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Difference and relation between Purchase Order, Bill and Supplier Credit

Forum|Forum|7 years ago
October 16, 2018
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Using QBO and trying to understand the difference and relation between Purchase Orders, Bill and Supplier Credit. All of them allow you to enter inventory items, so how are they different from each other? When do we need to use each?

Specifically, we don't actually send Purchase Orders from Quickbooks, but rather negotiate with suppliers through other channels, and then get an invoice from them, which we then proceed to pay according to the terms of payment. Then the supplier ships the item (which may take a few weeks).

If that is the case, can I just skip Purchase Order and straghtaway create a bill, and then record bill payments against this bill? Because creating Purchase Order doesn't seem to serve any purpose other than sending it to supplier (which we don't), and you need to create a bill from it anyway. So then what's the point?

And I'm afraid, if I create a PO and then a bill, it will increase the inventory TWICE (100 from PO, then 100 from Bill = 200, but actual quantity is only 100). Am I right?

And what is Supplier Credit? What circumstances do we use this functionality? And what happens once we have entered Supplier Credit? How do we use up this credit?

QuickBooks Online

Best answer by

A purchase order is a non-posting document that merely serves as a memo in which you tell the supplier what it is that you wish to purchase. It is purely optional and unnecessary.

A bill is entered into QB to record the goods or service that you received from the supplier and which you are obligated to pay.

A supplier credit is the opposite of a bill. It is a document which the supplier gives you to indicate that he owes you that amount of money. You might receive a supplier credit if you returned something that you previously received a bill for.

A

Anonymous

Answer

A purchase order is a non-posting document that merely serves as a memo in which you tell the supplier what it is that you wish to purchase. It is purely optional and unnecessary.

A bill is entered into QB to record the goods or service that you received from the supplier and which you are obligated to pay.

A supplier credit is the opposite of a bill. It is a document which the supplier gives you to indicate that he owes you that amount of money. You might receive a supplier credit if you returned something that you previously received a bill for.