Unlike purchase orders, Goods Receipt Purchase Orders (GRPO’s) have financial implications. When a GRPO is processed, a job line will be created in Eralis Job for the expenses that were incurred in association with that transaction. Processing of a GRPO acknowledges that materials have been delivered and all services have been rendered. The cost must now be linked to that job. However, it is not mandatory to process the GRPO – the purchase order can be processed directly to an A/P invoice.
GRPO’s can also be used when processing non-inventory items. For example, a subcontractor works 50 hours on a job in one month, but you will not get their invoice until two weeks after month end. Normally you would have to wait for an A/P invoice to come in before creating your A/R invoice to the customer for that work. With a GRPO, a job transaction is created to acknowledge the work that has been carried out. You can then invoice the customer even though you do not have an A/P invoice from your subcontractor. When the A/P invoice does come through, it can be paired with the GRPO and any variations can be added at this stage to be dealt with later.
Impact on Journal Entries
No changes are made with regard to journal entries associated with inventory items on a GRPO. A standard SAP Business One journal entry will be created to debit the Work-in-progress (WIP) GL account, and the credit the Goods Received Not Invoiced account. There are no journal entries created by Eralis Job.
On the other hand, the process does change for a non-inventory item. As SAP Business One does not process any transactions for a GRPO based on a non-inventory item, it will not create a journal entry. However, Eralis Job will generate a transaction to debit the WIP account and credit the Expense account associated with that item. The WIP must be debited to balance the job lines and the WIP GL account. The Expense account is based on the GL determination for that item code. This account will also be used when SAP Business One creates a journal entry based on the A/P invoice. In this case, SAP Business One will create a transaction to debit the Expense account and credit the A/P Control account. The net effect of this transaction is that the Expense account is cleared out.
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