A Request for Quotation is a document that an organization sends to one or more suppliers asking a quotation for items.

To access Request for Quotation, go to:

Home > Buying > Purchasing > Request for Quotation

1. Prerequisites 

Before creating and using a Request for Quotation, it is advised that you create the following first:

• Supplier
• Item

2. How to create a Request For Quotation 

1. Go to the Request For Quotation list, click on New.
2. Enter the date.
3. Choose the Supplier to whom the Request for Quotation is to be sent.
4. In the next table, enter items, quantity and the target warehouse where you’ll be sending the items.
5. Warehouse can be left blank if ‘Maintain Stock’ is unticked for the item.
6. Save and submit.

A Request for Quotation (RFQ) can also be created from a submitted Material Request. Once an RFQ is created, you can print and send suppliers the PDF which will have all the details you entered relevant to the RFQ. You can also get their reply (Supplier Quotation) in ERPNext itself, see section 4.1 Supplier Quotation by User. However, for a large number of items, your supplier may be more comfortable with an Excel sheet, etc.

3. Features 

3.1 Get items from 

The items in the items table can be fetched from other documents. The options are: Material Request, Opportunity, and Possible Supplier.

• Material Request: Items will be fetched from a submitted Material Request that you select. A Material Request can be searched with some matching words and a date range can also be selected to filter the Material Requests.
• Opportunity: Items will be fetched from a saved Opportunity. A date range can be selected here also.
• Possible Supplier: Select a possible supplier. Then if you have any submitted Material Requests against this supplier, items can be fetched from that.

3.2 Get Suppliers 

Instead of entering the suppliers manually in the table, you can also fetch them using the ‘Get Suppliers’ button. When you click on Tools > Get Suppliers, you will see the field ‘Get Suppliers By’. There are two options to fetch suppliers: By Tag or By Group.

• By tag: Go to ‘Tag Category’ via searching from the search bar. You must have created tags here first and assigned them to a Supplier in the Buying module. Then you can select ‘By Tag’. On clicking Add ‘All Suppliers’, suppliers with matching tags will be fetched.
• By Group: Select ‘Supplier Group’ and choose the supplier group from which suppliers need to be added. For example, if you select Hardware, all your hardware suppliers will be added so that you can get a quote from all of them.

In the Supplier table, on expanding a row with the inverted triangle, you’ll see an option ‘Download PDF’ which will open a PDF of the RFQ.

3.3 Link to Material Requests: 

When you click on Tools > Link to Material Requests, it links the Request for Quotation to available Material Requests. The items should be the same in the Request for Quotation and the Material Request.

Now, when the Request for Quotation is saved, you can see in the Dashboard that it is linked to the Material Request. If there are multiple Material Requests with the same items, then the link will be created with the newest Material Request.

3.4 Email Preview 

In the ‘Email Details’ section, of a Draft Request for Quotation, there is a provision to build and preview your email to be sent to the Supplier. 

Enter any additional messages for the Supplier in the ‘Message for Supplier’ field. This field can be auto-filled using the ‘Email Template’ field.

A salutation can be added and the ‘Subject’ field can be changed as well. Once done, you can click on the ‘Preview Email’ button and see a preview of the email which will be sent. 

3.5 Terms and Conditions 

In Sales/Purchase transactions, there might be certain Terms and Conditions based on which the Supplier provides goods or services to the Customer. You can apply the Terms and Conditions to transactions and they will appear when printing the document. To know about Terms and Conditions,

3.6 Print Settings 

Letterhead 

You can print your request for quotation/purchase order on your company’s letterhead.

‘Group same items’ will group the same items added multiple times in the items table. This can be seen when you print it.

Print Headings 

Titles of your documents can be changed.

4. Creating a Supplier Quotation after RFQ 

After creation of Request for Quotation, there are two ways to generate Supplier Quotation from Request for Quotation.

4.1 Supplier Quotation by User 

1. Open Request for Quotation and click on Supplier Quotation > Create.
2. Select the Supplier, click on the supplier again. In this page, click on the + next to ‘Supplier Quotation’. A new Supplier Quotation page will be opened, user has to enter the quantity, rate and submit it.

4.2 Supplier Quotation from Supplier 

1. If a Contact is created for the Supplier and an email address is associated with the Contact, the Contact details and the email address will be fetched on selecting the Supplier. Create a Contact and email address if not present already.
2. Click on Tools > Send Emails to Suppliers.If the Supplier’s account is not present: The system will create the Supplier’s account and send details to the Supplier. The Supplier will need to click on the link (Password Update) present in the email. After the password update, the Supplier can access their portal with the ‘Request for Quotation’ form. The Supplier will be created as a Website User.If Supplier’s account is present: The system will send a Request for Quotation link to the Supplier. The Supplier must log in using his credentials to view the Request for Quotation form on the portal.
3. Either way, when the Supplier logs in, the following screen will be shown to them. From here they can send you a quotation:The Supplier has to enter the amount and notes (payment terms) on the form and click on Submit. In the Quotations section, previous quotations will be visible.
4. On submission, IONIC ERP will create a Supplier Quotation (draft mode) against the Supplier. The user has to review the Supplier Quotation and submit it. When all the items from the Request for Quotation have been quoted by a Supplier, the quote status is updated to ‘Received’ in the ‘Suppliers’ table of the Request for Quotation.

A Purchase Order is a binding contract with your Supplier that you promise to buy a set of items under given conditions.

It is similar to a Sales Order but instead of sending it to an external party, you keep it for internal records.

Home > Buying > Purchasing > Purchase Order

1. Prerequisites 

Before creating and using a Purchase Order, it is advised that you create the following first:

• Supplier
• Item

2. How to create a Purchase Order 

A Purchase Order can be automatically created from a Material Request or Supplier Quotation.

1. Go to the Purchase Order list, click on New.
2. Select the Supplier, required by date.
3. In the items table, select the item by code, you can change the required by date for each item.
4. Set the quantity and the price will be fetched automatically if set in the Item master.
5. Set taxes.
6. Save and Submit. 

2.1 Setting Warehouses 

• Set Target Warehouse: Optionally, you can set the default target Warehouse where the purchased Items will be delivered. This will be fetched into the Item table rows.

2.2 Fetching Items from Open Material Requests 

Items can be fetched into the Purchase Order automatically from open Material Requests. For this to work, the following steps need to be done:

1. Select a Supplier in the Purchase Order.
2. Set default Supplier in the Item form under Item Defaults.
3. A Material Request needs to be present of type ‘Purchase’.
4. Click on the Get Items from open Material Requests button below the Supplier name. Now a dialog will appear with Material Requests containing Items for which the default Supplier is the same as the one selected in the Purchase Order. On selecting the Material Requests and clicking on Get Items, the Items will be fetched from the Material Requests. 

Note: The Get Items from Open Material Requests button is visible as long as the Items table is empty.

3. Features 

3.1 Address and Contact 

• Select Supplier Address: The Supplier’s billing address.
• Select Shipping Address: The Supplier’s shipping address from which they’ll be sending the items.
• Address, Shipping Address, Contact, Contact Email will be fetched if saved in the Supplier master.

For India:

• Supplier and Company GSTIN: The GST Identification Number of your Supplier and your company.
• Place of Supply: For GST, Place of Supply is necessary. It consists of the state’s name and number.

3.2 Currency and Price List 

You can set the currency in which the purchase order is to be stored. If you set a Pricing List, then the item prices will be fetched from that list. Ticking on Ignore Pricing Rule will ignore the Pricing Rules set in Accounts > Pricing Rule.

Read about Price Lists and Multi-Currency Transactions to know more.

3.3 Subcontracting or ‘Supply Raw Materials’ 

Setting ‘Supply Raw Materials’ option is useful for subcontracting where you provide the raw materials for manufacturing an item. To know more, visit the Subcontracting page.

3.4 The Items table 

• Scan Barcode: You can add Items in the Items table by scanning their barcodes if you have a barcode scanner. Read documentation for tracking items using barcode to know more.
• Quantity and Rate: When you select the Item code, it’s name, description, and UOM will be fetched. The ‘UOM Conversion Factor’ is set to 1 by default, you can change it depending on the UOM received from the seller, more in the next section.’Price List Rate’ will be fetched if a Standard Buying rate is set. ‘Last Purchase Rate’ shows the rate of the item from your last Purchase Order. Rate is fetched if set in the item master. You can attach an Item Tax Template to apply a specific tax rate to the item.
• Item weights will be fetched if set in the Item master else enter manually.
• Warehouse: The warehouse where the items will be delivered, will be auto-filled if ‘Set Target Warehouse’ was set in the Purchase Order. Via Blanket Order, a Blanket Order can be linked, to know more click here. A ‘Project’ can be linked to track progress. A ‘BOM’ or Bill of Materials can also be linked to track progress.
• ‘Qty as per Stock UOM’ will show the current stock as per the UOM set in the Item master. ‘Received Qty’ will be updated when the items are billed.
• Accounting Details: This section is autofilled for a Purchase Order. ‘Expense Account’ is the account against which the PO is billed and Cost Center is the CC against which the PO is charged.

A “Required By” date on each Item: If you are expecting part delivery, your Supplier will know how much quantity to deliver at which date. This will help you from preventing over-supply. It will also help you to track how well your Supplier is doing on timeliness.

Allow Zero Valuation Rate: Ticking on ‘Allow Zero Valuation Rate’ will allow submitting the Purchase Receipt even if the Valuation Rate of the Item is 0. This can be a sample item or due to a mutual understanding with your Supplier.

3.6 Raw Materials Supplied 

This section appears when ‘Supply Raw Materials’ supplied is set to ‘Yes’. This section shows a table with the Items to be supplied to the Supplier for the subcontracting process.

• Set Reserve Warehouse: When Subcontracting, the raw materials can be reserved in a separate Warehouse. On selecting the Reserved Warehouse here, it’ll be fetched into Item rows of the Raw Materials Supplied table.

Supplied Items Table 

• Required Quantity: The count of Items required to complete the subcontracting as specified in the BOM.
• Supplied Quantity: This will be updated when you create Stock Entries to transfer materials to Supplier Warehouse from the Reserve Warehouse using the Transfer button. 

3.7 Purchase UOM and Stock UOM Conversion 

You can change your UOM as per your stock requirements in the Purchase Order.

For example, If you have bought your raw material in large quantities with UOM – boxes, and wish to stock them in UOM – Nos; you can do so while making your Purchase Order.

1. Store UOM as Nos in the Item master. Note that the UOM in the Item master is the stock UOM.
2. In the Purchase Order mention UOM as Box. (Since material arrives in Boxes)
3. In the Warehouse and Reference section, the UOM will be pulled in as Nos (from the Item form):
4. Mention the UOM conversion factor. For example, (1); If one box has 1 kilo.
5. Notice that the stock quantity will be updated accordingly.

3.8 Taxes and Charges 

If your Supplier is going to charge you additional taxes or charge like a shipping or insurance charge, you can add it here. It will help you to accurately track your costs. Also, if some of these charges add to the value of the product you will have to mention them in the Taxes table.

Visit the Purchase Taxes and Charges Template page to know more about taxes.

The total taxes and charges will be displayed below the table.

To add taxes automatically via a Tax Category,

Make sure to mark all your taxes in the Taxes and Charges table correctly for an accurate valuation.

Shipping Rule 

A Shipping Rule helps set the cost of shipping an Item. The cost will usually increase with the distance of shipping. To know more, visit the Shipping Rule page.

For example, you buy Items worth X and sell them for 1.3X. So your Customer pays 1.3 times the tax you pay your Supplier. Since you have already paid tax to your Supplier for X, what you owe your government is only the tax on 0.3X.

This is very easy to track in ERPNext since each tax head is also an Account. Ideally you must create two Accounts for each type of VAT you pay and collect, “Purchase VAT-X” (asset) and “Sales VAT-X” (liability), or something to that effect.

3.9 Additional Discount 

Other than recording discount per item, you can add a discount to the whole purchase order in this section. This discount could be based on the Grand Total i.e., post tax/charges or Net total i.e., pre tax/charges. The additional discount can be applied as a percentage or an amount.

Read Applying Discount for more details.

3.10 Payment Terms 

Sometimes payment is not done all at once. Depending on the agreement, half of the payment may be made before shipment and the other half after receiving the goods/services. You can add a Payment Terms template or add the terms manually in this section.

Read Payment Terms to know more.

3.11 Terms and Conditions 

In Sales/Purchase transactions there might be certain Terms and Conditions based on which the Supplier provides goods or services to the Customer. You can apply the Terms and Conditions to transactions to transactions and they will appear when printing the document. To know about Terms and Conditions,

3.12 Print Settings 

Letterhead 

You can print your request for quotation / purchase order on your company’s letterhead.

‘Group same items’ will group the same items added multiple times in the items table. This can be seen when your print.

Print Headings 

Titles of your documents can be changed.

The seller’s Additional Discount, Payment Terms, Terms and Conditions can be recorded in your Purchase Order.

3.13 More Information 

This section shows the status of the Purchase Order, percentage of items received, and percentage of items billed. If this is an Inter Company Order, the Sales Order can be linked here.

3.14 After Submitting 

Once you “Submit” your Purchase Order, you can trigger actions these actions:

• You can Add, Update, Delete items in the Purchase Order by clicking on the Update Items button. However you cannot delete items which has already been received.
• Status: Once submitted, you can hold a Purchase Order or Close it.
• Create: From a submitted Purchase Order, you can create the following:
  • Purchase Receipt – A receipt indicating you’ve received the items.
  • Purchase Invoice – An invoice/bill for the purchase order.
  • Payment Entry – A payment entry indicates that payment has been made against a purchase order.
  • Journal Entry – A Journal Entry is recorded in the general ledger.

  

Purchase Taxes and Charges may be applied to any item you buy.

The Purchase Taxes and Charges Template is similar to the Sales Taxes and Charges Template. The templates created from this form can be used in Purchase Orders and Purchase Invoices for internal records.

For Tax Accounts that you want to use in the tax templates, you must set the Account Type field as ‘Tax’ for that particular account.

To access Purchase Taxes and Charges Template, go to:

Home > Buying > Settings > Purchase Taxes and Charges Template

1. How to add Purchase Taxes/Charges via a template 

Before creating a new template, note that templates are already created for many of the commonly used taxes.

1. Click on New.
2. Enter a title name for the Tax.
3. Under type, set on what the tax will be calculated and the tax rate. There are five options under type for which tax will be calculated.
   1. Actual: On the actual amount of each item.
   2. On Net Total: On the grand total of all the items.
   3. On Previous Row Amount: This is for compounding the charges. For example, cess charges over the amount to which tax was already applied in the previous row.
   4. On Previous Row Total: Same as above but applied on the total bill and not just the amount of an item.
4. Select an account head which has pre set tax rates or create your own.
5. Selecting default will apply this template by default for new Purchase transactions.
6. Save. 

Is Inter State: For India. On selection of a customer in Sales Invoice or Delivery Note, if the GST codes of place of supply and customer shipping address don’t match, the template with ‘Is Inter State’ ticked will be set as the taxes template. If the place of supply and shipping address are the same, the default taxes template will be applied. This also applies to Purchase Invoice, on selection of Supplier, the templates are set depending on the addresses. For example, IGST.

2. Features 

2.1 Purchase Taxes and Charges table 

• Consider Tax or Charge for: Total – for the total of all items. Valuation – for each item. Valuation and total – apply tax/charge to both.
• Add or Deduct: Whether you want to add or deduct the tax from the item.
• Reference Row #: If tax is based on “Previous Row Total” you can select the row number which will be taken as a base for this calculation (default is the previous row). 
• Is this Tax included in Basic Rate?: If checked, the tax amount will be considered as already included in the Print Rate / Print Amount.
• Account Head: The Account ledger under which this tax will be booked. If you select VAT or any other preset heads, the rate will be automatically filled.
• Cost Center: If the tax/charge is an income (like shipping) or expense it needs to be booked against a Cost Center.
• Description: Description of the tax (that will be printed in invoices/quotes).
• Rate: The Tax rate, eg: 14 = 14% tax.
• Amount: The Tax amount to be applied, eg: 100.00 = ₹100 tax.

Suppliers are companies or individuals who provide you with products or services.

To access the Supplier list, go to:

Home > Buying > Supplier > Supplier

1. How to create a Supplier 

1. Go to the Supplier list and click on New.
2. Enter a name for the supplier.
3. Select the supplier group whether Pharmaceutical, Hardware etc.
4. Save. 

The options to Warn RFQs, POs, Prevent RFQs, POs will be available once you create a Supplier Scorecard and transactions are made.

2. Features 

Fields in future transactions will be auto-populated if the ‘Default’ fields like Default Bank Account, Default Payment Terms Template etc., are set in Supplier.

2.1 Tax details 

• Country: If the supplier is from another country, you can change it here.
• Tax ID: Tax identification number of the supplier.
• Tax Category: This is linked to Tax Rule. If a Tax Category is set here, when you select this supplier, the respective Purchase Tax and Charges template will be applied. This template is linked to the Tax Rule and the Tax Rule is linked with a Tax Category. Tax Category can be used to group suppliers to whom same tax will be applied. For example: Government, commercial, etc,.
• Print Language: The language in which the document will be printed.
• Tax Withholding Category: For India, TDS category for the Supplier. On setting a category here, it will be fetched into the Purchase Invoice. For more information, visit the Tax Withholding Category page.
• Disabled: Disables the Supplier and they won’t be shown in the Supplier List.
• Is Transporter: If the supplier is selling your transport services, tick this box. ‘GST Transporter ID’ field will be visible if this field is ticked.
• Internal Supplier: If the supplier is from a sister or parent/child company, tick this field and select the company which they represent.

For India:

• GST Category: Select a GST Category of the supplier.
• PAN: For India, PAN (Permanent Account Number) card details of the Supplier.

2.2 Allow creation of Purchase Invoice without Purchase Order and Purchase Receipt 

If the “Purchase Order Required” or “Purchase Receipt Required” option is configured as “Yes” in Buying Settings, it can be overridden for a particular supplier by enabling the “Allow Purchase Invoice Creation Without Purchase Order” or “Allow Purchase Invoice Creation Without Purchase Receipt” in the Supplier Master.

2.3 Currency and Price List 

Billing Currency: Your supplier’s currency can be different from your company currency. If you choose JPY for a supplier, then the currency will be filled as JPY and the exchange rate shown for future purchase transactions.

Each Supplier can have a default Price List so that every time you buy a new item from this supplier for different prices, the price list associated with the supplier would be updated as well. Under the price list comes item price, you can see the prices in Buying > Items and Pricing > Item Price.

If you select this particular supplier, then the associated Price List will be fetched in Purchase transactions.

2.4 Credit Limit 

• Default Payment Terms Template: If a Payment Terms template is set here, it’ll be automatically selected for future purchase transactions.
• Block Supplier: You can block invoices, payments or both from a supplier till specific date. Choose ‘Hold Type’, if you do not select a hold type, IONIC ERP will set it to “All”. When a supplier is blocked, their status will be shown as ‘On Hold’.The hold types are as follows:
  • Invoices: IONIC ERP will not allow Purchase Invoices or Purchase Orders to be created for the supplier
  • Payments: IONIC ERP will not allow Payment Entries to be created for the Supplier
  • All: IONIC ERP will apply both hold types above

  If you do not set a release date, IONIC ERP will hold the Supplier indefinitely.

2.5 Default Payable Accounts 

Add the default account from which invoices against this supplier will be paid. Add additional rows for more companies, you can select only one account per company.

You can integrate a supplier with an account. For all Suppliers, “Creditor” account is set as the default payable Account. When Purchase Invoice is created, payable towards the supplier is booked against “Creditors” account.

If you want to customize payable account for the Supplier, you should first add a payable Account in the Chart of Account, and then select that Payable Account in the Supplier master.

If you don’t want to customize payable account, and proceed with default payable account “Creditor”, then do not update any value in the Default Supplier Account’s table.

Tip: Default Payable Account is set in the Company master. If you want to set another account as Account as default for payable instead of Creditors Account, go to Company master, and set that account as “Default Payable Account”.

Depending on your plan, you can add multiple companies in your IONIC ERP instance. One Supplier can be used across multiple companies. In this case, you should define Company-wise Payable Account for the Supplier in the “Default Payable Accounts” table, i.e, add multiple rows.

2.6 More Information 

You can add the supplier’s website and any additional details about your supplier in this section. If you freeze a supplier with the ‘Is Frozen’ option, accounting entries for the supplier will be frozen. In this case the only user whose entries will surpass the ‘freeze’ is the role assigned in ‘Role Allowed to Set Frozen Accounts & Edit Frozen Entries’ in Accounting > Settings > Accounts Settings. This is useful when the supplier’s name or bank details are being amended.

2.7 Address and Contacts 

Contacts and Addresses in IONIC ERP are stored separately so that you can create multiple Contacts and Addresses for one Supplier. Once Supplier is saved, you will find the option to create Contact and Address for that Supplier.

Tip: When you select a Supplier in any transaction, Contact for which “Is Primary” field id checked, it will auto-fetch with the Supplier details.

2.8 After saving 

Once all the necessary details are filled, save the document. On saving, options to create the following will be seen in the Dashboard:

• Request for Quotation: An RFQ against this supplier.
• Supplier Quotation: Any quotations that the supplier has sent you and you have submitted into the system.
• Purchase Order: Purchase Orders you’ve made against this supplier.
• Purchase Receipt: Purchase receipts given by this supplier that you’ve saved in the system.
• Purchase Invoice: Purchase Invoices you’ve made against this supplier.
• Payment Entry: Payment Entries for the Purchase Invoices against this supplier.
• Pricing Rule: Any Pricing Rules linked with this supplier. See section 2.2 Currency and Price List to know how it works.

By clicking on the View button, you can view the Accounting Ledger or Accounts Payable directly for this supplier.

There’s a button to ‘Send GST Update Reminder’ to the supplier. You need to have a default email account setup first.

A Supplier Quotation is document by a potential supplier specifying the cost of goods or services they’ll provide within a specified period.

A Supplier Quotation may also contain terms of sale, terms of payment, and warranties. Acceptance of quotation by the buyer can be considered as an agreement binding on both parties.

To access Supplier Quotation, go to:

Home > Buying > Purchasing > Supplier Quotation

1. Prerequisites 

Before creating and using a Supplier Quotation, it is advised that you create the following first:

• Supplier
• Item

2. How to create a Supplier Quotation 

2.1 Supplier Quotation from Material Request 

You can make a supplier quotation from a Material Request: 

Or:

A Supplier Quotation can be created from a Supplier master.

Or:

The supplier can submit you a quotation himself via ERPNext. To know more about this, see section visit the Request for Quotation page.

2.2 Creating a Supplier Quotation manually 

1. You can also make a Supplier Quotation directly from:Buying > Purchasing > Supplier Quotation > New.
2. Select the Supplier who sent you the quotation.
3. The Address and Contact will be fetched if you’ve saved it in the supplier master.
4. Enter the Item code, select the quantity. Rate will be fetched if you’ve set the Standard Buying rate for the item in Item Price. 

If you have multiple Suppliers who supply you with the same Item, you usually send out a Request for Quotation to various Suppliers. In many cases, especially if you have centralized buying, you may want to record all the quotes so that:

• You can easily compare prices in the future
• Audit whether all Suppliers were given the opportunity to quote.

Supplier Quotations are not necessary for most small businesses. Always evaluate the cost of collecting information to the value it really provides! As a recommendation, you can do this only for high value items.

3. Features 

3.1 Taxes and Charges 

If your Supplier is going to charge you additional taxes or charge like a shipping or insurance charge, you can add it here. This will help you accurately track your costs. Also, if some of these charges add to the value of the product you will have to mention them in the Taxes table. You can also use templates for your taxes. For more information on setting up your taxes see the Purchase Taxes and Charges Template.

3.2 More 

There are fields for Tax Category, Shipping Rule, Purchase Taxes and Charges Template, Discount, Terms and Conditions, Quotation Number, Printing Settings. You can fill these fields for your record. Visit the Quotation page to know more about these sections. Note that the details like Shipping Rule, taxes, Discount, Terms and Conditions, Quotation Number, etc., are from your supplier and can be recorded for accurate tracking.

Note:

• Tax Category will be fetched from supplier master if set
• Print settings is for making changes to the supplier quotation print
• The Terms and Conditions here are your supplier’s
• The Supplier Quotation can be linked to a Material Request using the ‘Link to material requests’ button

3.3 After Submitting 

The following records can be created after submitting a Supplier Quotation:

• Purchase Order – A Purchase Order if you agree with the supplier’s quotation.
• Quotation – A quotation to your customer.
• Auto Repeat – Auto Repeat the supplier quotation at specified intervals.

A Supplier Scorecard is an evaluation tool used to assess the performance of suppliers.

Supplier scorecards can be used to keep track of item quality, delivery, and responsiveness of suppliers across long periods of time. This data is typically used to help in purchasing decisions. A Supplier Scorecard is manually created for each supplier.

To access Supplier Scorecard, go to:

Home > Buying > Supplier Scorecard > Supplier Scorecard

1. Prerequisites 

Before creating and using a Supplier Scorecard, it is advised that you create the following first:

• Supplier

1. How to create Supplier Scorecard 

1. Go to the Supplier Scorecard list, click on New.
2. Select a Supplier to score.
3. Select the evaluating period whether weekly, monthly, or yearly.
4. Setup the scoring function (details in next section).
5. A supplier scorecard is created for each supplier individually. Only one supplier scorecard can be created for each supplier. 

2. Features 

2.1 Scoring Setup 

The supplier scorecard consists of a set evaluation periods, during which the performance of a supplier is evaluated. This period can be weekly, monthly or yearly. The current score is calculated from the score of each evaluation period based on the weighting function. The default formula is linearly weighed over the previous 12 scoring periods.  This formula is customizable.

Supplier Standings 

The supplier standing is used to quickly sort suppliers based on their performance. These are customizable for each supplier.

The scorecard standing of a supplier can also be used to restrict suppliers from being included in Request for Quotations or being issued Purchase Orders. The following screen can be seen on expanding a row in the ‘Scoring Standings’ table, click on the downward facing arrow. 

2.2 Criteria Setup 

A supplier can be evaluated on several individual evaluation criteria, including (but not limited to) quotation response time, delivered item quality, and delivery timeliness. These criteria are weighed to determine the final period score.

To create a new Criteria, go to Buying > Supplier Scorecard > Supplier Scorecard Criteria: 

Note: Criteria weights for a scorecard should add up to 100.

2.3 Supplier Scorecard Variables 

The method for calculating each criteria is determined through the Criteria Formula field, which can use a number of pre-established variables. This can be seen in the preceding screenshot.

The value of each of these variables is calculated over the scoring period for each supplier. Examples of such variables include:

• The total number of items received from the supplier
• The total number of accepted items from the supplier
• The total number of rejected items from the supplier
• The total number of deliveries from the supplier
• The total amount (in dollars) received from a supplier

Variables are pre-set, additional variables can be added through server-side customizations. Tick the Custom checkbox if the variable you’re creating is for a custom field.

The criteria formula should be customized to evaluate the suppliers in each criteria in a way that best fits the company requirements.

2.4 Evaluation Formulas 

The evaluation formula uses the pre-established or custom variables to evaluate an aspect of supplier performance over the scoring period. Formulas can use the following mathematical functions:

• addition: +
• subtraction: –
• multiplication: *
• division: /
• min: min(x,y)
• max: max(x,y)
• if/else: (x) if (formula) else (y)
• less than: <
• greater than: >
• variables: {variable_name}

It is crucial that the formula be solvable for all variable values. This is most often an issue if the value resolves to 0. For example:

{total_accepted_items} / {total_received_items}

This example would resolve to 0 / 0 in periods where there are no received items, and therefore should have a check to protect in this case:

({total_accepted_items} / {total_received_items})
if {total_received_items} > 0
else 1.

2.5 Evaluating the Supplier 

An evaluation is generated for each Supplier Scorecard Period by clicking the “Generate Missing Scorecard Periods” button. The supplier’s current score can be seen, as well as a visual graphic showing the performance of the supplier over time. Any actions against the supplier are also noted here, including warnings when creating RFQs and POs or preventing these features for this supplier altogether.

An Inter Company Journal Invoice is done between organizations that belong to the same group.

Along with creating Purchase Invoices or Sales Invoices for a single company, you can create inter-linked invoices for multiple companies.

For example, you can create a Purchase Invoice for a company say ‘Company ABC’, and create a Sales Invoice against this Purchase Invoice for another company say ‘Company XYZ’ and link them together.

1. How to create Inter Company Invoices 

1.1 Setting up 

1. Go to: Accounts > Masters > Customer.
2. Select the Customer who you would want to choose for the inter-linked invoice.
3. Enable the checkbox, Is Internal Customer shown as follows:

1. Add the company which the Customer represents in the Represents Company field. This the company for which the Sales Invoice will be created.
2. In the Allowed To Transact With table, add the company against which you will be creating a Purchase Invoice.
3. Now, when you create a Purchase Invoice against company A (customer is from company B, the seller is company A), it’ll be linked to the Sales Invoice for company A created using this Internal Customer from company B.
4. Now, you need to follow a similar procedure for setting up a Supplier for inter-linked invoices.
5. Go to: Accounts > Masters > Select the Supplier
6. Tick on Is Internal Supplier.
7. In the Represents Company field, add the company which you added in the table Allowed To Transact With for the Customer.
8. In the table Allowed To Transact With for the Supplier, add the company which the Customer represents. This is the company against which you are going to make an inter-linked Purchase Invoice.
9. Here is a screenshot of the Supplier company to avoid any confusion:

1.2 Creating the Invoice 

1. Now, create a new Sales Invoice, fill up the fields.
2. Remember to select the Customer who is an internal customer and company from which he’s buying.
3. Save and Submit the Invoice.
4. Before you make an Inter Company Invoice you need to do the following:
   1. The selling and buying price between the companies should be in sync.
   2. Go to Stock > Price List, create a new Price List for inter company transactions.
   3. Tick both Selling and Buying in this new Price List.
   4. Go to Buying > Supplier > internal supplier, in the currency and price list section, set the price list to the new one just created.
   5. Do the same for the internal customer, i.e., set the price list to the new one.
   6. Now, you can make an inter company Purchase or Sales Invoice.
5. Under the Make button dropdown, you will find a link Inter Company Invoice, on clicking the link, you will be routed to a new Purchase Invoice form page.
6. Here, the supplier and company will be auto-fetched depending on the company you selected in the Sales Invoice. > Remember: There can only be a single Internal Supplier or Customer per company.
7. Submit the invoice, done! Now, both the invoices are inter-linked. Also, on canceling any of the invoices, the link will break as well.

Note: An Inter Company invoice will only affect the accounting ledger and not the stock ledger. This is because the companies belong to the same group of companies.

You can follow the same process to create a Purchase Invoice and then an inter-linked Sales Invoice from the submitted Purchase Invoice.

A Debit Note is a document sent by a buyer to the Supplier notifying that a debit has been recorded against the goods returned to the Supplier.

A Debit Note is issued for the value of the goods returned. In some cases, sellers are seen sending Debit Notes which should be treated as like another invoice.

A Debit is for your record of the debit against the Items your return.

1. How to create Debit Note 

The user can make a Debit Note against the Purchase Invoice or they can directly make Debit Note from the Purchase Invoice without reference.

1. Go to the respective Purchase Invoice and click on Create > Return / Debit Note. 
2. The Supplier and Item details will be fetched as set in the Purchase Invoice.
3. If you had paid partially or fully, make a Payment Entry against the original Purchase Invoice.
4. Save and Submit.

The other steps are similar to a Purchase Invoice.

1.1 How does Debit Note affect ledger 

The Debit Note will reverse the impact of the purchase invoice.

Refer the Purchase Invoice page for any other details.

1.2 No payment was made against Sales Invoice 

In case no payment was made against the original invoice, you could just cancel the Sales Invoice. But, if only 5 out of 10 Items are being returned from an invoice, creating a Debit Note is useful for updating the ledger.

2. Example 

From Supplier Blue Mills, you had purchased Cotton worth Rs 2400 + taxes and at the time of delivery, you found that the products were damaged. Now you returned the product a Debit Note will be issued.

Debit Note with payment entry in ERPNext for above example is as below:

A purchased Item being returned is known as a Purchase Return.

With the Purchase Return feature, you can return products to the Supplier. This may be on account of a number of reasons like defects in goods, quality not matching, the buyer not needing the stock, etc.

1. Prerequisites 

Before creating and using a Purchase Return, it is advised that you create the following first:

• Item
• Purchase InvoiceOrPurchase Receipt

2. How to create a Purchase Return 

1. First open the original Purchase Receipt, against which supplier delivered the Items.
2. Click on ‘Create > Return’, it will open a new Purchase Receipt with ‘Is Return’ checked. Items, Rate, and taxes will negative numbers.
3. On submission of Return Purchase Return, the system will decrease item quantity from the mentioned Warehouse. To maintain correct stock valuation, stock balance will also go up according to the original purchase rate of the returned items.
4. In the Accounting Ledger, the Stock In Hand account will be credited and the Stock Received but Not Billed account will be debited.

If Perpetual Inventory enabled, the system will also post accounting entry against warehouse account to sync warehouse account balance with stock balance as per Stock Ledger.

3. Impact on Stock Return via Purchase Receipt 

On Creating a Purchase Return against a Purchase Receipt:

• The Returned Quantity in the original Purchase Receipt along with any Purchase Order linked to it, is updated.
• The original Purchase Receipt’s status is changed to Return Issued if 100% returned: