These are the general ledger transactions posted by Ostendo for supplier prepayments using our methodology. This usually applies to overseas purchases, but can apply to national purchases also.

 

There are three stages that occur in this order, although particular circumstances may mean that one of these stages may not be required.

1. Supplier Proforma Invoice - this is in fact a deposit paid to the supplier in full or part on placing of a purchase order with the supplier. This is not a commercial invoice and is therefore not posted to Accounts Payable. Ownership of the goods does not pass to the purchaser on payment of this.
2. Supplier Commercial Invoice - this is an official invoice typically issued and paid when the goods are shipped from the supplier. This posts to Accounts Payable and ownership of the goods passes to the purchaser even though they have not actually arrived and been receipted into inventory.
3. Receipt of Goods - this is the physical receipting of the goods into inventory at the time they arrive. This is usually after the commercial invoice has been issued and paid.

 

Circumstances can vary which will determine how this process is specifically applied. For example;

• The supplier may not issue a proforma invoice but simply send a commercial invoice to begin with.
• If the commercial invoice arrives with the goods (which is unusual for overseas purchases but likely for national purchases), then the normal Ostendo process for purchase receipts and matching to a supplier invoice applies. There is no need to process the commercial invoice separately as above.
• Proforma invoices may be based on the purchase order but the goods may be shipped based on what can be loaded into a shipping container. This means the commercial invoice may relate to a one or more proforma invoices either fully or partially.

 

Transaction	Debit	Credit
Proforma Invoice
Proforma Invoice	Supplier Proforma Deposit (Asset)	Bank (Asset)
Commercial Invoice
Commercial Invoice Purchase Receipt	Prepaid Inventory in Transit (Asset)	Purch Rec not Inv (Liability)
Commercial Invoice Purchase Invoice	Purch Rec not Inv (Liability)	Creditors (Liability)
Commercial Invoice Purchase Invoice	Freight Inwards (COS)	Creditors (Liability)
Commercial Invoice Paid	Creditors (Liability)	Supplier Proforma Deposit (Asset)
Receipt of Goods
Purchase Order Receipt	Inventory (Asset)	Purch Rec not Inv (Liability)
Freight Costs	Inventory (Asset)	Freight Inwards (COS)
Customs Charges	Inventory (Asset)	Customs Charges (COS)
Ostendo Supplier Invoice	Purch Rec not Inv (Liability)	Creditors (Liability)
Commercial Invoice Reversed	Creditors (Liability)	Prepaid Inventory in Transit (Asset)
Remaining Creditors
Freight Invoice	Freight Inwards (COS)	Creditors (Liability)
Customs Invoice	Customs Charges (COS)	Creditors (Liability)

 

Proforma Invoice

This is processed as a Spend Money in the accounting system against the supplier's card to the 

Supplier Proforma Deposit GL account. The Ostendo purchase order number should be referenced in the transaction so it can be tracked.

 

Commercial Invoice

A descriptor for the value of the commercial invoice is receipted against the purchase order and matched to a supplier invoice in Ostendo. 

 

The value of the purchase receipt posts to the Prepaid Inventory in Transit GL account where it recognised as inventory owned by the business but not yet in stock and therefore not contributing to the inventory value in Ostendo.

 

The matched supplier invoice posts as a normal supplier invoice to the accounting programme. If there is freight on the commercial invoice it is added to the matched supplier invoice in Ostendo before posting it. Freight is not included in the purchase order or purchase receipt for the commercial invoice.

 

The commercial invoice is paid either;

• Out of the Supplier Proforma Deposit GL account in the accounting programme and any remaining balance through the bank or credit card as normal. 
• Out of the bank or credit card as normal if there was no preceding Proforma invoice.

 

Receipt of Goods

Goods are receipted into stock, often with landed costs. This updates inventory in Ostendo and the corresponding inventory GL account for Ostendo. This is matched to a supplier invoice in Ostendo that posts to the accounting programme as an invoice.

 

A descriptor for the negative value of the commercial invoice is receipted against the purchase order and matched to a supplier credit note in Ostendo. This posts as a normal supplier credit note to the accounting programme. This reverses the value out of the Prepaid Inventory in Transit GL account, thus balancing the inventory value.

 

The supplier invoice and credit note from Ostendo are matched off in the accounting programme.