Purchase Flow
Complete end-to-end documentation of purchase transactions in NetSuite - with or without Purchase Orders - covering all variations from requisition to payment.
In This Section
| Page | Description |
|---|---|
| Requisition to PO | Purchase Requisition approval and conversion to PO |
| Standard Path | PO → Item Receipt → Vendor Bill → Payment |
| Direct Paths | Bill Direct, Standalone Bill, Drop Ship |
| Returns to Vendor | VRA, Vendor Credit, Vendor Refund |
Master Flow Diagram
COMPLETE PURCHASE FLOW (ALL PATHS)
─────────────────────────────────────────────────────────────────
┌─────────────────────────────────────────────────────────────────┐
│ REQUISITION PATH (OPTIONAL) │
├─────────────────────────────────────────────────────────────────┤
│ ┌───────────────┐ ┌───────────────┐ ┌───────────────────┐ │
│ │ REQUISITION │──▶│ APPROVAL │──▶│ PURCHASE ORDER │ │
│ │ GL: None │ │ WORKFLOW │ │ (Created from │ │
│ │ Inv: None │ │ │ │ Requisition) │ │
│ └───────────────┘ └───────────────┘ └─────────┬─────────┘ │
└────────────────────────────────────────────────────┼────────────┘
│
▼
┌─────────────────────────────────────────────────────────────────┐
│ WITH PURCHASE ORDER │
├─────────────────────────────────────────────────────────────────┤
│ │
│ ┌─────────────────┐ │
│ │ PURCHASE ORDER │ │
│ │ GL: None │ │
│ │ Inv: None │ │
│ └────────┬────────┘ │
│ │ │
│ ┌──────────────────┼──────────────────┐ │
│ │ │ │ │
│ ▼ ▼ ▼ │
│ ┌────────────────┐ ┌──────────────┐ ┌──────────────────┐ │
│ │ STANDARD PATH │ │ BILL ONLY │ │ DROP SHIP │ │
│ │ (Receive+Bill) │ │ (No Receive) │ │ │ │
│ └───────┬────────┘ └──────┬───────┘ └────────┬─────────┘ │
│ │ │ │ │
│ ▼ │ ▼ │
│ ┌────────────────┐ │ ┌──────────────────┐ │
│ │ ITEM RECEIPT │ │ │ Ships direct to │ │
│ │ GL: Inventory │ │ │ customer │ │
│ │ Inv: Increases │ │ │ (see Sales Flow) │ │
│ └───────┬────────┘ │ └──────────────────┘ │
│ │ │ │
│ ▼ ▼ │
│ ┌────────────────┐ ┌──────────────┐ │
│ │ VENDOR BILL │ │ VENDOR BILL │ │
│ │ GL: A/P │ │ (Direct) │ │
│ │ Inv: None │ │ GL: A/P+Inv │ │
│ └───────┬────────┘ └──────┬───────┘ │
│ │ │ │
└─────────────┼──────────────────┼────────────────────────────────┘
│ │
│ │
┌─────────────┼──────────────────┼────────────────────────────────┐
│ │ WITHOUT PURCHASE ORDER │
├─────────────┼──────────────────┼────────────────────────────────┤
│ │ │ │
│ │ ┌──────────────────┐ │
│ │ │ STANDALONE │ │
│ │ │ VENDOR BILL │ │
│ │ │ GL: A/P + Inv* │ │
│ │ │ Inv: Increase* │ │
│ │ └────────┬─────────┘ │
│ │ │ │
└─────────────┼─────────────┼─────────────────────────────────────┘
│ │
└─────────────┼─────────────────────────────────────┐
│ │
▼ │
┌────────────────────────────────────┐ │
│ VENDOR PAYMENT │ │
│ GL: A/P → Cash │◀─────────────┘
└────────────────────────────────────┘
* Inventory increase only for inventory items
Accounting Basics (For Non-Accountants)
Before diving into GL entries, here's a simple explanation for purchase transactions.
The Core Concept
BUYING THINGS = GETTING STUFF + OWING MONEY
─────────────────────────────────────────────────────────────────
When you buy inventory:
You GET: Inventory (Asset ↑) → DEBIT
You OWE: Vendor payment (Liability ↑) → CREDIT
The balance scale:
DEBIT CREDIT
▼ ▼
┌──────────┐ ┌──────────┐
│ Inventory │ ═══ │ A/P │
│ +$500 │ │ +$500 │
└──────────┘ └──────────┘
Account Types Quick Reference
| Account Type | Increases With | Decreases With | Purchase Examples |
|---|---|---|---|
| Assets | Debit | Credit | Inventory, Cash, Prepaid |
| Liabilities | Credit | Debit | A/P, Accrued Expenses |
| Expenses | Debit | Credit | Rent, Utilities, Supplies |
Real Example: Buying Inventory
PURCHASE GL ENTRY EXPLAINED
─────────────────────────────────────────────────────────────────
You order 100 widgets at $5 each = $500
Step 1: RECEIVE the goods (Item Receipt)
┌─────────────────────────────────────────────────────────────────┐
│ Inventory (Asset) $500 DEBIT │
│ └── WHY? You now HAVE more stuff = Asset INCREASES │
│ │
│ IRNB* (Liability) $500 CREDIT │
│ └── WHY? You OWE for received goods = Liability INCREASES │
└─────────────────────────────────────────────────────────────────┘
Step 2: BILL arrives (Vendor Bill)
┌─────────────────────────────────────────────────────────────────┐
│ IRNB (Liability) $500 DEBIT │
│ └── WHY? Clear the temporary liability = Liability DECREASES │
│ │
│ Accounts Payable (Liability) $500 CREDIT │
│ └── WHY? Now you formally owe vendor = Liability INCREASES │
└─────────────────────────────────────────────────────────────────┘
*IRNB = Inventory Received Not Billed (clearing account)
Why It Matters
| When You See... | It Means... |
|---|---|
| Debit Inventory | You received more stock |
| Credit Inventory | Stock left (sold/returned) |
| Credit A/P | You owe vendor more |
| Debit A/P | You paid vendor or reduced debt |
| Debit Cash | You received money |
| Credit Cash | You paid money out |
| Debit Expense | Cost recognized |
Quick Reference
GL vs Inventory Summary
| Transaction | GL Posts? | Inventory Impact |
|---|---|---|
| Purchase Order | No | On Order qty only |
| Item Receipt | Yes | Increases On Hand |
| Vendor Bill (from IR) | Yes | No change |
| Vendor Bill (Direct) | Yes | Increases On Hand |
| Standalone Bill | Yes | Increases* |
| Vendor Payment | Yes | No change |
| Vendor Credit | Yes | Decreases* |
*For inventory items
Next Steps
- Requisition to PO - Start with purchase requisition and approval workflow
- Standard Path - Learn the PO → IR → Bill → Payment flow
- Direct Paths - Skip receipt or PO entirely
- Returns to Vendor - Handle vendor returns and credits