Understanding the ERP module's integration

The product receipt represents the physical reception of products in the company warehouse. This increases the physical quantities in the inventory and reduces the quantity of the remainder in the purchase order, in addition to changes in the inventory value according to the inventory valuation method.

The vendor sends the purchase order invoice either along with product reception or after product reception. Recoding the vendor invoice to reflect the company's liabilities to the vendor results in an increase in the open vendor balance. Microsoft Dynamics AX supports a company's internal control in vendor invoices by matching the invoice with the purchase order and the invoice amount.

It can be a three-way match for a product when comparing the purchase order quantity against the product receipt, and the purchase order invoice against the invoice amount. It is a two-way match for services when comparing the purchase order amount against the invoice amount. For the service invoices that are not related to purchase order, such as cleaning services, just issue an invoice to the vendor against delivered services. This reflects the company liabilities to the vendor.

The vendor payment processing reduces the company liability to vendors. The payment can be an advanced one, attached to a specific purchase order and independent of other purchase orders; it is usually the responsibility of the accounts payable section in the finance department.

The settlement processing involves settling the open invoices against payments. This process affects vendor statements by decreasing open vendor invoices and, increasing closed vendor invoices.

The packing slip represents the physical issuance of products from the company warehouse. This decreases the physical quantities in the inventory and reduces the quantities remaining in the sales order.

After the delivery of goods or services to the customer, the sales team issues a customer invoice, increasing the customer open invoices. This affects the customer statement and customer aging, in addition to the revenue recognition and the cost of goods sold.

The customer collection process represents the transaction of the required amount of money from the customer whether it is against an open invoice or advanced collection.

The settlement process settles the open invoices against collection. This process affects the customer statement, reducing the number of open customer invoices and increasing the number of closed customer invoices and aging.