• From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Topic: Supplier Invoice Page possible?

Hi friends,


Page: Supplier Invoice (supplier_invoice.php)


Questions:

1. In the Supplier Invoice page, is it possible to make direct GL entry for (GL-Inventory Account) for a specific item?

--- Meaning I would like to update(add the amount) of a specific Item, without having items at the top in the Items Yet to Invoice.
--- Cause it seems direct GL entry in Inventory account in Supplier Invoice, would result in amount updating to the Inventory Account in general. Not item specific.


So after entry, the GL entry would be for the specific GL Item.

Debit - GL-Inventory for Item Computer - 2,000 pesos
Credit - GL-Accounts Payabel for Supplier-A - 2,000 pesos


Purpose:
Because sometimes I need to add charges or minus charges to the Item cost. And want it to reflect the item cost valuation, specifically for that item. And would like Invoice (add charges) or Credit (deduct charges) to the supplier payable account.

Cause we are in the manufacturing processing business, so after purchasing the raw materials. Due to the variability of the raw material. Actual cost is only known after the production of batch processed.

  • From: Singapore, India, Chennai
  • Registered: 05/02/2009
  • Posts: 6,089

Re: Supplier Invoice Page possible?

Have you tried Debit / Credit Notes?

apmuthu's Website

  • From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Re: Supplier Invoice Page possible?

Hi,

Yes I tried doing the Supplier Debit/Credit Notes. But it requires to debit or credit past supplier invoice.

I would like to to debit/credit note without referring to a previous transaction. Just want it to directly enter the GL Inventory Item. So that it would only affect the amount (add amount/less amount) and not the quantity. But it seems GL Inventory does not refer to a specific Item.

Do you have ideas?

  • Registered: 04/19/2020
  • Posts: 60

Re: Supplier Invoice Page possible?

if your company manufacture not many different items, maybe you can create specific inventory a/c for each item.

flpages's Website

  • From: USA
  • Registered: 07/16/2017
  • Posts: 276

Re: Supplier Invoice Page possible?

Assignment of costs to a given item is done using the manufacturing process.  If for some reason, the costs are not clearly understood when item A manufactured, you can assign more cost by manufacturing item B where item A and the newly discovered costs are input.  Then invoice item B.

  • From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Re: Supplier Invoice Page possible?

Dear Sir,

I think that is one way of doing that since we don't have many items. But would that reflect the Item Unit Cost in the inventory valuation?


flpages wrote:

if your company manufacture not many different items, maybe you can create specific inventory a/c for each item.

  • From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Re: Supplier Invoice Page possible?

Dear Sir,

Could you expound a little bit? I didn't clearly understand the details.


Our step process:

1. Purchase Raw Material (Item A)
1.1 Item A - 1000 kg @ 20php/kg. = 20,000php

2. Pay Supplier the purchased (Item A)
1.1 Payment - 20,000php

* Waiting Time for production of (Item A) (depending on the queue line)

3. Manufacture (Item A) to (Item B)
3.1 Issue Item A - 1000kg @ 20php/kg (depends on the average cost) = 200,000php
3.2 Add Labor Cost/Add Overhead Cost if any (optional)
3.3 Produced Finish Product: Item B = 500kg (take note of the shrinkage of kilogram) because our item by nature losses weight due to water evaporation.
3.4 Produced Summary: Item B = 500kg @ 40php/kg = 200,000php


4. Liquidation of Purchase (Prior to purchase of Item A. Our actual purchase would take place based on the Dry Weight of Item A which is equal to Item B)

4.1 Two Scenarios

4.1.1 Thus, if we had an agreed purchase price of Item B as 45, then I need to make a purchase supplier invoice to add cost to Item-B without affecting the inventory quantity.
4.1.2 Thus, if we had an agreed purchase price of Item B as 35, then I need to make a credit note to deduct cost to Item-B without affecting the inventory quantity.


Analysis:
Based on my testing with the system, since FA is using average cost. I'm not sure if it's possible because our manufacturing process involves FIFO cost input for the issued items. Because using average cost would include in the manufacturing process the unrealistic cost of the produced item. And we can't add/deduct cost to the specific item via supplier invoice/credit note.



Braath Waate wrote:

Assignment of costs to a given item is done using the manufacturing process.  If for some reason, the costs are not clearly understood when item A manufactured, you can assign more cost by manufacturing item B where item A and the newly discovered costs are input.  Then invoice item B.

8 Reply by Braath Waate (edited by Braath Waate 07/30/2020 12:30:20 pm)

  • From: USA
  • Registered: 07/16/2017
  • Posts: 276

Re: Supplier Invoice Page possible?

1. Purchase item X
2. Pay supplier for purchased item X
3. Manufacture item A based on cost of purchased item X

Now you discover that the supplier needs to be paid more or less based on output of manufactured item A per your supplier agreement.

4. Pay/credit the supplier using a G/L account.  This does not affect inventory.
5. Manufacture item B using all of item A + payment/credit from same G/L account in item 5.

Item B now has the average cost of payments to the supplier / quantity of item B.

FA does not do FIFO.

Vanilla FA might not allow negative cost assignment as a manufacturing issue; in this case, change the code to allow it.

  • From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Re: Supplier Invoice Page possible?

Dear Braath,

Thanks for the advice!

Replied Questions:

1) Referring to your number 5, how do you use the payment/credit from G/L account? By using the manufacturing overhead credit? or via Item issue?

2) Is it possible to issue Service Item in manufacturing? It seems when I issue a Service Item, it would result to zero GL entries. No GL entries are done by the system when using Service Item.




Braath Waate wrote:

1. Purchase item X
2. Pay supplier for purchased item X
3. Manufacture item A based on cost of purchased item X

Now you discover that the supplier needs to be paid more or less based on output of manufactured item A per your supplier agreement.

4. Pay/credit the supplier using a G/L account.  This does not affect inventory.
5. Manufacture item B using all of item A + payment/credit from same G/L account in item 5.

Item B now has the average cost of payments to the supplier / quantity of item B.

FA does not do FIFO.

Vanilla FA might not allow negative cost assignment as a manufacturing issue; in this case, change the code to allow it.

  • From: USA
  • Registered: 07/16/2017
  • Posts: 276

Re: Supplier Invoice Page possible?

1.  In vanilla FA, costs are labeled Overhead and Labor.   These labels are misleading, because costs can be any G/L account. (On my site, I have renamed them Cost 1 and Cost 2).

2. I have not tried using Service Item in manufacturing, and it sounds like you uncovered a bug.  I would imagine that it could work like additional costs and could be a useful feature.

Note that you should use Advanced Manufacture to assign additional costs because Basic Manufacture in vanilla FA requires a BOM (On my site, I eliminated that requirement).

I checked the demo site and if you do use a negative cost, FA reports "The amount entered is not a valid number or less then zero".  So you would have to change the code to allow a negative number to reduce the cost of item B from item A.  It may be as simple as changing the check for <=0 to ==0.

I admit that this is a less direct way to achieve what you really want: charge/credit the supplier to change the item cost of a previously manufactured item.

  • From: Philippines
  • Registered: 07/19/2020
  • Posts: 15

Re: Supplier Invoice Page possible?

Dear Braath,

Thanks for your informative replies. I learned a few things from you on how to use the system.
Yes. It seems Service Item is available for issue. However, when you use it. It results to no GL entries. (not sure what's the purpose)


Since my requirement is FIFO for manufacturing, I'm planning on using these steps.

1. (To input purchase of raw material) create Supplier Invoice GL Account (Temporary Raw Material Inv. Account)
2. Then, after I get the results of the actual manufacturing of the product.
2.1 Create Supplier Invoice GL Account (Temporary Raw Material Inv. Account) - to add charges
2.2 or Create Credit Invoice GL Account (Temporary Raw Material Inv. Account) - to deduct the amount
   Note: This will include in the supplier ledger the amounts needed to debit or credit


3. For Manufacturing from Raw Material to Item B, (using advance manufacturing)
3.1 Without issuing any items, I'll go straight to Cost. And add cost crediting from GL Account (Temporary Raw Material Inv. Account) = credit amount = purchase amount + (add invoice/credit invoice amount)
3.2 Produce the item


Thus, I was able to implement a FIFO costing for manufacturing.

Drawback:
* I have to have an external excel file to record the Batch entries of purchases (since they are per LOT) and I have to output it as FIFO Amount per LOT.
* No inventory quantity is recorded for the item. Only Inventory Amount is present.


What do you think?

Thanks and Regards!