Purchase Invoice

A purchase invoice is a supplier's demand for payment that creates a liability in the buyer's accounts.

Also called Bill · Vendor invoice · Payable · AP invoice

Why it exists

Because a supplier's claim on the business has to become a recorded, approvable, payable obligation rather than a piece of paper someone is holding.

What it means to the business

The purchase invoice is where procurement becomes money owed, and the point at which the three-way match either protects the business or does not. In India it carries a second job: it is the document input tax credit hangs on, and that credit depends on the supplier's behaviour rather than yours — which makes reconciliation against the portal a recurring operational task, not a one-off configuration.

01Lifecycle — walk the states

Draft. Recorded, not posted. No liability.

State 1 of 6

02Relationships — walk the chain

Purchase Invoice issued by Supplier.

Open Supplier

03What goes wrong — and why

You pay for what the supplier says they sent rather than what arrived. This is the single most common route for both honest billing errors and deliberate over-invoicing, and it is invisible in the accounts because the invoice and the payment agree perfectly.

Rules that must hold

A purchase invoice creates a payable and posts to the ledger; an unposted one is a draft, not a liability.
It must be matched against what was ordered and what was received before payment — the three-way match is a control, not a formality.
Input tax credit may only be claimed where the supplier's GSTIN is valid and the supplier has actually filed. Your record being correct is not sufficient.

What commonly goes wrong

Invoices get approved on relationship rather than on match, because chasing a discrepancy is slower than paying and the supplier is trusted. The control degrades quietly, and by the time anyone tests it the business has been paying against its own purchase orders rather than against its own receipts for years.

Edge cases

Invoice arriving before the goods, common with imports, where the payable exists and the stock does not.
Supplier invoicing in a different currency from the order, where the exchange difference belongs to settlement rather than to cost.
Landed costs invoiced separately by a third party — freight forwarder, customs agent — that must still land in the item's valuation.
Credit notes from a supplier for short supply or quality, which reduce the payable and may need to reverse input tax already claimed.
Services with no receipt at all, where the invoice is the only evidence the work happened and approval replaces the match.

How ERPNext models it

DocType	Note
Purchase Invoice	`docstatus` 0/1/2 as elsewhere. Setting `update_stock` makes it move stock too — correct only when there is genuinely no separate receipt.
Purchase Receipt	Linked so received and billed quantities reconcile. Skipping the link is what breaks the match.
GL Entry	Clears Stock Received But Not Billed against the payable — which is why an unmatched receipt leaves that account growing.

Last reviewed 2026-08-14

Machine-readable version

We implement this for a living — that’s where the mistakes above come from. See the service or request a discovery briefing