Maintaining and controlling corporate spending is more critical than ever. With Microsoft Dynamics AX, it has never been simpler to ensure that an organization changes and evolves the business processes and tasks that control the procure-to-pay processes.
The approval process for purchase orders adds automation and control to purchase order processes. It also delivers a high level of flexibility in the modeling processes with policies and workflows, including task and approval management. Purchase order history and versioning is built-in and is easily accessible, providing deep insight and supporting analysis and conscious decision making.
The approval process for purchase orders ensures that the business processes have been followed and that correct review and approval has been performed, which guarantees that the purchase orders created and confirmed to the vendors have been appropriately reviewed and approved.
Approval Process Configuration
The approval process for purchase orders within Microsoft Dynamics AX 2012 provides the flexibility to control and track changes within purchase order processes, and it enables control of the approval process by using the standard workflow framework.
The key areas supported by the approval process for purchase orders are:
- Activation – The purchase order approval process can be activated on different levels:
- For all purchase orders
- For purchase orders for a specific vendors
- For individual purchase orders
- Workflow – The purchase order approval process uses the standard workflow framework to define activities (such as tasks, decisions, and approvals) that need to be carried out. It provides the ability to design business processes such as company approval processes and change management policies.Both the purchase order and purchase order line have been workflow-enabled, making it possible to configure and execute different activities per purchase order line based on line conditions and properties.
- Versioning – The purchase order document is versioning-enabled with activation. A new document version is created upon approval of the purchase order, and versioning ensures a complete audit trail for the changes made to a confirmed purchase order.
The Purchase Order Approval Process
After a purchase order has been entered into the system, its approval status controls the actions that can be performed. An unapproved purchase order must be approved before the purchase order can be issued to the vendor and the purchase order status is confirmed. A purchase order must be confirmed before product receipt and invoices can be matched against the purchase order.
Approval state model:
- Draft – The purchase order requester creates and makes changes to the purchase order when in Draft state.
- In review – The requester submits the purchase order or the request for change to an approval workflow, which will change the state to In review. The policies and processes configured within the workflow will assign and execute tasks, decisions, and approvals needed for the specific purchase order or change request. If budget control is enabled, a budget check will be performed based on budget control policies, providing real-time analytics related to budget funds available.
- Rejected – A purchase order that has been rejected by a workflow reviewer has the state of Rejected. The purchase order can be changed and resubmitted to workflow if desired.
- Approved – A purchase order that has completed the approval process is considered Approved, and can now be issued to the vendor. Expected receipt transactions may be created when the order reaches Approved status.
- Confirmed – Confirming the purchase order generates a purchase order confirmation document, which is an external document that may be provided to the vendor to notify them of the order. If budget control is enabled, the budget check is performed based on the budget control policies and budget reservations are established ensuring that planned expenditures do not exceed budget funds available. If encumbrance processing has been enabled, subledger journal entries are created for a purchase order when the purchase order is confirmed to reflect the consumption of budget funds on the balance sheet.
- Finalized – Finalizing the purchase order requires all lines to be either canceled or invoiced. After a purchase order has been finalized, you can no longer change the purchase order. Finalize the purchase order to liquidate budget reservations and any encumbrance that is not yet relieved in general ledger.
The approval process for purchase orders features provided by Microsoft Dynamics AX 2012 explicitly requires the approval of any request to change the purchase order, and the changes are not effective before approval. The feature also ensures that every change request is captured within a purchase order version, which allows for version comparison (header and lines) for analysis of changes between any two versions of the purchase order.