ActivityHD Purchasing supports entry of standard purchase orders and miscellaneous purchases and the generation of AP invoices. Miscellaneous purchases are typically purchases that are entered after the fact, such as purchases made on a company credit card or charge account or employee purchases which require reimbursement.

First Things First

Efficient operation of Purchasing requires that several types of records be set up before you commence regular data entry. These include records in General Ledger, Accounts Payable, and Purchasing. The following discussion indicates the records you need to set up in the order you need to set them up. For your convenience, each section contains a link to a topic that describes how to set up the corresponding records.

General Ledger Setup

Ensure that you have the appropriate GL accounts set up in your chart of accounts to accurately record liabilities, expenses, and inventory related to purchasing activities.

Liability accounts

Among the categories of liability accounts you may need are:

• Accounts Payable liability
• Use tax payable
• Payment withholding payable

Expense accounts

Among the categories of expense accounts you may need are:

• Supplies
• Maintenance
• Consulting/contractor fees
• Use/sales tax
• Freight

Inventory accounts

If you enable inventory for one or more of your purchasing departments, you need to define the inventory accounts needed to accurately record inventory purchases.

Commitment accounts

You can use commitments to reserve funds from an appropriated budget to honor purchase orders for goods and/or services. The GL entries for commitments are made when the purchase order is moved to "Master" status. Commitments are processed as special AP commitment invoices that are not eligible for payment. Commitments are reversed when purchase orders are invoiced or canceled.

Commitments are typically recorded in a separate commitment ledger within the general ledger. You can include the commitment ledger, along with budgets and actuals, in budgetary reporting and analysis to give a more complete picture of how your budgetary resources are allocated.

If you enable commitments for one or more of your purchasing departments, you need to define commitment accounts to accurately categorize and record purchase commitments. Among the categories of commitment accounts you may need are:

• Commitment liabilities
• Expense commitments
• Inventory commitments

Accounts Payable Setup

In Accounts Payable you need to set up the elements that define your relationships with your vendors.

Payment Terms

Payment terms describe the credit arrangements you have with your vendors. Payment terms can differ by vendor or the terms can differ depending on the merchandise/service type purchased from a vendor. If a vendor agrees to consistently extend you the same payment terms on most of your invoices, you can set default payment terms on the vendor record. You can also assign payment terms directly on a purchase order or on an invoice from a miscellaneous purchase if the vendor's default terms are not applicable.

APCodes

APCodes determine how Accounts Payable processes invoices and payments. In particular, APCodes provide information for calculating use tax on purchases, for payment reporting on 1099s, or for payment withholding.

Vendor classes

Vendor classes are used to group vendors for reporting and payment. Typically, vendor classes categorize vendors by their function or by the merchandise/service purchased from them.

Vendors

Vendors are the companies or people from whom you purchase goods or services. In addition to traditional vendors, if you use miscellaneous purchases to record purchases made by company credit card or made by an employee who needs to be reimbursed, you need to set up vendor records for the credit card companies and/or the affected employees.

Vendor locations

Vendor locations need to be defined for each vendor's order location, payment location, and reporting location. A vendor can have an unlimited number of locations and you can specify one of those locations as the default location for the vendor. Each of your vendor contacts can only be assigned to one vendor location.

Vendor contacts

Vendor contacts are people with your vendor who have specialized contact relationships with your company. A vendor can have an unlimited number of contacts, but only one contact can be designated as the vendor's primary contact. Each contact must be associated with exactly one vendor location.

Vendor defaults

Vendor defaults are useful for improving data entry on purchase orders, purchases, invoices, and payments. You can specify default values for any of the following: AP account, GL batch, payment terms, distribution template, distribution account mask, and APCodes (if applicable). In addition to vendor defaults, you can specify PO defaults for: shipping address, freight terms, shipping method, and purchasing departments.

AP note types

AP notes can be used to record information for vendors, vendor contacts, vendor locations, AP invoices, or AP payments. AP note types are used to organize AP notes. AP note types may include billing problems, customer service, payments, messages, etc.

Purchasing Setup

Setting up ActivityHD Purchasing involves setting up the operators in the purchasing process, the products and services being purchased, and how the products and services are delivered.

Shipping methods

Shipping methods are the means by which product moves from the vendor to one of your company's shipping addresses. Typically, a shipping method represents a shipping company such as FedEx or UPS.

Freight terms

Freight terms determine whether shipping is paid by the buyer or by the seller and also determines where ownership of the goods shipped transfers from the vendor to the buyer. Freight terms print on the purchase order.

Shipping addresses

Shipping addresses are the physical locations within your company where goods can be shipped or where services need to be performed. A single purchase order may have one or more shipping addresses. A default shipping address can be designated on any of the following:

• Attributes with PO usage
• Department
• AP vendor's PO defaults

Operators

Operators are the users of the Purchasing package, including users who enter purchase information and those who approve purchase orders. ActivityHD allows you to restrict the operators who can enter and approve purchase orders. Each operator is data-linked to a company authorized user.

Purchasing departments

The use of departments in Purchasing allows you to enable certain features by department, including:

• Inventory posting. You can enable inventory purchases by purchasing department.
• PO approvals. Approval settings are controlled by purchasing department, including whether a department's purchase orders require approval, how many approval levels are required, and the dollar limits on approvals by approval level.
• Commitments. Commitment posting is controlled by purchasing department.

Restrictions on who can enter miscellaneous purchases or purchases orders for a particular department can also be defined on the department record. You can also restrict which vendors can be used by department.

Units of measure

Each product in Purchasing must have a unit of measure (UOM) assigned to it when the product is associated with a purchase. The unit of measure is typically the base unit by which the vendor prices the product (each, case, etc.).

Products

Products are the items and services that your company purchases from your vendors. Products can also represent various expenses for which you need to reimburse an employee, such as mileage or daily subsistence.

Purchasing agents

Purchasing agents are people who make purchases of goods and services on behalf of your company. An agent could be an employee who makes purchases from his/her own funds and then seeks reimbursement or an employee who uses a company credit card or charge account to make purchases.

An agent record can also represent a factor, a company that purchases the receivables of one or more of your vendors. In this case, payment for any purchases from the vendor would need to go to the factor.

Attributes

Attributes with PO usage provide additional ways to categorize purchases for reporting. In addition, attributes can contribute account masks for the GL accounts used during invoice posting. An attribute which has both PO order usage and AP invoice usage populates at the invoice level when posting from PO to AP.

Purchasing Security Setup

In addition to the typical security accesses available in security for any resource, such as edit, delete, import, export, report, etc., some resources in Purchasing require special access. Access to these resources needs to be evaluated on a user by user basis. The following table describes some of the special Purchasing accesses.

Purchasing Resource	Access	Comment
Agents	Invoice	Controls access to the invoicing function for agent-based purchases.
Attributes	Activate	Controls access to the activate/deactivate function for attributes with PO usage.
Orders	Invoice	Controls access to the invoicing function for purchase orders.
	Master	Controls access to moving the purchase order status to "Master".
	Print	Controls access to the purchase order printing function.
	Receive	Controls access to the receiving function for purchase orders.
	Reprint	Controls access to the purchase order reprinting function.
Purchases	Master	Controls access to moving the purchase status to "Master".

The conduit for recording purchasing activity as financial transactions in General Ledger is an AP invoice. AP invoices are created from several locations in the Purchasing package.