Production Order To Dispatch, Billing, And Payroll

This guide follows one manufacturing customer order from product setup through material supply, production, dispatch, customer billing, deposit application, final payment, labour settlement, and reporting.

Use it when testing a factory flow such as a school-uniform order where the customer may order the same product design in several variants, for example 30 pieces of size XL, 80 pieces of size XS, and another quantity of size M.

Ownership Rule

Production owns the manufacturing runtime context. The downstream ledgers stay with their owner modules:

Area	Owner Module	User Checks
Product design, BOM, routing, operations, output	Production	Design, variants, order, release, execution, costing.
Stock categories, raw materials, receipts, issues, balances	Inventory	Stock item, warehouse, movement, quantity, tracking, valuation.
Quality evidence and release decisions	Inspections	Inspection record, NCR, hold, pass/fail, certificate evidence.
Customer deposits, invoices, credit notes, customer receipts	Billing	Advance liability, invoice, payment allocation, statements.
Employee payroll, labour payout, statutory deductions	HR and Payments	Employee enrollment, payroll run, payment batch, remittance.
Management review	Reporting	Production, stock, billing, HR, payroll, and GL reports.

Do not treat the order as complete just because the invoice is paid. A production order is commercially settled on the customer side when Billing shows zero balance, but it is operationally and financially complete only after stock, costing, labour, payroll, and reporting are reconciled.

Setup Before The Order

Operational And Stock Items

Create operational items for the real business identity, such as short-sleeve shirt, skirt, trouser, fabric, thread, buttons, labels, and packaging. Use flags such as stock-managed, sellable, purchasable, and manufacturable to drive the right usage bindings and lookups.

Create stock items only where inventory balance, warehouse movement, valuation, tracking, or reservation is required. Finished goods should be stock-backed when they must be dispatched, invoiced from delivery, or valued in inventory.

Product Design And Variants

Create a product design for the customer-specific manufactured offer, for example Kampala Preparatory Shirt Uniform.

Use operation-item characteristics as the option axes. For a school uniform this may include size, color, sleeve type, logo position, material grade, or fit. For other industries it may be pack size, gauge, length, voltage, recipe strength, model trim, finish, or customer specification tier.

Create variants from those characteristics and connect each variant to the stock-backed output item that will be planned, produced, dispatched, and billed.

BOM, Routing, Resources, And Quality

Before accepting live orders, confirm:

• BOM lines use purchasable or stockable raw materials and packaging.
• Routing operations match the real factory sequence.
• Routing rates, setup minutes, run minutes, resource type, and resource are realistic enough for release.
• Production resources represent the real work center, machine, line, tool, or labour pool.
• Employees who will be paid are active HR employees and enrolled for payroll where payroll settlement is expected.
• Inspection templates and quality gates are ready for receiving, WIP, final QC, or dispatch.

Customer Demand

Quotation

Create the quotation from Production -> Operations -> Quotations. The line should identify the product or product design, selected variant, quantity, price, delivery date, customer, and deposit policy where required.

Use separate lines for variant quantities when the customer orders a mix of sizes, colors, grades, or other options.

Sales Order

Convert or create the sales order from Production -> Operations -> Sales Orders after the customer confirms demand.

For deposit-controlled manufacturing, capture the release and dispatch policies on the source document. Typical policies are:

• no deposit required
• fixed deposit amount required
• percentage deposit required
• full payment required before production or dispatch

Customer Deposit

Open Billing -> Operations -> Deposits & Advances and receive the customer deposit against the approved quote or sales order.

The deposit should post as a liability, not revenue. It becomes available for later invoice application after the receipt is posted or approved according to the tenant's GL workflow.

Before releasing production or dispatching, check the source document's deposit requirement status. If production or dispatch requires a deposit, do not bypass that control casually.

Planning, Procurement, And Receipts

Run MRP from Production -> Operations -> Production Planning after approved demand, BOMs, routings, stock, and warehouse setup are ready.

Resolve shortages through the owning primitive:

Need	Use
Make finished output	Production-order suggestion.
Buy raw material, trims, labels, or packaging	Procurement suggestion, purchase order, goods receipt.
Move available stock from another location	Stock transfer suggestion or stock transfer.
Reserve existing material for the order	Stock reservation or production material allocation.

Receive purchased materials through the procurement or material receipt flow. Approval should finalize the needed stock consequences, including accepted quantity, warehouse, tracking reference, and GL state where posting is configured.

Production Orders

Create or convert production orders for the approved demand. When one sales order has multiple variants, create the production structure that matches how the factory works: one order per output variant, one order per batch, or another approved grouping that still keeps traceability clear.

Before release, confirm:

• output item is manufacturable and execution-ready
• BOM and routing are approved
• materials are available or intentionally backflushed
• warehouse and production location are selected
• source document and deposit gate pass where configured
• quality and resource readiness blockers are cleared

Material Issue

If the operation does not backflush automatically, issue raw materials manually from the production order or operation line.

The issue form should be prefilled from the production context where possible: production order, operation, material/component, source warehouse, destination or WIP scope, planned quantity, UOM, lot, batch, and source reference.

Use the actual material scope. Do not issue a generic material line when the BOM, warehouse, batch, lot, or operation requires a specific component.

Shop-Floor Execution And Labour

Start operation lines from Production Orders or Shop Floor.

At operation start, assign the resource and select the operators who are starting that work now. More than one operator can work on the same operation. Operators who join or leave later should be managed from the operation's operator tracking area.

Complete the operation at the operation-line level. The completion screen should show every assigned or active operator who worked on the line. Book labour for each operator separately:

Labour Field	Meaning
Setup minutes	Actual setup time attributed to the operator.
Run minutes	Actual run time attributed to the operator.
Labour rate	Hourly rate used for cost if piece-rate fields are blank.
Piece quantity	Units credited to the operator for piece-rate work.
Piece rate	Rate per credited piece.
Operator notes	Short note explaining the worker's booking when needed.

Routing labour rates should prefill where available, but supervisors can override them with a reason where policy allows.

Production labour booking captures production cost evidence. It does not by itself pay the employee.

When using the standard Production Orders UI, completing an operation line also attempts the configured production cost absorption posting for eligible completed work. If the completion succeeds but posting cannot finish because GL setup, approval, or accounting readiness is missing, treat the warning as an accounting follow-up and use the production order's Post Costs retry action after the blocker is fixed. Do not create a manual journal that hides the production order reference.

Quality And Dispatch

Record inspection evidence from the production quality workspace or the shared Inspections workspace. Failed, held, or rework output should not be dispatched as approved finished goods.

After output is accepted and available, use Production -> Operations -> Dispatch to create and approve the delivery note. Dispatch should reduce finished-goods availability and provide the source document for customer invoicing.

Invoice, Deposit Application, And Final Payment

Open the invoice from the approved dispatch or delivery note.

Billing should show:

• invoice lines matching the delivered goods
• customer, source document, and delivery reference
• deposit applications that reduce the invoice balance
• final received payments that clear the remaining receivable
• a zero balance only after all customer money is applied

Use Deposits & Advances to apply the customer deposit to the invoice. Use Apply Payment for the remaining customer receipt.

When the invoice detail shows the deposit application and final payment, the customer-side receivable is settled. That does not close payroll, supplier payables, production costing, or reporting review.

Deposit application should happen after the invoice exists. The receipt of the deposit credits the customer deposit liability; applying it to the invoice relieves that liability against the receivable. The final customer payment clears any remaining receivable balance through Billing and the selected payment channel.

Payroll And Employee Payout

After production operations are complete, open HR -> Operations -> Payroll Processing.

Review the employees who worked on the production order:

1. Confirm each operator exists as an active employee.
2. Confirm payroll enrollment and payment details are ready.
3. Review production labour bookings by employee, operation, minutes, rate, piece quantity, piece rate, and production order.
4. Open or create the payroll period for the same active business unit context used by the person running payroll.
5. Generate the normal payroll run for the period. Posted production labour is collected automatically from payroll-ready operator work in the payroll actor's active business-unit context; do not create a separate production supplementary run.
6. Review the payroll run details and confirm that every payable operator appears with the expected production earning lines.
7. Approve the payroll run. In the standard UI, approval also submits the payroll accrual posting where GL setup is ready.
8. Create the payroll payment batch.
9. Complete payment through Payments & Settlement.
10. Review statutory remittances where applicable.

Production labour payroll stays in the active business unit context of the user generating the run. Do not switch to a separate HR service or all-services context just to pay operators. Production supplies the labour evidence, while payroll owns the employee payout, period, approval, posting, and payment flow in the actor's current business unit. Use the detail drawer to verify that the production labour lines are pulled into that same active context before approval.

Use the detail drawer before approval. It should answer:

• Which employees are being paid?
• Which production order and operation produced each earning line?
• Which booking method created the amount: minutes/rate or piece quantity/piece rate?
• Has the labour event already been linked to a previous payroll run?
• Does the run period match the production booking dates and HR payroll policy?

If a production-labour run appears in the wrong business unit or period, do not approve it. Reverse or correct the generated run before GL posting or payment batch creation. Generated, unposted runs can be safely corrected; posted or paid runs need reversal and audit review.

If production labour bookings are not yet automated into payroll earnings for the tenant, export or review the production labour evidence and reconcile it before payroll approval. Do not pay workers from customer Billing payments.

Labour Accounting Chain

Production completion and HR payroll are not duplicate postings when they use the clearing pattern:

Event	Debit	Credit	Meaning
Production operation completion	WIP or production cost	Production labour absorption clearing	The production order absorbs labour cost from shop-floor evidence.
HR payroll accrual for production labour	Production labour absorption clearing	Payroll payable or employee payable	HR recognizes the amount owed to employees and clears the absorption account.
Payroll payment batch settlement	Payroll payable or employee payable	Cash, bank, mobile money, or payment clearing	The employee is paid through the approved payment batch.

This sequence lets production show the real cost of the order while HR still owns employee payout, deductions, remittances, approval, and settlement. If the same amount appears twice in expense without the clearing account reversing, stop and review the posting rules before paying or closing the order.

Use the manual Post to GL or Post Costs actions only as retry controls after a failed automated attempt. They should not be a second business step that users must remember after a clean approval or completion.

Reporting Closeout

The flow is complete only after users can explain the same order from all reporting angles:

Report Area	Questions To Answer
Production	Which orders were released, completed, dispatched, and closed?
Inventory	Which materials were received, issued, consumed, returned, or left on hand?
Quality	Which inspections passed, failed, held, or required rework?
Billing	Which invoice, deposit, final payment, and statement cleared the customer balance?
HR/Payroll	Which employees earned labour amounts and which payroll/payment batch paid them?
Costing	How did actual material, labour, overhead, scrap, and variance compare with standard?
Accounting	Do stock, WIP, receivable, deposit liability, payroll, cash/bank, and variance postings reconcile?

Use saved reporting presets for the customer, sales order, production order, delivery note, invoice, and payroll period so the QA team can repeat the check without rebuilding every filter.

On the Production Orders table, differentiate orders by their operational state before deciding the next action: planned, released, material-blocked, in progress, operation-complete, quality-held, dispatch-ready, dispatched, cost-posted, payroll-pending, payroll-paid, and closed where those status columns or filters are available. Do not infer order state from only one signal such as invoice payment or operation completion.

Pass Criteria

The end-to-end order is complete when:

• source sales order is approved and traceable to the production order
• deposit requirement is satisfied or intentionally not required
• raw materials are procured or available
• material receipts and issues have stock effects
• production operations are complete
• operator labour bookings are captured per employee
• quality evidence supports release
• dispatch/delivery note is approved
• invoice is issued and paid with deposit application visible
• payroll run or payroll evidence includes the operators' payable labour
• payment batch or payroll settlement path is complete
• costing and reports reconcile stock, WIP, receivable, deposits, labour, cash/bank, and GL

Related Guides

• Production Operations
• Production Setup
• Production Costing
• Production Operator Payroll
• Inventory Operations
• Procurement And Stock Control
• Invoices
• Applying Payments
• Payroll
• Reporting Operations & Usage