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POS: Vendors / Purchase Orders / Receivables

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Vendors

Vendors are the People / Companies from whom you purchase your goods for resale. Most times a Purchase Order is produced by your Point of Sale to fax or email to the Vendor.

A Purchase Order (abbreviated PO) is a commercial document issued by a buyer to a seller, indicating the type, quantities and agreed prices for products or services that the seller will provide to the buyer. Sending a PO to a supplier constitutes a legal offer to buy products or services. Acceptance of a PO by a seller usually forms a once-off contract between the buyer and seller so no contract exists until the PO is accepted. POs usually also specify additional conditions such as terms of payment, Incoterms for liability and freight responsibility, and required delivery date. Many Point of Sale systems can generate, send and receive (update orders) automatically.

Purchasing Process
Purchasing order forms an integral part of purchasing process in the POS computer software. The respective department first make a purchase order request, then the request is received by the purchasing department. The purchasing department generates the purchase order. Parts of approved PO are sent to seller, IT department, the respective department and accounting department for future matching process.

Structure
A purchase order usually contains: PO number, shipping date, billing address, shipping address, requested terms, and a list of products with quantities and prices.

Rationale
The reasons why companies use POs are several. They allow buyers to clearly communicate their intentions to sellers, and they protect sellers in the event that a buyer refuses to pay for something which was sent. For example, say that Alice works for Company A and orders some parts from Bob at Company B. There could be a problem if Alice didn’t actually have authority to authorize this order--maybe she thought she had her boss’s permission, but there was a miscommunication. So, the order gets returned and Company B loses money. Depending on the situation, Company B might only lose shipping and packing costs, but they might also lose significant manufacturing labor and materials costs and other expenses. They might lose the product entirely (e.g. if it is perishable).Vendor Warehouse

In order to prevent such problems, sellers often request purchase orders from buyers. This document represents the buyer’s intent to purchase specific quantities of product at specified prices. In the event of non-payment, the seller can use the PO as a legal document in a court of law to demonstrate the buyer’s intent and to facilitate collection efforts. Companies usually request POs when doing business with other companies for orders of significant size, as the PO reduces the risks involved.

In the course of the accounts payable process, purchase orders are matched with invoice and packing slips before the invoices are paid.

Types of purchase orders

Electronic
Many companies (and organizations) now use electronic purchase orders following specific B2B standards, such as, ANSI, EDIFACT or RosettaNet.

Single-use
One class of purchase orders is the single-use purchase orders used by retail stores. The purpose of a single-use purchase order is to keep track of a single order from a vendor until all items have been received from that order. Once all items have been received, that purchase order number can no longer be used.

Blanket
Another class of purchase orders are the blanket purchase orders. These are typically used by organizations to keep track of money that was spent for a particular department or for a specific project (such as IT equipment upgrade). Another general use of the blanket purchase order is to limit spending during a specific timeframe or for a specific project.
 

Accounts Receivables
Accounts receivable is one of a series of accounting transactions dealing with the billing of customers who owe money to a person, company or organization for goods and services that have been provided to the customer. This is typically done in a one person organization by writing an invoice and mailing or delivering it to each customer. Your Point of Sale should have a built-in Accounts Receivable module.

On a company's balance sheet, accounts receivable is the amount that customers owe a business. Sometimes called trade receivables, they are classified as current assets. To record a journal entry for a sale on account, one must debit a receivable and credit a revenue account. When the customer pays off their accounts, one debits cash and credit the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is always debit.Vendor Warehouse

Business organizations which have become too large to perform such tasks by hand (or small ones that could but prefer not to do them by hand) will generally use accounting software on a computer to perform this task.

Associated accounting issues include recognizing accounts receivable, valuing accounts receivable, and disposing of accounts receivable.

Accounts receivable departments use the Sales Ledger

Other types of accounting transactions include accounts payable, payroll, and trial balance.

Since not all customer debts will be collected, businesses typically record an allowance for bad debts which is subtracted from total accounts receivable. When accounts receivable are not paid, some companies turn them over to collection agencies. However, many debtors still do not pay; in those cases, some creditors turn to collection attorneys

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