When to Write off and When to Cancel

The supplier can only deliver a reduced quantity (e.g. they can deliver 100 books but only 75 pencils).

Solution A: If you are happy to wait for the remaining quantity to be delivered:

Wait for the first delivery thencreate a GRN from the applicable purchase order. Amend the quantities in the GRN to reflect what has been received (e.g. amend the number of pencils to 75).

Once the GRN has been posted, the remaining item quantity (e.g. 25 pencils) is outstanding for the purchase order (and shows as a commitment).

When the outstanding quantity is delivered, create a GRN from the applicable purchase order, which then shows an outstanding quantity (e.g.25 pencils). Enter the quantity received and progress.

Solution B - If you do not want to wait for the remaining quantity to be delivered (e.g. not wait for the 25 pencils), or the supplier is unable to deliver the outstanding quantity in the near future, you need to write off the quantity from the applicable purchase order.

This process amends the purchase order to correctly reflect the quantity of items that can be delivered so that the commitment is correct (e.g. 75 pencils). You can then progress the GRN, which correctly reflects what has been delivered.

Solution C – If you no longer want the item (e.g. you do not want any pencils delivered), you need to cancel the item.

Solution D – If you no longer want to proceed with the entire order, you need to cancel the order.

If the goods are still required, you can create a new requisition and/or purchase order for a different supplier.

The supplier has no stock of one or more items (e.g. has no pencils in stock).

Solution A – If you want to proceed with the remainder of the order (e.g. you still want the 100 books), you need to cancel the item that cannot be supplied (e.g. the pencils).

This removes the item from the purchase order. When the remainder of the order arrives, create a GRN from the applicable purchase order, which then correctly shows only the items that can be delivered (e.g. 100 books).

Solution B – If you no longer want to proceed with the entire order, you need to cancel the order.

If the goods are still required, you can create a new requisition and/or purchase order for a different supplier.

A quantity of the items are missing or damaged (e.g. only 90 books were delivered and 5 of the pencils were damaged).

The solution depends on what the supplier is able/prepared to do:

Solution A – If the supplier agrees to send the missing items and/or replace the damaged items, create a GRN for the appropriate purchase order, then enter the actual quantity delivered and quantity of undamaged items (e.g. 90 books and 95 pencils).

Once the GRN has been posted, the missing/damaged item quantities remain outstanding for the purchase order (and show as a commitment). In our example, 10 books and 5 pencils remain outstanding.

When the missing/replacement item quantities are delivered, create a GRN from the applicable purchase order, which shows the outstanding quantities (e.g. 10 books and 5 pencils). Enter the quantity received and progress the GRN.

Solution B – if the supplier agrees to amend their invoice to reflect what was actually delivered (i.e. removes the missing and damaged items from the invoice), you can then:

Write off the missing/damaged item quantities from the applicable purchase order.

The purchase order then correctly shows the item quantities that have actually been delivered (e.g. 90 books and 95 pencils).

Do not create the invoice yet. Create a GRN from the applicable purchase order first, which correctly shows 90 books and 95 pencils have been delivered. The GRN can then be progressed to the invoice stage, which should then correctly match the supplier invoice when it arrives.

Solution C – There may be occasions when you decide to return the full quantity of a damaged item rather than just those that are damaged. In this circumstance, you need to cancel the item on the purchase order. The GRN then no longer shows the item and can be progressed to the invoice stage with the quantities actually received.

Ensure that the damaged items are returned so that these are not included on the supplier invoice.

An item is no longer available and has not been delivered.

Solution A – If an item is no longer in stock, you need to cancel the item on the purchase order. The GRN then no longer shows the item and can be completed and progressed to the invoice stage.

The GRN has been incorrectly completed and does not match the quantities delivered (e.g only 97 books were delivered but 100 were entered in the GRN).

If no action is taken, there is either a disparity between the supplier invoice and the GRN, or you pay for more items than you actually received.

The solution depends on what the supplier is able/prepared to do:

Solution A – If the supplier is going to deliver the missing quantities,cancel the GRN to go back to the authorised purchase order stage.

Create a new GRNfor the applicable purchase order and correctly enter the quantities delivered (e.g. 97 books). The missing quantities (e.g. the 3 books) remain outstanding and a GRN can be created when they arrive.

Solution B – If the supplier agrees to amend the invoice to match what was actually delivered (e.g. they invoice for 97 books and 100 pencils), cancel the GRN, then write off the quantities that were not delivered (e.g. 3 books) from the authorised purchase order. This then correctly reflects what has been delivered.

Create a new GRN and enter the correct quantities delivered (e.g. 97 books and 100 pencils).

The GRN has been incorrectly completed and does not match the items delivered (e.g only 100 books and no pencils were delivered but 100 books and 100 pencils were entered in the GRN).

If no action is taken, there is either a disparity between the supplier invoice and the GRN, or you pay for more items than you actually received.

The solution depends on what the supplier is able/prepared to do:

Solution A – If the supplier is going to deliver the missing items, cancel the GRN to go back to the authorised purchase order stage.

Create a new GRN for the applicable purchase order and correctly enter the quantities that were delivered (e.g. 100 books and 0 pencils). The missing items (e.g. 100 pencils) remain outstanding and a GRN can be created when the missing items arrive.

Solution B – If the supplier agrees to amend the invoice to match what was actually delivered (e.g. they invoice for 100 books only), cancel the GRN, then cancel the missing item (e.g. the 100 pencils) from the authorised purchase order.

The purchase order then correctly reflects what has been ordered and delivered. Create a new GRN and enter the correct quantities delivered (e.g. 100 books).