How to use purchase invoice to add to inventory


I have just started using the inventory system and I can create items and enter their opening balance.

How do I add stock when entering a purchase invoice from a supplier?

Do I need to enter a PO first?

Any pointers would be helpful.


To purchase invoice items, select Inventory on hand account. Manager will then ask which item you are purchasing and quantity.

There are 4 ways how you can purchase inventory which should cover every single possibility.

  1. If you purchase inventory and pay from business bank account, record the purchase under Bank accounts tab.
  2. If you purchase inventory for business cash, record the purchase under Cash accounts tab.
  3. If you purchase inventory using personal funds, record the purchase under Expense claims tab.
  4. If you purchase inventory on credit, record the purchase under Purchase invoices tab.

In other words, you should purchase inventory items through purchase invoice ONLY if the purchase is on credit. Otherwise record the purchase under Bank accounts, Cash accounts or Expense claims (based on how did you pay - business bank account, petty cash/cash float or personal funds)


What do I do if I create a PO and pay the supplier in advance? I can’t add the stock to the inventory at the time of purchase as I don’t actually have it on hand. :smile:


This will be solved by warehousing feature. You will simply record the purchase of inventory and indicate it is in your supplier’s warehouse. Once you receive inventory items from supplier, you will record the “transfer” of inventory items from “warehouse A” which represents your supplier’s warehouse into “warehouse B” which would represent your warehouse (not that you have real warehouse but it doesn’t matter what we call it)

For now, even without warehousing feature, there is still solution. When you pay supplier, allocate the payment to Supplier advance payments asset account (rather than selecting Inventory on hand asset account). When you receive goods, you can make Journal entry where you debit Inventory on hand account and credit Supplier advance payments. Basically you will use journal entry to convert supplier advance payment into one or more inventory items. Make sure debits & credits equal.


Thanks, Lubos, clearly it’s easy when you know how… I just don’t know how! :smile:


I’ve some questions concerning with this topic.

I’ve made a lot of inventory items. After this I make purchase invoice, where I choose the “Inventory on hand” account and the item which was bought by the firm. We pay every purchases with bank transfer and deferred payment with 8 days payment deadline.

Until now we don’t make any invoice for our customer about this items.

Our problems:

  1. We don’t see the right stock in the inventory. Some of the purchased item is appears and some not. We don’t find any connection which is appear and which is not. We follow the same process with every purchase invoice. When the item is appears in inventory the qty is wrong value.
  2. If we make invoice for our customer, - sales of inventory item - will the manager reduces the stock in inventory?
  3. Where can I see the updated stock?


I attach some examples:

This is in Inventory: (see the item: Carrier 42HVS18/38YVS

And this is the purchasing invoice:


It’s best if you send your accounting file to and state exactly which purchase invoice you can’t see affecting which inventory item quantity.