Procurement Cycle in ERPNext (Beginner Overview)
The procurement cycle in ERPNext represents the end-to-end flow of purchasing goods or services, starting from identifying a requirement and ending with payment to the supplier.
1. Overview of the 7 Stages
- Material Request
- Request for Quotation (RFQ)
- Supplier Quotation
- Purchase Order
- Purchase Receipt
- Purchase Invoice
- Payment Entry
2. Step-by-Step Procurement Flow
2.1 Material Request
The process begins when a requirement for goods or services is identified.
A Material Request is created to record what needs to be purchased, transferred, or manufactured.
2.2 Request for Quotation (RFQ)
If procurement involves vendor comparison, an RFQ is issued to one or more suppliers.
This allows suppliers to submit their pricing and delivery terms for the required items.
2.3 Supplier Quotation
Suppliers respond to the RFQ with their quotations, specifying rates, quantities, and terms.
These quotations can be submitted either directly in ERPNext or through the Supplier Portal.
2.4 Comparison and Purchase Order
Once multiple supplier quotations are received, they are evaluated and compared.
The most suitable quotation is selected, and a Purchase Order (PO) is created to formalize the purchase agreement with the supplier.
2.5 Purchase Receipt
When goods are delivered by the supplier, a Purchase Receipt is created to confirm the receipt of items into inventory.
2.6 Purchase Invoice
After goods or services are received, the supplier submits an invoice.
A Purchase Invoice is recorded in ERPNext to account for the payable amount.
2.7 Payment Entry
Finally, payment is made to the supplier using a Payment Entry.
This completes the procurement cycle and clears the outstanding liability.
3. Summary of Flow
Material Request → RFQ → Supplier Quotation → Purchase Order → Purchase Receipt → Purchase Invoice → Payment Entry
4. Key Insight
This structured flow ensures transparency, proper approval tracking, supplier comparison, and accurate financial recording across the entire procurement process.
