Purchase Orders: Managing and Receiving Purchase Orders
Purpose Statement
This guide explains how to manage purchase order status and document the receipt of items when deliveries arrive from vendors. The receiving process ensures accurate inventory tracking, verifies that delivered items match the original purchase order, and updates the system to reflect current stock levels. Proper status management and receiving procedures maintain inventory accuracy, support financial reconciliation, and provide an audit trail for all incoming materials and equipment.
Background Information
Managing and receiving purchase orders represents the final stages in the procurement workflow. Purchase orders progress through various status levels that track their position in the ordering and delivery process. Understanding which status types allow continued editing versus which lock the order is critical for proper purchase order management.
When ordered items arrive at a department location, designated personnel must verify the delivery, update the purchase order status, document receipt in the system, and assign items to their final destination locations. This process updates inventory levels, triggers payment processing, and closes the purchase order record. Once a purchase order is marked as received, it becomes locked and can no longer be edited, ensuring data integrity for financial and inventory records.
Required Permissions
Users performing purchase order receiving must have:
- Assets module access permissions
- Purchase order management rights
- Inventory receiving authority
- Location assignment permissions
- Edit rights for purchase order status updates
Contact your system administrator if you cannot access the receiving functions or edit purchase order status.
Video
Step-by-Step Guide
The PO will be left open for further edits with the following:
Sent
Processing
Needs Attention
Shipped
Edits will no longer be allowed for the following:
Delivered - Will allow users to receive the inventory into their account or allow update of the status only for users of a higher authority to receive those items.
Closed - Closes the PO out w/o receiving the items.
Best Practices
Status Management
Before Receiving
- Physically inspect all delivered items before processing receipt
- Verify quantities match the purchase order
- Check for damage or defects
- Confirm all items on the packing slip are present
- Review the purchase order details in the system
During Receiving
- Document any discrepancies immediately in comments
- Take photos of damaged items if applicable
- Verify SKU numbers match actual items received
- Ensure proper destination locations are selected
- Use global destination when appropriate to save time
Inventory Accuracy
- Assign items to specific storage locations, not just general facilities
- Update locations if items will be immediately transferred elsewhere
- Consider proximity to where items will be used most frequently
- Coordinate with inventory managers for high-value items
Documentation
- Add detailed comments about delivery condition
- Note any substitutions or backorders
- Document communication with vendors about issues
- Include names of personnel who verified the delivery
- Reference any damage claims or returns needed
- Explain reasons for using "Closed" status
Discrepancy Management
If delivered items don't match the purchase order:
- Document all discrepancies in comments
- Contact the vendor immediately about missing or incorrect items
- Do not mark items as received until discrepancies are resolved
- Coordinate with purchasing personnel about returns or credits
- Keep delivery documentation for vendor follow-up
Troubleshooting & FAQs
Which status should I use when the vendor confirms they've received our order? A: Use "Sent" or "Processing" status to indicate the order is being handled. Save "Shipped" for when the vendor actually ships the items.
Q: Can I edit a purchase order after marking it "Shipped"? A: Yes, "Shipped" status keeps the purchase order editable. You can continue making changes until you mark it as "Delivered" or "Closed."
Q: What if some items on the order haven't arrived yet? A: Keep the status as "Shipped" and add comments noting the partial delivery. Only mark as "Delivered" when you're ready to begin the receiving process for the items that did arrive, or wait until all items arrive.
Q: I marked an order as "Delivered" by accident. Can I change it back? A: Once marked as "Delivered," the purchase order becomes locked. If you selected "Change status only" in the receiving dialog, contact your system administrator. If you completed the receiving process, the order cannot be unlocked.
Q: When should I use "Closed" instead of receiving the order? A: Use "Closed" when an order is cancelled, returned, entered in error, or otherwise won't result in items being added to inventory. Always document the reason in comments.
Q: What's the difference between "Delivered" and "Received"? A: "Delivered" is a status you manually set when items physically arrive, which locks the order for receiving. "Received" is the final status automatically set by the system after you complete the receiving process and assign items to locations.
Q: Can another user receive an order after I mark it as "Delivered"? A: Yes, when marking as "Delivered," select "Change status only" in the dialog. The designated user can then find the purchase order and click the play button to begin receiving.
Q: Who should be assigned as the contact person for receiving? A: The contact person should be someone at the receiving location who can accept deliveries, verify contents, and has access to process the receipt in the system.
Q: What if I need to make changes after marking an order "Delivered"? A: Once "Delivered" status is set, the purchase order is locked. Contact your system administrator if corrections are absolutely necessary before receiving.
Q: How do I handle items that need to go to multiple locations? A: Assign each item individually to its specific destination location. Do not use the global destination feature if items are going to different locations.
Q: How do I handle items that need to go to multiple locations? A: Assign each item individually to its specific destination location. Do not use the global destination feature if items are going to different locations.
Q: Should I wait for the invoice before receiving the order? A: No, you should receive the order when the physical items arrive. The invoice matching and payment processing happen separately in accounts payable.
Additional Considerations
Status Workflow Best Practices
Inventory Integration
Receiving purchase orders automatically:
- Updates inventory quantities at assigned locations
- Creates audit trails for stock level changes
- Triggers reorder point evaluations
- Updates inventory valuation records
- Generates receiving reports for management
Financial Processing
Completed receipts support:
- Three-way matching (purchase order, receipt, invoice)
- Accounts payable processing and payment authorization
- Budget tracking and expenditure reporting
- Period-end financial closing procedures
- Audit documentation requirements
Quality Control
Upon receiving, verify:
- Items meet specifications in purchase order
- Equipment is in working condition
- Expiration dates are appropriate (for consumables)
- Safety equipment meets certification requirements
- Documentation and manuals are included
Communication
After receiving:
- Notify requestors that their items have arrived
- Alert inventory managers of new stock additions
- Inform maintenance personnel about new equipment
- Update training staff about new supplies or tools
- Coordinate with supervisors about item deployment
Record Retention
Receiving documentation provides:
- Proof of delivery for vendor disputes
- Warranty start date verification
- Audit trail for asset management
- Historical data for vendor performance evaluation
- Evidence for grant compliance reporting
- Timeline of order progression and issues
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