Purchase Invoice

November 5, 2025

Overview

The Purchase Invoice in DIGITZ ERP is a core accounting document used to record the purchase of goods or services from suppliers. It represents the financial recognition of an expense or liability after receiving goods or services and is directly linked to accounts payable and tax reporting.

Purpose

To record supplier bills accurately and update the company’s financial ledgers for expenses, taxes, and payables.
The Purchase Invoice ensures that all purchase-related costs are accounted for properly, providing a clear picture of outstanding liabilities and purchase expenditures.

How It Works

A Purchase Invoice can be created directly or derived from preceding documents such as a Purchase Order or Purchase Receipt.
While the Purchase Receipt handles the physical movement of stock, the Purchase Invoice handles the financial posting.

When the invoice is created, the system applies rates, discounts, and tax rules based on both the Company Configuration and the Item Tax Configuration.
The document records the value of purchases, applicable taxes, and payable balances. It also identifies whether the purchase is on credit or linked to a payment mode for immediate settlement.

Key Fields

Supplier – The supplier from whom goods or services are procured.
Posting Date – The date on which the invoice is recorded in the company books.
Items / Services – List of goods or services purchased, including quantity, rate, and amount.
Taxability – Defines whether each item is taxable or exempt, based on company and item tax configurations.
Line Item Discount (before tax) – Allows discounts to be applied to individual items before tax is calculated.
Rate Includes Tax – Specifies whether item rates include tax. This setting is inherited from the Company Configuration but can be changed at the document level.
Project / Cost Center – Links the purchase expense to a specific project or cost center for financial tracking.

Price Control with Price List

The Price Control with Price List feature helps maintain pricing consistency and control in procurement by referring to predefined supplier price lists.

Purpose:
To ensure that purchase pricing aligns with agreed supplier terms or standard cost structures, avoiding manual rate entry errors.

How It Works:

Price Lists can be predefined and assigned to suppliers. When creating a Purchase Invoice or Purchase Order, item rates are automatically fetched from the assigned price list.
If a supplier does not have a specific price list assigned, the Default Company Purchase Price List applies.
The Use Supplier Last Price setting in Company Configuration takes priority when enabled — automatically applying the supplier’s most recent purchase rate.
New or adjusted rates can be optionally saved back to the price list for future reference.

This ensures accuracy and consistency in supplier pricing across all purchase documents.

Service Billing with Purchase Invoice

The Service Billing feature within the Purchase Invoice allows recording of service-based expenses such as maintenance, consultancy, or professional services without affecting stock.

Purpose:
To enable the booking of service expenses and supplier bills that do not involve inventory.

How It Works:

Users can add Service-type items or items configured without Maintain Stock in the Item Master.
These items are excluded from any inventory updates and are treated purely as expense entries.
On submission, the system posts the necessary entries for Expense, Tax, and Payable accounts, ensuring accurate financial reflection without stock involvement.

This feature is ideal for handling service-related supplier invoices, rental expenses, or indirect purchases.

Posting Behaviour

On submission, accounting entries are automatically generated based on configuration.
Credit Purchases post to the Accounts Payable account.
Payment-based Purchases post directly to the selected Payment Mode’s linked account (Cash or Bank).
Expense and Tax accounts are updated according to the company’s Default Accounts, Tax Configuration, and Item Tax Settings.
When Rate Includes Tax is enabled, the system automatically separates the tax portion from the item rate before posting.
The system adheres to the Perpetual Inventory method, where stock and valuation updates are managed exclusively through Purchase Receipts, while Purchase Invoices handle only financial recognition.

Integration

The Purchase Invoice integrates seamlessly with:

Supplier Ledger – Tracks payables and payment settlements.
Purchase Receipt – Links financial postings with corresponding goods receipts for accurate reconciliation.
Accounting Reports – Appears in Profit & Loss, Trial Balance, and General Ledger.
Tax Reports – Reflects input tax credits and supplier tax details.
Project / Cost Center – Associates purchases and expenses with specific business units or projects.
Price Lists and Supplier Records – Maintains consistency and traceability of supplier pricing.

Conclusion

The Purchase Invoice in DIGITZ ERP provides a streamlined and accurate way to record supplier bills, manage expenses, and recognize payables.
With built-in controls for tax, pricing, and service billing, it ensures financial precision and compliance while maintaining seamless integration with supplier accounts and purchase receipts.