7 Replies Latest reply on Feb 16, 2015 7:44 AM by 1476643

    Purchase order approvals for Negative amount

    1476643

      Hello All,

       

      Want your assistance on the above mentioned topic.

      We have a business requirement to have Purchase order approvals for Negative amount. I understand from the Below SAR that JD Edwards 9.1  doesn't support PO approvals on Negative amount


      Bug 11022294 : APPROVAL ROUTES FOR DEBIT MEMO - SAR: 8940968

       

      Appreciate if you can suggest best practice or workaround to meet this requirement.

       

      Thanks & Regards

      Nikhil M. Pawar.

        • 1. Re: Purchase order approvals for Negative amount
          Sanjay Desai EBS

          Are you facing problem in Oracle EBS or JD Edwards ?

          • 2. Re: Purchase order approvals for Negative amount
            Abhi83

            Your Question defies logic.

             

            How can you get paid for purchasing something, and if business is getting paid by someone for making a purchase, why seek approvals?

            • 3. Re: Purchase order approvals for Negative amount
              1476643

              Hi Abhi,

               

              Thanks for your response. This requirement is for construction Industry where a contract is signed  and PO is created, The contract is for cosntruction work for the whole building, but contractor is not able to complete the doors and windows. So we need a deductive change order where the amount of door and windows will be deducted.. To create this we need to create a PO with negative amount and this will need approvals.

               

              Regards

              Ashutosh

              • 4. Re: Purchase order approvals for Negative amount
                1476643

                Hi Sanjay,

                 

                This problem is for JD Edwards 9.1.

                 

                Regards

                Ashutosh

                • 5. Re: Purchase order approvals for Negative amount
                  Abhi83

                  Dear Ashutosh,

                   

                  Couple of points from my side. We have a similar scenario at a client where I am working. In construction, there are three stages.

                   

                  a) Practical Completion

                  b) Partial Completion and

                  c) Final Completion.

                   

                  In the case above, you are not deducting an amount from existing PO, you would be applying a penalty on the Vendor for Failure for not meeting the Practical/Final Completion Certificate requirements. Based on the legal understanding, usually the penalty may vary above and beyond of 10% of value of work not done/ delivered. (This is company to company)

                   

                  So we establish that the scenario above is not a case for PO, but for Penalty. Now penalty in construction business again is of three types (My understanding again from experiences)

                  a) Time/Schedule based penalty - Levied on vendor due to delays (Ranging for 100 SAR/ Day to 400 SAR/Day - if you are in Saudi)

                  b) Cost/ Quantity Based penalty - Deviation from Standard Plan/ over consumption against budgeted quantity in Bill of Ladding

                  c) KPI/ Quality Based Penalty - This can be a levied for number for reasons, including non completion of agreed deliverable in Contract. (This can be even 150% of contract value)

                   

                  Now, penalty is a revenue to the Organization so this needs to be accounted differently. You apply a Penalty against a PO and create a Debit memo and show the penalty as revenue in the books. This cannot be done if this is entered as a PO.

                   

                  So, my point is, you need a customization to capture the penalty and apply it against the PO and account it as a debit memo in Finance side.

                   

                  Please let me know your thoughts, I will be glad to hear if I need to be corrected.

                   

                  Rgds,

                  Abhi

                  • 6. Re: Purchase order approvals for Negative amount
                    1476643

                    Hi Abhi,

                     

                    I was looking for standard feature. The Change I was talking was about change in scope. In this although PO was created and received , there is a change in open PO amount. So we need to add a Deductive change order so that the vendor doesn't get over paid. For the Construction business, remembering small small deductive changes is diffucult and so they want to add a deductive change order for the PO.

                     

                    For Rentention, we are using Retainage on the PO, so only when 100% work is done full retainage is released else we have a retainage on the PO.

                     

                    We are only using for Non stock procurement currently but need to have a change orders process for deductions on PO.

                     

                    Regards

                    Ashutosh

                    • 7. Re: Purchase order approvals for Negative amount
                      1476643

                      Hi All,

                       

                      Can you JDE process of PO Approval for negative amount. The current change order process is for postive amounts and any deductions are not triggering PO Approvals.

                       

                      Regards

                      Ashutosh