Purchase Invoice
Overview
A Purchase Invoice (PI) in DIGITZ ERP represents the supplier’s official bill for the goods or services delivered.
It records the payable amount owed to the supplier and completes the financial recognition of the procurement cycle.
Usually created after a Purchase Receipt, the Purchase Invoice ensures that received goods are billed correctly, taxes and additional charges are applied, and supplier outstanding balances remain accurate in Accounts Payable.
The Purchase Invoice serves as the financial anchor between procurement operations and accounting.
Purpose
The Purchase Invoice ensures that:
- Supplier bills are systematically captured and validated.
- Payables are updated accurately in the supplier ledger.
- Taxes and indirect costs are handled properly.
- Inventory valuation reflects the final landed cost of items.
- Billing stays aligned with actual receipts and Purchase Order terms.
This supports controlled purchasing, accurate financial reporting, and clean reconciliation with suppliers.
How It Works
- A Purchase Invoice is created from one or more Purchase Receipts, or directly from a Purchase Order.
- Item quantities, rates, and tax structures are fetched automatically.
- Additional charges (freight, clearing, duty, transport, etc.) may be added directly or via Additional Expense Entry.
- Upon submission:
- Supplier’s payable balance is created.
- Stock valuation is updated as needed.
- Automatic ledger postings are generated.
The Purchase Invoice becomes the official payable document for processing payments.
Key Features
- Create from Purchase Receipt, multiple Purchase Receipts, or Purchase Order.
- Supports partial invoicing and multiple billing cycles.
- Apply tax templates and multiple types of charges.
- Supports allocation of indirect expenses directly or via Additional Expense Entry.
- Prevents over-billing beyond received quantities (default control).
- Strong document linking for complete traceability.
- Automatic adjustment of stock valuation for inventory items.
Multiple Purchase Receipts Against One Invoice
DIGITZ ERP allows creating one consolidated Purchase Invoice from multiple Purchase Receipts, ideal when suppliers issue a single bill for several deliveries.
System Behaviour
- User selects multiple PRs when creating the invoice.
- Quantities across PRs are combined in the invoice.
- System ensures billed quantity does not exceed total received quantity.
- The PO dashboard tracks billed vs. pending quantities.
Partial Invoicing
Suppliers may send invoices in stages. DIGITZ ERP supports partial billing by:
- Allowing multiple invoices for one PO or PR.
- Tracking billed and unbilled quantities.
- Preventing billing beyond manual or actual receipt limits.
Valuation Impact
Submitting a Purchase Invoice updates item valuation based on:
- Actual invoiced rate
- Applied taxes
- Additional charges and landed costs
If there is a difference between Purchase Receipt estimated value and the invoice value, DIGITZ ERP automatically adjusts valuation using the standard costing method.
Note on Landed Costs
If the organisation prefers a separate mechanism to allocate expenses (like freight, customs, or handling), they can use Additional Expense Entry, which proportionately distributes costs across items and updates valuation accordingly.
(See also: Additional Expense Entry)
Additional Expenses Allocation
The Purchase Invoice supports capturing and allocating additional procurement costs such as:
- Freight & Transport
- Customs Duty
- Insurance
- Handling & Loading
- Clearing Charges
- Any other indirect purchase-related expenses
These expenses can be applied:
A. Inside the Purchase Invoice
Expenses added here affect valuation and ledger postings directly.
B. Through Additional Expense Entry
A more advanced option that:
- Allocates expenses proportionately based on item value.
- Recalculates valuation.
- Posts proper accounting entries.
- Can be linked to one or multiple Purchase Invoices.
(See also: Additional Expense Entry)
Relevant Reports
- Purchase Register
- Purchase Itemwise Register
- Purchase Itemwise Summary
- Supplier Transaction Statement
- Supplier Ageing Report
These reports collectively provide insight into supplier billing, expenses, and payables.
Workflow
- Go to Buying → Purchase Invoice → New.
- Select Purchase Receipt(s) or Purchase Order.
- Verify quantities, rates, taxes, and additional charges.
- Add landed cost adjustments (inside invoice or via Additional Expense Entry).
- Save and Submit the invoice.
- Outstanding balance updates in the supplier ledger.
- Proceed to supplier payment (handled under accounting).
Integration
Purchase Invoice integrates tightly with:
- Purchase Receipt → source of delivered items
- Purchase Order → pre-receipt invoicing
- Supplier Ledger → payables and ageing
- General Ledger → accounting impact
- Stock Ledger → valuation adjustments
- Additional Expense Entry → advanced landed cost distribution
(See also: Additional Expense Entry for more details on allocating charges)
Conclusion
The Purchase Invoice in DIGITZ ERP finalises the procurement process by recording supplier charges, updating financial liabilities, and ensuring inventory valuation remains accurate.
With features supporting multiple receipts, partial billing, tax processing, and both direct and indirect expense allocations, it provides a complete and transparent mechanism for managing supplier billing and payables.
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