The quick answer
Open the received outsourced purchase order, which shows the status Pending Bill, and click Bill. The bill normally inherits the vendor, the account and the order's line, so review them against the supplier's invoice. Enter the vendor's invoice number in Reference No., check Approval Status, save, and then read the saved bill's GL Impact. In this example the bill's GL Impact credits Accounts Payable and debits the same Outside Services account that the assembly build credited, so that expense account nets to zero and the order becomes Fully Billed. Which account the bill debits depends on your item and accounting setup, so confirm it on your own saved bill.
The screenshots show sample data. Person and company names are fictional. Use your own purchase order, vendor and amounts when following the steps.
Before you start
In this example, Alex Morgan at Example Supply Co. sends raw steel bicycle frames to Cobalt Peak Coating Co. for powder coating. Purchase order PO3315 is for 25 PC-210 Powder Coating Charge at 9.50, which is 237.50. It has already been received, so NetSuite built 25 MR-210 Powder-Coated Frames at the vendor's location from the 25 MR-200 Raw Steel Frames that were there.
This walkthrough picks up after that receipt, for a non-WIP outsourced work order. It assumes the setup is already in place: Outsourced Manufacturing is enabled, the vendor is tied to a manufacturing location, the outsourcing charge item has a purchase price and an expense account, the assembly's bill of materials lists the charge and the supplied components, and the components were on hand at the vendor's location. You also need permission to enter vendor bills in an open posting period.
Receiving does not create a vendor bill or credit Accounts Payable. In this example the vendor owes nothing in the ledger until you save the bill. Other purchasing flows can accrue a received-not-billed liability at receipt, so check the receipt's and the build's GL Impact in your account. Use the status your account shows: here the received order reads Pending Bill.
01. Review the received purchase order
Open purchase order PO3315. It is to Cobalt Peak Coating Co., the total is 237.50 and the status is Pending Bill. The button bar includes Bill.
Open the Related Records subtab. Only the item receipt IR4871 is listed, so there is no bill yet.
02. See what the build already posted
Click the date on the IR4871 row, then click the Assembly Build link on its line to open ASSYB644. On the GL Impact subtab, 1330 Inventory : Finished Goods is debited 1,287.50. 1320 Inventory : Raw Materials is credited 1,050.00 and 6480 Expenses : G&A Expenses : Outside Services is credited 237.50, with Cobalt Peak Coating Co. as the Name.
The coating charge is already part of the frames' cost, but nothing owes Cobalt Peak yet. That credit to Outside Services waits for the vendor's invoice. Go back to PO3315, for example with the browser's Back button.
03. Bill the purchase order
On PO3315, click Bill. The vendor bill opens already filled in from the order: Cobalt Peak Coating Co. as the vendor, 2010 Accounts Payable : Accounts Payable - Trade as the account and an Amount of 237.50. Check the vendor, currency, date, posting period and amount against the supplier's invoice. Enter the vendor's invoice number, INV-60418, in Reference No., add a Memo and review Approval Status. Here it is Approved. If an approval routing applies in your account, the bill can save as Pending Approval and may not post yet.
On the Expenses and Items tab, the line is PC-210 Powder Coating Charge, quantity 25 at 9.50, amount 237.50. Tax, freight, a partial bill or more charge lines would change what you see here. Click Save.
04. Read the bill's postings
The bill is saved with the status Open and an Amount of 237.50, and NetSuite shows the confirmation Transaction successfully Saved. With an approval routing the status would be Pending Approval instead.
Open the GL Impact subtab. 2010 Accounts Payable is credited 237.50 with Cobalt Peak Coating Co. as the Name, and 6480 Outside Services is debited 237.50. No inventory account appears. This debit matches the credit the build posted, so Outside Services nets to zero, and the 237.50 stays in the finished goods and in Accounts Payable until you pay the bill.
05. Confirm the order is billed
On the bill, open Related Records, click the Purchase Orders subtab and click the date on the PO3315 row. The order now shows the status Fully Billed, because all of its billable quantity has been billed.
On its Related Records subtab, the bill INV-60418 is listed beside the item receipt, with the status Open, Link Type Order Bill/Invoice and amount 237.50.
Check the result
- PO3315 was Pending Bill after receipt, with only the item receipt in Related Records.
- The build's GL Impact credited 6480 Outside Services 237.50.
- Bill INV-60418 is Open for 237.50. Its GL Impact credits Accounts Payable and debits 6480 Outside Services, both 237.50.
- PO3315 is Fully Billed and lists the bill beside the item receipt.
Common questions
Does receiving an outsourced purchase order create a payable in NetSuite?
Receiving does not create a vendor bill or credit Accounts Payable. The item receipt makes NetSuite build the assembly, which debits finished goods and credits the outsourcing charge's expense account, here Outside Services. In this example the order stays Pending Bill and Accounts Payable is credited only when you save the vendor bill. Other purchasing flows can accrue a received-not-billed liability at receipt, so check the receipt's and the build's GL Impact in your account.
What does the vendor bill post to for an outsourcing charge?
In this example it credits Accounts Payable and debits the 6480 Outside Services account, which is the expense account of the outsourcing charge item, and it posts nothing to inventory. A different account, such as an accrued purchases or received-not-billed account, can be used depending on the item, the receipt and your accounting setup. Tax, freight, landed cost, currency, receipt matching, variance settings, a replaced bill line or custom accounting can also change the postings, so confirm the GL Impact on your own saved bill.
Will the outsourcing charge be counted twice?
In this example it is not. The build credited Outside Services when it capitalized the charge into the frames' cost, and the bill debits the same account. Outside Services nets to zero, the cost stays in finished goods and Accounts Payable carries the amount owed.
Why is a balance left in Outside Services after I billed the order?
The bill's debit differs from the build's credit. That usually means the vendor invoiced a different amount than the purchase order's charge, and in this setup the difference would show in Outside Services until you resolve it with the vendor. Tax, currency, rounding, variance settings, freight or landed cost can send part of a difference to another account. Editing the bill does not rewrite the build that was already posted, so look at the build, the bill and any variance entries together.
When does the purchase order become Fully Billed?
When all of its billable quantity or amount has been billed, or the remaining lines are closed under your account's rules. A partial bill leaves the order open for the remainder. Approval and payment status are separate, so a Fully Billed order can still have a bill that is pending approval, not yet posted or unpaid.
Does the bill change where the finished assemblies are?
No. The vendor bill records what you owe and does not move inventory. The receipt's To Location decides where the finished assemblies go. In this example they stay at the vendor's location. If the destination were a different location, NetSuite would also create an inventory transfer.