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[Ian Ray]

Hi,

For single-line expenses on a G/L account, I am familiar with

• Purchase journals of type invoice, debit to a G/L account, creating general and vendor ledger entries.
• Purchase invoice with single line of type G/L account, vendor as buy-from vendor no., creating a posted purchase invoice as well as general and vendor ledger entries.

Additionally, I have used NAV 2016+ to attach incoming documents to purchase invoice and vendor ledger entries.

My question is, in this situation, why would one use purchase invoice vs. purchase journal?

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Ian Ray
Cypress Grove
Arcata CA
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[Sue Barrett]

I tend to only use the purchase journal for migrating open document balances and perhaps for adjustments and write-off’s where no physical vendor document exists.  

Purchase journal gives you the opportunity to select the balancing account as opposed to the purchase and purchase credit memo which will auto-post to AP control based upon the vendor posting group.  This is course is useful for migrating document balances because you can post back to the AP control in order to net the posting to 0.00.

Use purchase invoices and purchase credits where a physical document exists and you want the control account entry posted to AP control.

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Sue Barrett
Consultant
Sudbury
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[Crystal Tollison]

Ian,
I find entering invoices via the Purchase Journal to be a bit quicker than posting a full document.  For new NAV users it can be confusing as to when it is okay to use.  I usually recommend using the Recurring Journal for the usual monthly expenses for several reasons.

By creating a Recurring Journal for the recurring monthly expenses you create a ‘check list’ of expected expenses so when the electric bill doesn’t show up, you are aware it is missing.

Secondly, I find the most common issue with using the Purchase Journal is a user that leaves the Document Type field blank.  When blank, the system does not utilize the ‘Invoice’ functions.  for example, it will not use the Payment Terms to populate the Due Date, etc. This may also cause it to be left out of certain reports or statistics. Using the Recurring Journal eliminates these types of user errors.

Otherwise I don’t find problems with using the Purchase Journal for GL Account invoices.

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Crystal Tollison
Consultant
ArcherPoint Inc.
Lawrenceville GA
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[Ian Ray]

Thank you for the detailed explanation.

I have examined how the document type being blank in the purchase journal can cause issues as well. With a blank document type, no error is thrown when the transaction is pointing the wrong way. In contrast, if document type = invoice and, for example, a line is entered to debit a vendor and credit a G/L account, NAV will complain that the amount should be negative.

Using recurring monthly transactions in a purchase journal as a checklist makes a lot of sense; I had not thought of it this way.

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Ian Ray
Cypress Grove
Arcata CA
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[Mark Keener]

Hi Ian,

For my users, it’s all about consistency in how things are entered.  I have one client that hasn’t entered a purchase invoice in at least the 10 years since they’ve been my client.  They enter all accounts payable – even multi-line entries – into a purchase journal.  They have also developed interfaces from some of their external systems (employee expense, etc.) that feed into the purchase journal.

For the majority of my users, the purchase invoice is used exclusively.  The purchase invoice most closely resembles what other systems use to enter AP, so it’s an easier transition during implementation and training.  I think that using the purchase journal requires more of a “debits and credits” understanding than many AP users have, so keeping them in the purchase invoice page is usually best.

I have one client that requires some special processing in their AP process.  I won’t bore you with the details of it, but they enter AP transactions into the Purchase Invoice, but during posting I actually interrupt the process, do some calculations, make some adjustments and then, behind the scenes, feed a purchase journal with the results and then post the purchase journal.  This would be much more difficult for the users if they had to start directly in the purchase journal.

For you, it doesn’t make any difference where they’re entered.  Doing it in one area vs. another simply gives you consistency and saves you from having to switch back and forth between a journal and a purchase invoice.  Keep in mind that you can enter multi-line transactions in the purchase journal by entering 2 or 3 lines of “expense” with the offsetting transaction to the vendor.  Just keep the document type, document no. and posting date all consistent and NAV will treat it all as a single transaction.

A tip of the hat to Crystal – Using the Recurring Journal as a check list is a pretty clever idea!!

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Mark Keener
CV, LLC
Centerville OH
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[Ian Ray]

Thank you for the insights and examples.

I have definitely seen the “debits and credits” point in action. I think it is a matter of abstraction more than remembering how to set these journal entries up. That is, with a purchase document, a user doesn’t have to know what is happening behind the scenes beyond that the transaction is a purchase.

As an anecdote, I saw a NAV setup recently where many expenses are purchased as service-type items, further abstracting the purchasing workflow from the accounting logic. In this situation, purchasing entries are almost entirely disconnected from the chart of accounts; perhaps this is a good thing. However, I wouldn’t want to be the one managing the general posting setup.

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Ian Ray
Cypress Grove
Arcata CA
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[Rob Fontaine]

Hi Ian,

We use the purchase invoice instead of the journal to support our business requirements around internal controls and segregation of duties.  We require that most purchases have a purchase order, which are coded to G/L accounts, and the originators must post receipts when the goods/services are actually received.  The vendor’s invoice must reference the PO number on the invoices they send us.  The invoices are processed centrally by our AP team and the posted receipts are used to determine if invoices are okay to post and pay (i.e., traditional three-way matching of PO-Receipt-Invoice).  

Additional reasons for using the purchase invoice are that NAV handles all the sales tax calculations automatically (Provincial and Federal taxes in Canada, which are accounted for differently), and as we use Zetadocs for document capture and storage it is much more straightforward to attach documents to the purchase invoice vs. a journal entry when looking up posted records afterwards, such as during an audit.

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Rob Fontaine
Director, ERP & Financial Analysis
SilverBirch Hotels & Resorts
Vancouver BC
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