How to Manage Anticipated Vendor Costs: AP vs. PO Tracking in Cetec ERP
Manufacturers often face a tricky accounting question: how should we track vendor costs we know are coming, but haven’t yet received an invoice for?
On one hand, finance teams need clean Accounts Payable (AP) reporting tied only to real invoices. On the other, operations and leadership need visibility into upcoming cash outflows, even before those invoices hit the inbox. Cetec ERP gives manufacturers two practical ways to handle this situation.
True AP vs. Anticipated Costs
By definition, Accounts Payable is a liability created when a vendor invoice is received. Until then, purchase orders and receipts represent commitments, but not legal obligations. That’s why many accounting teams hesitate to enter vouchers without invoices—doing so risks overstating liabilities.
At the same time, ignoring expected costs makes it difficult to plan cash flow. Manufacturers need a way to balance strict financial accuracy with operational foresight.
Two Common Approaches
1. Entering Vouchers for Expected Invoices
Some companies choose to enter vouchers as soon as goods are received and they know an invoice will follow. These vouchers show up as open AP and can later be reconciled against the actual invoice.
Pros: Provides a more complete AP aging report, helps forecast cash needs.
Cons: AP may reflect amounts not yet legally payable; requires strong reconciliation discipline.
2. Relying on Open POs and Receipts
Others prefer to leave AP untouched until invoices arrive, and instead forecast cash needs by running reports on open purchase orders and receipts.
Pros: Keeps AP clean and accurate.
Cons: Forecasting is less tied to the AP module itself; requires reviewing PO/receiving data.
Using Cash Projections in Cetec ERP
Cetec ERP gives you flexibility with its Cash Projections report (Accounting → Reports → Cash Projections). This report allows you to choose:
- Project based on open vouchers only (strict AP).
- Project based on open POs/receipts only (anticipated costs).
- Or combine both methods for a full picture.
This approach lets accounting teams maintain accuracy while still equipping leadership with forward-looking cash visibility.
Best Practice for Manufacturers
For most companies, the best balance is to:
- Keep AP limited to invoices actually received.
- Use open PO and receipt reporting to forecast anticipated vendor costs.
- Leverage Cash Projections in Cetec ERP to present both views side by side.
This way, your AP reporting stays precise for audits and financial statements, while cash planning remains realistic and useful for operations.
Managing anticipated vendor costs doesn’t have to be an accounting headache. Clearly distinguishing between true AP and forecasted obligations by using the reporting tools available in Cetec ERP, manufacturers can maintain financial accuracy without losing sight of upcoming cash needs.
Explore the Cash Projections report in Cetec ERP to see how your team can track both real and anticipated costs in one place.