Use of line types in Oracle Purchasing
Oracle purchasing application provides the line type feature for clearly differentiating orders for goods, services or outside processing orders. The line type controls the type of various documents like Purchase Orders, Requisitions you create. You can select a default Line Type for these documents. When you create any of these documents, the line type is part of your item information. You can override the line type for each document line.
The services related line type support a broad range of service categories including general business services, consulting services, and contingent labor. While implementing oracle purchasing module ‘Define Line Types’ is a required setup with defaults.
It will be clearer with example. Suppose a buyer could order 10 computers at a price of $2000 each. Later, the receiving person records the receipt of 5 computers. The accounts payable department receives a bill for 5 computers, and matches the invoice against the original purchase order. Sometimes, you also need to order services in the same way. For example, you purchase 40 hours of product training at a rate of $40 per hour.
However, you sometimes order services by amount rather than by quantity. For instance, an organization orders $5,000 of consulting services to deliver training. In this case, the buyer only needs to record the total amount of the service. When half of the work is complete, the project manager records a receipt of $2,500. The consulting firm may send an invoice for the complete amount of the service, or it may send partial invoices. In either case, the accounts payable department must match the invoice to the original purchase order by amount.
Purchasing provides you with the features you need to order both goods and services. You should be able to:
- Create your own purchasing document line types. For each line type, you should be able to specify the value basis: amount or quantity. For both amount and quantity based line types, you can specify default values for category, unit of measure, and whether you require receipt. For quantity based line types, you can specify the unit price, but for amount based line types the unit price defaults to 1. For quantity based lines, you can specify whether the line type is used for outside processing.
- Create a purchasing document with any combination of line types you need.
- Auto Create purchase order lines from your requisition lines, grouping requisition lines for the same line type and item onto the same purchase order lines.
- Create amount-based purchase order lines by selecting an amount-based line type, category, item description, and total amount for the line.