Paying a Purchase Order before receiving an Invoice

Dear @lubos,

would it be possible to add the “New Payment” button also to Purchase Order? All freelancers in Italy issue an invoice within 15 days of receiving payment,

@Davide, payments are related to invoices, they are financial transactions. Purchase Orders and Sales Orders are optional in accounting as they are process documents while invoices in accrual accounting immediately show in P&L even if still payable or receivable.

I think that you confuse invoice with receipt. You indicate that invoices are issued within 15 days of receiving payment. An invoice is always prior to a payment a receipt after a payment is recorded.

I’m not requesting to be linked in the accounting. Just an utility (a button) to generate the payment without copying them by hand… like paying a supplier without having any invoice. It can be seen as a “Copy to” Payment.

Sorry but why use a PO and not an PI in the first instance. The way you describe it you do not need a PO.

Because the PI will be issued only after payment.

Let me explain better the workflow:

  1. I receive a Proforma and I register it under PO since it is not a PI
  2. After few or several days, I make a Payment based on the amount of the PO
  3. After few days I receive an PI and I register it

Since in a PO you have all the info to automatically create a Payment vs a Supplier why don’t add this functionality.

Your explanation / workflow is confusing.

  1. You mention you receive a “Proforma”. In accounting this would always be a Proforma Invoice which is not yet the Sales Invoice but send with all the sales details and used external to the business, i.e. send to customers, the Proforma may be based internally on a Sales Order, which is always internal to a business and not send to customers. So in this instance you should just create a Purchase Invoice,

  2. The Purchase Invoice would have indicated the credit period (due date or due in e.g. 15 days) and when you make the payment you would use that Purchase Invoice view screen and click on New Payment to make the payment.

  3. You actually will receive a Sales Invoice or a Receipt from the supplier that you can use as a receipt against your payment (the payment is then cleared).

A premise, in Italy we have eInvoices, so you cannot register a Proforma as an Invoice in your accountings unless you want to have some issue with the Tax Authorities. Also you should notice that, even if you have a Proforma in your hands, registering it under PI would create a mess since it doesn’t generate any VAT credit or Witholding Tax Debts. So creating a sort of dummy invoice would generate more problems than solutions.

So, since there in not a Proforma tab, and we want to keep everything under Manager we use Purchase Orders.

I didn’t open this topic to discuss our way of working. The workflow is not in question, and you don’t even have to try to convince us, since it was blessed also from a legal auditor. We are asking if it is possible to add a “Copy to Payment” (call it whatever you want) functionality inside Purchase Order since all data to generate a payment are there.

If not AMEN.

@Davide, I am actually quite familiar with Italy having worked for FAO in Rome. So I disagree with your statements as I have many colleges and friends in Italy that run businesses and you somehow have a very different workflow to them.I actually decided to contact some of them who are business people in Rome before giving you my answer. Please just change your process to even what is common at least in Rome and Milan (yes some of my friends own businesses in Milan).

So my recommendation is to just do as I recommended when using Manager.

I disagree with @eko’s statement that you cannot have a payment without a purchase invoice. From an accounting perspective, that is just a deposit or advance, which Manager handles quite nicely. VAT can be delineated or not, depending on when Italian law requires the taxable purchase to be recognized (payment or purchase invoice).

@Davide, I am wondering why you use a purchase order. Why not just issue a payment directly, posted to Accounts payable and the supplier’s (freelancer’s) subaccount? Your workflow description did not mention any need or use for the purchase order beyond a place to enter information for later copying. So why not combine steps 1 and 2 in your workflow? When you receive the freelancer’s sales invoice, enter a purchase invoice, which will automatically be paid by the deposit you already sent. Overall, this reduces your workflow from 3 steps to 2.