Processing Purchase Orders In Xero

Purpose

  • To outline the steps required to accurately process Purchase Orders (POs) in Xero to ensure proper accounting and record-keeping.

Scope

  • This SOP applies to all employees involved in the procurement and accounting processes who are responsible for handling Purchase Orders in Xero.

Responsibility: 

  • Finance Department, Accounts Payable Team, and any authorized personnel involved in procurement and accounting.
  • Receive PO:
  •    – Obtain the Purchase Order from the procurement team or relevant department.
  •    – Ensure the PO includes essential details: vendor name, PO number, date, items, quantities, and agreed prices.
  • Review PO Details
  •    – Verify the accuracy of the PO against the purchase request.
  •    – Confirm that the PO is approved as per the company’s authorization procedures.

Creating a Purchase Order in Xero

  • . Log In to Xero:  – Access your Xero account using your credentials.
  • Navigate to Purchase Orders:
  •    – Go to the ‘Business’ menu.
  •    – Select ‘Purchase Orders.’

Create a New Purchase Order:

  •    – Click on ‘New Purchase Order.’

Enter PO Details:

  •    -Supplier: Choose the supplier from the drop-down menu or add a new supplier if not already in the system.
  •    – PO Number: Enter the PO number as provided.
  •    – Date: Input the date of the PO.
  •    – Items: Add each item as listed on the PO, including descriptions, quantities, unit prices, and account codes.
  • Total Amount: Ensure the total amount matches the PO.

Review & Save:

  • Double-check all details for accuracy.
  •    – Click ‘Save’ to record the PO in Xero

Approving and Sending Purchase Orders

  • Approval Process:
  •    – Ensure the PO follows the company’s approval process. This may involve electronic approval or physical sign-off by authorized personnel.

Send PO to Supplier:

  •    – Send the PO to the supplier via email or Xero’s built-in email feature.
  •    – Attach any necessary documentation or notes.

Receiving Goods and Services

  • Goods/Services Receipt:
  •    – Upon receiving goods or services, ensure they match the PO in terms of quantity and description.

Record Receipt in Xero:

  •    – Navigate to the Purchase Orders section.
  •    – Find and open the relevant PO.
  •    – Click on ‘Create Bill’ to convert the PO into a bill.
  •    – Adjust quantities and costs, if necessary, based on the actual receipt.

Matching and Reconciling Bills

  • . Review the Bill:
  •    – Verify that the bill matches the PO, and the goods/services received.
  •    – Check for any discrepancies and resolve them with the supplier if needed.
  • – Ensure the bill is matched to the original PO in Xero. This can be done by comparing the bill’s details to the PO.
  • Once approved, process the payment as per company policy.

Archiving and Documentation

  • Archive the PO, receipt, and bill documentation according to company policy and regulatory requirements
  •    – Ensure all records in Xero are up-to-date and accurately reflect the PO and related transactions.
  • Monitor outstanding POs and ensure timely follow-up for pending items
  • – Use Xero’s reporting tools to generate PO reports as needed for financial analysis and auditing purposes.