What is a Purchase Order?

A purchase order (PO) is the order request sent from a buyer to a seller. It outlines the purchase prices that have been agreed upon, type and quantity of items being ordered, and the payment terms. Purchase orders ensure the products that arrive are indeed the products ordered.

What is a Receive Item?

A receive item transfers the status of an inventory item on purchase order to be included in Quantity on Hand.

What is a Bill?

A bill is entered into your books to record the goods or service that you received from the supplier and which you are obligated to pay for.

What is the difference?

A purchase order is a non-posting document that tracks the initial order placed with a supplier.

A receive item is used prior to receiving a bill from the supplier as a posting transaction, which updates Inventory and offsets to a liability type clearing account called Pending Item Receipt.

A bill is entered into your books to record the goods or service that you received from the supplier. It represents your obligation to pay the supplier and the transaction will post to Accounts Payable.

If you typically receive your items from purchase order before receiving the related bills from suppliers, you will create a 'Receive Item' to update your stock status. Once you receive the bill from your supplier, you will create the bill directly from the related 'receive item' transaction. This action will transfer the amount on your balance sheet from the Pending Item Receipt account to Accounts Payable.

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