📋 Purchase Cycle

How to add a new Vendor

1. Vendors → Vendor List → + New Vendor
2. Fill: Vendor Code (auto), Vendor Name, GSTIN (validates + auto-detects State), PAN, Phone, Email, Address, Bank Account + IFSC (for NEFT/RTGS)
3. Set Payment Terms: Net 30 / Net 45 / COD / Advance
4. Optional: MSME Registered checkbox — enables 45-day auto-alert (Payment Act 2006)
5. Optional: Default TDS Section (194C for contractors, 194J for professionals). System auto-computes on payment.
6. Save. Vendor appears in PO picker.

Create a Purchase Order

1. Purchase Orders → + New PO
2. Pick Vendor. Fields auto-fill from vendor master.
3. Pick Store (where goods will land) + Expected Date
4. Add lines: Item + Qty + Rate. Tax auto-computed from item's GST rate.
5. Optional: Freight, Discount per line or invoice level
6. Click Post. PO gets a number (e.g. PO-2026-00042) + goes to Approved (or Draft if approval workflow enabled).
7. Optional: Print → email/WhatsApp the PO PDF to vendor.

Receive goods (GRN — Goods Receipt Note)

When vendor delivers, receive the physical goods and match against the PO.

1. GRN → + New GRN OR from PO detail → Convert to GRN
2. Pick the source PO. Lines pre-fill with PO quantities.
3. Adjust Received Qty if partial delivery. For items with batches/expiry, enter batch no + expiry date per line.
4. Optional: Quality Check — mark accepted / rejected qty separately
5. Click Post. Inventory +Received Qty. ItemLedger updated. If PO is fully received, its status → Closed.

Book the Purchase Invoice

Vendor sends a bill (paper or PDF). Booking it creates AP liability + records ITC for GST.

1. Finance → Purchase Invoice → + New PI OR from GRN → Convert to PI
2. Enter Vendor Invoice No (their invoice number, not ours) + Invoice Date + Due Date (auto-computed from vendor's Payment Terms)
3. Lines auto-fill from GRN. Verify amounts match vendor's paper bill.
4. Click Post. GL entries: Dr Inventory / Expense, Dr GST-ITC, Cr Vendor.

Pay the Vendor

1. Finance → Vendor Payment → + New Payment
2. Pick Vendor. Left panel shows open invoices with overdue days.
3. Tick invoices to pay. Or type an amount + tick On Account for advance.
4. Pick Payment Mode: Cash / Cheque / NEFT / RTGS / UPI. Enter reference (cheque no + date, or UTR)
5. Pick Bank Account to pay from
6. Optional: Auto-compute TDS if vendor has a TDSSection — see next section
7. Click Post. GL: Dr Vendor, Cr Bank (Cr TDS Payable if applicable). Invoice(s) marked Paid.
8. Optional: Print → BANK_PAYMENT_VOUCHER for cheque/RTGS record. Or BANK_PAYMENT_ADVICE to email/post to vendor.

TDS deduction (194C / 194J / 194H)

Withhold tax at source before paying the vendor. Deposit to govt monthly via challan.

1. On vendor master: set Default TDS Section
2. On the payment screen: click Compute TDS — system checks payment amount vs section threshold (single + FY-cumulative). If deductible, shows rate + amount.
3. Rate depends on: PAN present or not (20% penalty if no PAN), payee type (Individual vs Company), section (2% for 194C-Company, 1% for 194C-Individual, etc)
4. Click Apply. Payment amount becomes Gross − TDS. Vendor gets net; TDS goes to Government via TDSPayable GL account.
5. Monthly: Admin → TDS → Create Challan → Enter BSR + Challan No + Date. Marks all deductions as Deposited.
6. Quarterly: Admin → TDS → Download Form 16A — per-vendor CSV to give to vendors.

Purchase Return (defective goods, wrong item)

1. Purchase Returns → + New Return
2. Pick vendor + reference GRN/PI
3. Enter Return Qty per line + Reason (Damaged / Wrong Item / Expired / Short-shipped)
4. Click Post. Inventory −Return Qty. Debit Note printed for vendor. Vendor account credited.

Landed cost (freight + insurance into inventory cost)

Cost of purchase = Vendor rate + Freight + Insurance + Import duty. To value inventory correctly, allocate the extras across lines.

1. Finance → Landed Cost → + New Landed Cost
2. Pick the parent GRN or PI
3. Add cost lines: Freight ₹5000, Insurance ₹800, Customs ₹1200
4. Pick allocation method: By Value (share by line ₹) / By Quantity / By Weight
5. Click Post. Item unit cost rises proportionally. Impacts WAC + inventory valuation.

Payment Advice (email to vendor)

Confirmation letter to vendor: "we paid you ₹12,345 today for these invoices". Standard courtesy in Indian B2B.

1. From posted Vendor Payment → Print → BANK_PAYMENT_ADVICE
2. PDF renders with: date, invoices covered, TDS deducted, net paid, bank ref (UTR/cheque)
3. Attach to email OR use WhatsApp Bill Share (also works for advice)