The Purchase Order document is always the starting point for the purchase and receipt of goods, either for trading stock into the Inventory ledger, or for other types of purchasing to be expensed or treated as asset purchases.
Cost Price Management
LILAC manages the cost prices of products in a comprehensive and sophisticated fashion. The user enterprise may elect to employ Standard Cost, Average Cost or Last Cost for accounting operations, but in any case LILAC always calculates and maintains records of all three. Standard Cost accounting is particularly useful in a manufacturing context where stability of costing is important. Average Cost accounting may be appropriate in a distribution context.
Order Status Reporting
The software keeps track of the state of progress of all outstanding Purchase Orders and Goods Received transactions. The Status Purchase Orders report is always available to allow extraction of details and follow up of unprocessed and part processed purchases.
Many Stock & Inventory reports and re-order computations also take purchase in progress into their calculations.
LILAC provides full support for purchasing from overseas suppliers in a variety of foreign currencies. Provision is made for overseas supplier's creditor's accounts to be maintained in their currency with appropriate balancing entries generated automatically by the software. The software automatically manages profit/loss on foreign exchange transactions to account for currency fluctuations between time of purchase and cash settlement.
Three Phase Purchasing Procedure
The Purchase Order document may be manually created by the operator (or electronically created by the Stock Control system). A Purchase Order is stored in the database under a two-part key comprising the key for the creditor's account for the supplier, and an order number, which may be incrementally allocated by the software, or manually set by the operator.
Generally supplier details, product selections, prices, discounts etc are established, and then with a single mouse click, an image of the freshly created Purchase Order is faxed on-line to the supplier via the LILAC Fax Server facility - all the faxing details being stored with Creditors account data.
Phase II takes place when the goods (or services) are physically received. The original Purchase Order is brought back to the screen either with reference to the order number details if provided by the supplier, or by the use of LILAC's powerful database search facilities The quantities to receive are amended if required, and the Receive button is clicked to create a Goods Received document in the database to reflect the arrival of the goods. This is the stage at which the Stock quantities are increased if the purchase was into the Inventory ledger, so that the goods are seen to be available for resale or internal consumption.
Phase III takes place when the Invoice documentation arrives from the supplier with accurate pricing and other financial data such as freight, tax and duty charges. The Goods Received document is brought back to the screen, and any adjustments required to the financial aspects of the purchase are made, the invoice number and date are entered and the Invoice button is clicked. This results in the creation of a Purchase Invoice document in the database to reflect the information provided by the supplier on his actual invoice document. This is the stage at which all appropriate accounting entries are automatically created in the LILAC double-entry, multi-ledger database.