Please also read the Pearl Guide to Purchasing

There are two types of purchase invoice; one type for stock items, and one type for overheads such as rent. This is to allow Pearl to track the exact price that you are paying for your stock to provide accurate and fast profit reports.

Entering a Supplier Invoice for overheads or expenses

A purchase invoice for overheads should be entered using Accounts->Suppliers->Enter quick invoice.

If a purchase invoice for overheads contains more than one tax code you can enter extra rows by clicking the "add row" button.

You can set up a supplier to have a default tax code, which will be filled automatically into the tax code field when entering an invoice from that supplier. Open the supplier's contact details page and enter the default tax code in the financial info tab.

1. Find the Purchase Order that relates to the invoice you are entering; use the PO ref or the suppliers company name in the orders quick search box or use Purchases->View Purchase Orders.
2. Open the Purchase Order and make sure that the list of items on the PO match the list of items on the Invoice.
   This is the point at which you will see if you have been over-invoiced or have not received items that perhaps you should have done.
3. If the PO needs amending to match the Invoice, amend it now.
4. Remove lines if required by entering zero quantity then clicking Save, or by moving them to a new Purchase Order using the split to back order link.
5. Once the PO matches the invoice for both tax, net, shipping, save the order.
6. Click "receive invoice" at the top right of the screen.
7. Enter the invoice number, due date and invoice date and submit.
8. The invoice will now be showing on the suppliers aged report (Accounts->Suppliers->Supplier debt)

Note that if the invoice you receive from the supplier does not match the total you have on the Pearl system, there are two ways to make the correction. First, ensure that the quantities of items are the same on both the paper document and the Pearl Purchase Order, then save.

Method 1
You can amend the total and tax figures on the right hand side of the page and Pearl will allocate the difference since the last page save across all the products on the PO. If you do this, save the page before you change anything on the product listing section.

Method 2
Run through the products on the left hand side of the PO and make sure that each product price matches than on the Purchase Invoice received from your supplier. Pearl will automatically update the totals on the right hand side. If you are updating amounts in the products list, make sure that you save the order before amending any values on the right hand side.

Entering multi-code Purchase Invoices for stock

Some supplier invoices will contain items that you may want to allocate to different nominal codes; for example:

Since this invoice contains product (items that you are tracking the stock of), you must create a Purchase Order and then receive an invoice against the Purchase Order.

For the Import Duty line, you can add a "misc item" to the order, renaming it to "Duty" (or similar) and setting the nominal code to 5101 accordingly. In this way you can create an order that contains both products and non products.

This will post the total value of the invoice to the supplier account and split up the lines in the accounting database so that you can track spending more accurately.

Note that you have to have set "Allow multiple nominal codes in orders" to "yes" in your company settings screen.

Nominal code rules on Purchase orders

The Pearl system follows these rules when creating Sales and Purchase Orders:

1. As items are added to the Purchase Order they will be assigned the default nominal code of the supplier (if it exists)
2. Otherwise they will either be assigned to your default purchases code which is normally 5000 (Purchases).
3. If you save a nominal code per product once items have been added to the order, this setting will be kept.

Stock value and stock control

Stock is valued at net cost price excluding tax. Stock purchases must be made through Pearl using a Purchase Order. When stock is received, the cost value from the Purchase Order is used to value the stock.Until the Supplier Invoice is received for the Purchase Order, this valuation is provisional.

When a Purchase Invoice is later received against the Purchase Order, the exact stock value is calculated and any items remaining in your database are updated. The cost value will also be saved into the database so that the next Purchase Order uses the most up to date cost values as the provisional amount.

If you "Cost of Goods Sold" is switched on, Pearl reduces the value of the Stock nominal code (1001) every time a Sales Invoice is raised. The decrease in stock value is matched by an increase in the Cost of Goods Sold nominal code (5005). If you are not using Cost of Goods Sold, you will need to do a manual stock valuation at each month end so that the equivalent value of goods sold is transferred from the stock account 1001 to the 5005 account.

Opening stock value (start of month) - Closing stock value (month end) = Cost of Goods Sold

At any point you can run a detailed stock report to see which items are in stock but have not yet been invoiced (provisional value), and which items have been invoiced but have not yet been received into your warehouse (stock in transit, confirmed value).

Each delivery of stock is stored in a separate area of the database, to allow Pearl to operate with a FIFO (First In First Out) stock system. The oldest stock is sold first. To see the list of current stock, click Products->Stock report from the main menu.

Remember that Supplier Invoices for stock are entered against Purchase Orders, and Supplier Invoices for expenses (such as rent) are entered using Accounts->Suppliers->Enter quick invoice.

Should I use Cost of Goods Sold?

If you use Cost of Goods Sold, Pearl allows you to run an accurate Profit and Loss without needing to do stock takes every month, since the stock nominal account is updated every time a sale is posted to accounts. It does however require you to keep your Purchasing and Supplier Invoices right up to date all the time, which is also good business practice.

Other pre-requisites for an accurate accounting system with the Cost of Goods Sold method:

• You must not sell any actual stock items as "misc items"
• Every Purchase Order should allocate the cost price directly to the Stock code (1001) -(ensure this by setting all your stock suppliers to nominal code 1001, and your default purchase code to 1001 in Setup->Company defaults).
• Any stock that is disposed of must be done through a sale order, even if the sale order is zero value
• Manual stock adjustments should be kept to a minimum since the exact cost value is not known

You should be aware that if you sell items that have a provisional cost value then that figure will be used as cost of goods sold (for that Sales Order only), and will not be updated when the Supplier Invoice is later allocated against the Purchase Order. If your stock cost price does not change from Purchase to Purchase then this will not introduce variance. It's important to allocate your Supplier Invoices to the Purchase Orders as soon as the invoice arrives.

Month end stock take

Before you value your month end stock, you should make sure that the figures in Pearl reflect the quantities you actually have. Export the product database (Products->import/export) then make any corrections in the spreadsheet before re-importing the file.

Please read the documentation on Products to learn more about the product import/export process.

Click Accounts->Stock value from the main menu to see the current value of the product database. Click the "Record stock values" to keep a snapshot of the current database value at the end of the month to use later for entering opening and closing stock values.