How do I complete a Purchase order with a backordered status?

This document assumes that the setting for "Post A/P Invoices" in PO setup is turned on. For the status of a Purchase Order to change to Completed the Ordered quantity for each line must equal the Received Quantity which must equal the Invoiced Quantity (see Notes at end for exception)

*IMPORTANT CAVEAT* It is important to investigate and understand the reasons why a Purchase Order is in a backordered status. Before proceeding determine why the ordered quantity does not match the received/invoiced quantities.

To verify the quantities for the three amounts run (from the Purchase Order Period End menu) a Purchase Order Clearing report. Run the report option for Purchases Clearing in Open PO format.

The Daily Receipt Registers/Update process compares the lines for all POs and when ordered = received = invoiced the Purchase Order will complete. (see notes for exception based on PO settings).

Below are some sample scenarios:

Example #1: Ordered = 10 Received = 8 Invoiced = 8
Solutions:
A> (If the remaining 2 are received) Process a receipt of goods (with invoice number) for a quantity of two.
B> (If the remaining 2 are NOT received) Change the ordered quantity down to 8 (in PO entry). Once the 3 quantities match and the order is accepted in PO entry it will change to a completed status.

Example #2: Ordered = 10 Received = 10 Invoiced = 0
In this scenario the invoice was usually entered directly in Accounts Payable. Since a GL entry of DR: Inventory CR: Purchases Clearing was made when the Receipt of Goods was udated there is a Credit amount in the Purchases Clearing Account.
Solutions:
A> Turn off the Post A/P invoices setting in Purchase Order setup options. This will cause the system to disregard the invoiced quantity field. In PO entry change the ordered quantity up to 11 and click OK to accept the line then click on the line again and change the ordered quantity back down to 10 and click OK then accept the order. It will change to a completed status at that point. Be sure to change the setting in PO options for "Post A/P invoices" back on before entering/updating any further receipts.

NOTE: A correcting entry to the general ledger the following will have to be entered to balance the purchases clearing account:

Debit Credit
Purchases Clearing The A/P expense account the A/P invoice debited

B> Alternatively, process a Receipt of Invoice for 10 (system won't allow usage of the same A/P invoice number so put a "-A" on the end or something similar) then (in A/P) adjust the newly created invoice back out against the A/P expense (X) account that the original invoice debited. This will have the net effect of debiting Inventory and crediting A/P.

Example #3: Ordered = 10 Received = 12 Invoiced = 12
Solutions:
A> If the order was over received then process a return of goods with invoice number for a quantity of 2 (system won't allow usage of the same A/P invoice number so put a "-A" on the end or something similar)
B> If the quantity of 12 is accurate then change the ordered quantity to 12 and accept the order. The order will change to a completed status.

NOTES:
+ Entry of a Purchase Order does not create a G/L entry. The Purchases Clearing account only comes into play when a receipt of goods is processed without an invoice.
+ A completed PO will remain in PO entry until the "Number of days to retain completed POs" setting in PO setup is exceeded AND a Period End Processing is performed
+ There is a setting to "Automatically Close Partially Received POs" which allows a percentage variance between the quantity ordered and received/invoiced. If the variance is set at 10% for example and 10 were ordered when 9 are received and invoiced then the PO will complete.
+ The option to "Purge Completed POs" under Period End Processing will remove POs from the PO1/2 files based on the setting for "Number of days to retain completed POs" in PO setup
+ "Purge Obsolete POs" under Period End Processing will look at Order Date on the header tab of Purchase Order Entry as well as the Last PO and Last Invoice date on the Totals tab. All dates must be older than the specified purge date. A blank date is OK and will be purged.
IMPORTANT: This function will purge ALL Purchase Orders regardless of status. A G/L journal entry to adjust the Purchases Clearing account for those POs where the received quantity does not match the invoiced quantity must be made.