Sales / Purchase types definition

Purchase Order Types
When you create a new purchase order, Microsoft Dynamics AX gives you
several options on the Create purchase order form.
There are six Purchase order types to select from depending on the process or
action the user requires:
• Journal
• Quotation
• Subscription
• Purchase Order
• Returned Item
• Blanket Order

Journal
The first Purchase order type is the journal. This type is used as a draft; it does
not affect stock quantities and does not generate any item transactions and the
quantity on the order line will not be considered in the Master scheduler.
EXAMPLE: A purchase order of the type Journal can be used when importing data by
batch; in this manner, the purchase order can be reviewed and evaluated without
affecting inventory, on-order, or other numbers.

Quotation
This kind of purchase order is used if the vendor has not yet committed to
fulfilling the order if the company has not confirmed the purchase order.
Quotation type generates an issue lot with the type Quotation in the inventory
and optionally in the Master scheduler. Generating an issue lot means that
Microsoft Dynamics AX creates a Lot ID for the specified quantity which
enables the users to see the supply that is being considered for purchase on this
specific item. Unlike the Journal type, the Quotation makes an entry in the inventory
transaction table. Making this transaction is what enables Microsoft Dynamics
AX to use this information for Master scheduling purposes.

Subscription
This kind of purchase order is used for repeated purchases of the same goods or
services. When a packing slip is updated, Microsoft Dynamics AX generates a
receipt. When the invoice is updated for the receipt, a new packing slip or invoice
entry can be updated for the same purchase line immediately or at some future
date. The order will never be at an Invoiced status only Open or Received.
EXAMPLE: An example of a recurring order would be a fee for monthly delivery of
bulbs. In this situation, the company purchases a quantity of bulbs every month with
monthly deliveries and billings. When the order is invoiced, the order status is
automatically set to open order, the quantity delivered is invoiced, and the delivery
remainder is updated.
Whenever we post this type, an entry is created in INVENTORY->Transaction.



Purchase Order
This type is used when the vendor confirms they can fill the order. When you
create a new order, the type can be set to default to Purchase order type in the
parameters form depending on the client’s business process.

Returned Item
This type is used when you return goods to the vendor. A Return Merchandise
Authorization (RMA) number supplied by the vendor is required when entering
this kind of order. Learn more about Returned items later on in the Trade and
Logistics course.
EXAMPLE: You create a purchase order for 100 pieces of S-Shade/Color_Size color
Blue but the supplier sent 100 pieces of S-Shade/Color_Size color White. The purchaser
contacts the vendor, requests a RMA, and uses the Purchase type Returned Item to track
the return. This purchase type can also be used to return damaged or otherwise defect
goods to the supplier.

Blanket Order
This kind of purchase order is used if there is a contract with the vendor and you
want to order from the contract. Typically, a company uses blanket orders to
receive better pricing conditions as the blanket order quantity is bigger than on
single purchase orders. You can create a Release order to release, order, and
invoice items until the contract is fulfilled. Blanket orders do not affect stock
quantities, do not generate item transactions, and are not included in Master
scheduling. Release orders, issued from Blanket orders, do affect all the above.
EXAMPLE: A company wants to purchase 3000 meters of RM-Cable/3l, but because of
storage and capital limitations, wants it delivered as needed. In this situation, the buyer
contacts the supplier and requests 100 meters on Monday, 300 meters on Wednesday,
and on the following Monday, 100 meters. At this point 2500 meters remain on the open
purchase order. Every time that the company orders against this purchase order, the
remaining quantity is decreased until 3000 meters has been delivered.


Sales Order Types
Create a sales order in Microsoft Dynamics AX 4.0 and you can select from one
of several sales order types:
• Journal
• Subscription
• Sales Order
• Returned item
• Blanket order
• Item Requirements






Subscription
This kind off sales order is used for repeated sales of the same goods or services
to the same customer. When a packing slip is updated, Microsoft Dynamics AX
generates a packing slip. When the invoice is updated, a new packing slip or
invoice entry can be updated for the same sales line. The order never has an
Invoiced status, only Open or Delivered.
EXAMPLE: Light and Design have a standing order to buy 100 CL-100-B-M lamps
from the Global Trade & Manufacturing Company. The order taker creates a sales order
of type 'Subscription' for Light and Design and creates a line for 100 pieces of CL-100-
B-M. Each month the subscription is invoice updated. The goods are delivered to the
customer and the customer is billed for the standard quantity of 100 pieces. The sales
order remains at the status Open order but transactions are created for the sales order
line.

Sales Order
This kind of sales order is used when the customer confirms that they want the
order. When you create a new order, the type can be set to default to Sales order
type in the parameters form depending on the client’s business process.

Returned Item
This kind of sales order is used when receiving goods back from a customer. A

Return Item Number is required for this kind of order and can automatically be
assigned by Microsoft Dynamics AX by the number sequence set up or manually
assigned by the user. The returned items topic is discussed more in the Trade and
Logistics II course.

Item Requirements
The Sales order type of Item Requirements is connected to the Microsoft
Dynamics AX Project Module. When you create your item requirements in the
Project module, you create a sales order of the type Item requirements.
The item requirements sales orders topic is discussed more in the Project
Accounting training manual.

Blanket Order
A sales blanket order works the same as for a purchase order except the order is
made with a customer for whom you periodically generate release sales order.

PROCESS FLOW IN A DIRECT DELIVERY SALES ORDER






What is Posting

When posting an order in Microsoft Dynamics AX you update the order
according to the stage it has reached in the order cycle. These stages include:
• Confirming order details
• Receiving/shipping items
• Invoicing
When you post a packing slip, invoice, or other document, post the inventory cost
or sales activity or both to the general ledger and sub-ledgers. Profiles for posting
to the general ledger can be set up for:
• One item
• An item group
• All items at the same time

POSTING DIAGRAM

Post Receipts List
Generating a Receipts list from a purchase order does not change the status of a
purchase order or create any inventory transactions. It only provides a means for
checking and validating shipments before accepting the order. The use of this
function is determined by a business need and may not be a required process.
Packing Slip
The second to last step in updating purchase orders is to receive the goods or
services and to enter the packing slip into the system. This creates a physical
inventory transaction and makes the items available. This transaction is recorded
in the system by posting the packing slip.
If all items on a given purchase order are received, the purchase order Status
changes to Received.
Invoice
The last step in updating purchase orders is to invoice update the purchase order
when you receive the hard copy of the invoice from the supplier.


Post Sales Orders
There are four posting update statuses for sales orders. They are as follows:
• Confirmation
• Picking list
• Packing slip
• Invoice
Sales orders can be created through Microsoft Dynamics. CRM or Microsoft®
Projects, or created manually in Accounts receivable.
Confirm a Sales Order
After you create a sales order you may want to post the Sales order confirmation
to confirm the details of the order and print the hard copy of the sales order for
the customer. The business needs of the company determine whether this posting
update is necessary. The confirmation is useful when a customer is only
committing to part of a proposed order but has not declined the other proposed
items or quantities.
This step does not change the status of the order and does not create any
inventory transactions.
Picking List
The third step in updating sales orders is to post the order picking list.
Running a picking list update is either voluntary or mandatory depending on the
inventory model attached to the item you are selling. If in INVENTORY
MANAGEMENT → SETUP → INVENTORY → INVENTORY MODEL GROUP the Picking
requirement parameter is selected, the transactions for a line must have the
status Picked before you can continue to packing slip updating the line.
The use of this function depends on whether you use the WMS functionality.
When WMS is not used, the picking process depends on whether the Accounts
receivable Parameter field’s Set inventory transaction to 'Picked' check box
is selected.
Packing Slip
The fourth step in updating sales orders occurs when the items are ready to ship
to the customer. This is when a packing slip is posted. When the packing slip is
posted, the system recognizes that the sales order demand has been satisfied and
reduces the physical on-hand inventory.
Invoice
The last step in the sales order processing is to post and print the invoice.
If the quantities posted on the invoice update are equal to the ordered quantities,
the sales order Status changes to Invoiced. If there is a back order on one or
more items, the sales order Status remains Open Order.
HINT: In ACCOUNTS RECEIVABLE SETUP→PARAMETERS→UPDATES tab, select Delete
order line invoiced in total and Delete order after invoicing to delete the sales orders or
order lines when they are fully invoiced.

Sales Order Packing Slip Posting
When the Packing slip is updated for an item, transactions based on the item’s
cost at the time the Packing slip is updated are generated in the Packing slip
account, and the Packing slip offset account.
To post packing slip related transactions for an item make sure that the Post
physical inventory parameter is set up for the item’s inventory model group.
nvoice Posting for Sales Orders
When a sales order is finally invoice updated:
• The two packing slip transactions are reversed when the item is
Invoice updated.
• The cost value of the item is released from the Issue account, also
known as the Inventory account, and the offset for the release is
made to the Consumption (or Cost of goods sold) account.
For posting to occur when invoice updating a sales order for items, the Post
Financial inventory must be selected in the items inventory model.
NOTE: If the item is of the type Service, you do not want to post item consumption. As
you do not keep items in stock, they are not consumed financially. Therefore, the
inventory model group attached to the item should have the Post financial inventory
parameter clear.
In addition to the inventory posting, the sales revenue and customer summary
accounts receive postings during invoice updating. The customer account is
updated in the sub-ledger when the sale is posted.
Use Purchase Order Posting Profile
Purchase Order Packing Slip Posting
When Purchase orders are Packing slip updated, meaning inventory is received,
transactions based on the item’s cost as recorded in the purchase line are
generated in the Packing slip account, and the Packing slip offset account.
Select the Post physical inventory parameter in the item’s inventory model
group and the Post packing slip in ledger check box for in ACCOUNTS
PAYABLE→SETUP→PARAMETERS. This parameter setup is the same as for sales
order packing slip posting except for Accounts payable.
Receipt Account Posting
The Receipt account, also know as Inventory account, is used to post inventory.
For items not using standard cost, the item’s true cost is debited from the Receipt
account. Any tax is debited in the Tax code account, and item purchases,
including tax, are credited to the Vendor summary account according to the setup
in the supplier’s Posting profile.