Overview
Creating a purchase order (PO) is a crucial step in formalizing your transaction with a supplier. A purchase order outlines what your organization wants to buy, including product or service details, quantities, and agreed-upon pricing. It serves as a legally binding document that defines the terms and conditions of the transaction.
This guide will walk you through the steps to create, review, and send a NetSuite purchase order using Tropic, covering the following topics:
- Creating, reviewing, and approving your purchase order
- Understanding the difference between expenses and items pricing
- Setting up taxes in NetSuite
Before You Start
Connect to Netsuite
The Create Purchase Order task requires Tropic’s NetSuite integration. To connect the integration, see Set up the NetSuite integration.
Check your items
To add NetSuite items to a purchase order, you must have one or more item records in your NetSuite account. The item records must be synced to Tropic. To create item records, see Creating Item Records in the NetSuite docs.
Tropic only syncs items for purchase. Other items, such as items for sale, aren't synced.
Steps to Create a NetSuite Purchase Order
Access the Assigned Task
Locate the Create Purchase Order task from one of the following:
- Action Center
- Purchasing Portal
- Link in your email or Slack notification.
- Click Start Purchase Order to begin.
Fill Out Purchase Order Information
- Select your supplier from the dropdown. For organizations using subsidiaries in NetSuite, ensure the correct subsidiary is selected under the NetSuite Vendor field.
- Under Organization Details, specify the Contact responsible for managing the PO process and (optionally) select a NetSuite Department. Associating the PO with a department can enhance tracking in NetSuite.
- Use the Note field to include any relevant details (this corresponds to the Memo field in NetSuite).
Once all required fields are completed, click Save and Continue.
Handling Department Fields in Purchase Orders
When creating a purchase order (PO) in Tropic, it's important to understand how department fields at the header and line levels interact. This section outlines the behavior and provides recommendations for managing these fields effectively.
Department Field Behavior
- Header Department Field: This field applies to the entire PO and will override department settings at the line-item level if updated after line-item departments are specified.
- Line Department Field: This field allows for more granular tracking by assigning specific departments to individual line items. However, if the header department is modified after line departments are set, the system will overwrite line departments with the header department.
Recommended Workflow
To ensure accuracy and avoid overwriting line-item departments:
- Set the Header Department First: Start by assigning the default department for the PO at the header level.
- Add Line Items and Specify Departments: Create line items and assign their specific departments as needed.
- Avoid Editing the Header Department After Setting Line Departments: Once the line-item departments are set, avoid changing the header department. If changes are necessary, update the line departments again after modifying the header.
Add Line Items
Tropic supports two types of line items within a purchase order:
- Item Pricing: Linked to predefined NetSuite items.
- Expense Pricing: Linked to general ledger (GL) accounts in NetSuite.
Both item-based and expense-based line items can coexist in the same PO.
Steps:
- Click Add Items.
- In the Name field, select a predefined NetSuite item or create a new one.
- Specify details such as the GL Account, Department, Quantity (QTY), and Unit Price.
- Click Add Items to save.
- Repeat for additional line items as needed.
When finished, click Review Purchase Order.
See Additional Information about Item Pricing vs Expense Pricing below.
After reviewing the PO, click Submit for Approval to initiate the approval process.
Additional Information
Expenses vs. Items
An expense line item is a cost incurred by your organization, such as rent or legal fees. The cost is linked directly to a general ledger (GL) account in NetSuite.
An item line item is a product, software, or service your organization buys. You can also use items to allow for partial billing of a purchase order within NetSuite.
You must define item records in NetSuite before adding them to a purchase order. To create item records, see Creating Item Records in the NetSuite docs.
Set up Taxes in NetSuite
If you have non-US subsidiaries with taxable purchase items, ensure you’ve set up taxes in NetSuite. Once set up, NetSuite automatically applies the appropriate tax code based on a purchase order’s subsidiary and vendor.
Tax setup varies per country. Common elements to configure include:
- Setup Taxes
- Tax Nexus
- Tax Code
- Tax Groups
- Use State Tax Code Tables
- Subsidiary - Has been associated with the appropriate tax nexus(es)
- Vendor - Has been associated with the appropriate subsidiaries and has their address(es) appropriately defined
You can test your tax setup by creating a purchase order with a taxable vendor and subsidiary in NetSuite. If NetSuite automatically populates a tax code, taxes are configured correctly. This means the integration can create purchase orders in NetSuite.
If NetSuite requires you to select a tax code, taxes aren’t configured correctly. This means the integration can’t successfully post purchase orders to NetSuite. If the tax code field doesn’t appear, the subsidiary and vendor don’t require a tax code.
Best Practices
- Review Item Records: Ensure all NetSuite item records are accurate and synced to Tropic.
- Track and Review Departments: Use NetSuite Departments for better tracking and reporting, and double-check department assignments at both the header and line levels before submitting the PO for approval.
- Test Tax Setup: Always test your tax configuration in NetSuite to avoid errors when creating POs.
- Leverage Item and Expense Pricing: Utilize both item and expense pricing to align with your organization’s financial needs.
- Duplicate Lines for Efficiency: For line items with similar coding, duplicate existing lines and modify amounts or descriptions as needed.
FAQ
Q: What happens if I change the header department after setting line departments?
A: The line-item departments will be overwritten with the header department.
Q: Can I fix line-item departments after they’ve been overwritten?
A: Yes, you can manually reassign the correct department to each line item. Ensure you do this before submitting the PO.