency, date basis, quantity, amount, status and linkage keys. Separate a cash transfer from its application to invoices; one payment can settle several documents, and an invoice can be paid in installments.
Microsoft's Business Central documentation distinguishes purchase orders, receipts and purchase invoices, including partial receipts and posted records. These are product-specific workflows, not a claim that every system recognizes every event identically. Purchase invoices and orders.
Choose a cutoff and consistent currency, tax and credit treatment. A PO may use ordered unit prices while an invoice contains extra freight or changed quantities. Those differences need their own bridge lines.
Define which orders qualify as commitments: draft, cancelled and closed records may require different treatment. Do not count the current PO total plus every previous revision. Preserve revisions for history, but select the approved version applicable to the snapshot.
Amounts below are synthetic USD values on the same simplified tax-exclusive basis, with no price or FX changes. That restriction makes the document-chain arithmetic easy to inspect.
A PO is originally approved for $30,000. Before the reporting cutoff, $2,000 is cancelled, goods worth $20,000 are received, $18,000 is invoiced and $10,000 of those invoices is paid.
| View at the cutoff | Amount |
|---|---|
| Original approved PO | $30,000 |
| Cancellation | -$2,000 |
| Remaining authorized purchase value | $28,000 |
| Received | $20,000 |
| Posted invoices | $18,000 |
| Cash applied to those invoices | $10,000 |
| Authorized but not yet invoiced | $10,000 |
| Invoiced but unpaid | $8,000 |
The first identity is $30,000 = $2,000 cancelled + $18,000 invoiced + $10,000 authorized but not yet invoiced. The uninvoiced $10,000 contains $2,000 received but not yet invoiced and $8,000 not yet received.
The second identity is $18,000 invoiced = $10,000 paid + $8,000 unpaid, under the simplified assumptions. Adding $28,000 of authorized orders, $18,000 of invoices and $10,000 of payments would produce $56,000, counting different stages of the same purchase as separate spend.
Link invoice lines to PO/receipt lines where the export provides that relationship. A header-level PO number may not identify how an invoice spans several lines or categories. Preserve unmatched amounts and multiple-candidate matches rather than forcing a convenient allocation.
Link payments through application records. Joining one payment header to every invoice line can multiply cash. If the source only shows a paid flag, it may support a status view but not a dated cash-paid analysis.
Test partial deliveries, partial invoices, deposits, credit memos, cancelled remainders and invoices without POs. An advance payment is not evidence that goods were received. A posted credit can affect a balance without creating a new payment event.
The credit/tax/currency guide explains why document spend and cash can differ even after matching.
New PO approvals during a month are a flow. Open uninvoiced commitments at month-end are a stock. Invoices posted during the month are a flow, while unpaid AP at month-end is a stock. Comparing their amounts requires a bridge, not an expectation of equality.
For a full AP roll-forward, start with opening balance, add posted invoices, subtract applicable credits and settlements, and separately identify FX and other adjustments under finance's approved basis. Do not use the simplified example to omit those real-world entries.
Use ordered commitments for upcoming purchasing exposure, invoices for the selected buying analysis and cash for settlement timing. Receipts help explain delivery and unbilled obligations. A category manager's supplier-spend cube should state which event population it uses; see the Excel cube guide.
Agree checks through the procurement pilot specification. Bring authorized document samples and independent controls to discuss the scope. This method does not imply that live PO, receipt or payment connectors are included, or that a sample establishes statutory accrual completeness.
Investigate matching exceptions and approval timing separately from the classification of purchase-order, invoiced and paid amounts.
They measure different events and dates. Partial receipts, cancellations, invoice timing, settlement, credits and currency movements can explain the bridge.
Not reliably. A dated cash view needs payment and invoice-application evidence, especially for installments and payments covering several documents.