Purchase invoice, Accounts payable and Supplier credits

Need some clarification here.

  1. Purchase order: issued to supplier when we make orders on supplies
  2. Purchase invoice: issued to supplier when we get the products we ordered but no payment made yet.
    When we make payment for the product we receive, we just click the tab ‘pay money’ at the top part of the ‘purchase invoice’, right? then it will appear on ‘account receivable’

Where in the above, will ‘supplier credits’ come into the picture then?

If you have multiple invoices from a supplier and you wish to pay all the invoices in one transaction, just spend money from bank account (or cash) and select supplier credits, then sellect the supplier, enter total of all invoices you wish to pay then click create. Supplier credits will be automatically allocated to these invoices.
Be sure to enter the correct total of all the invoices you wish to pay.

Same goes for customer. If customer has several invoices to pay and wants to pay them off in one transaction click receive money from bank account (or cash) and select customer credits.

A purchase invoice is not actually issued to a supplier. It is the method for entering the sales invoice the supplier sent to you.

Accounts receivable are created when you issue a sales invoice.

Paying a purchase invoice retires an account payable.

@Tut need your advice on proper documenting accounts pertaining to suppliers. I run a clinic. When i need to order drugs or consumables (gloves, syringes, etc) I will just give a phone call to my suppliers, and they will send the products over with a copy of their sales invoice. I usually pay them within the same month and don’t take ‘credits’ from them. How do i put all this ‘transactions’ properly in the books?

You can just Spend Money from your bank account, allocating the payment to some supplies expense account. But you won’t be able to track supplier history. To do that you should enter purchase invoices and then enter payment against accounts payable and the applicable purchase invoice.

@Tut when do we use ‘suppliers credit’ then?

You can allocate a payment to Suppliers Credit and the specific supplier, who must be created first. Manager will apply payment to oldest invoice first with any additional money going to next invoice until used up. This is easier when you have many invoices from same supplier, but sacrifices specific control over which invoices are paid.

Of course, purchase invoices must be entered first so there is something for Manager to allocate to.