Subcontracting

Most garment factories send some work out — wash, embroidery, print, sometimes whole stitching runs. GarmentFlow treats that as buying labour, not as ERPNext's goods-custody subcontracting.

That choice explains everything else on this page. A subcontractor is a Production Unit with Unit Type = External, a warehouse (the material stays on your books — the operation ledger already transfers it there and consumes it) and a supplier for the service fee. So in your accounts, subcontracting is a pure labour purchase. There is no goods transfer, no Subcontracting Receipt, no second inventory to reconcile.

The three prices of a subcontracted operation

The reference rate exists because one service item is only a category. SERV-WASH covers a wash that might be negotiated anywhere from a few cents to several times that, depending on the finish. The item's price list is therefore meaningless here, and the rate that counts is the one written on the step.

Billable quantity

Billing quantity is not what you sent out. It is what the operation ledger says came back: pieces completed at the operation, net of the subcontractor's scrap, counting each piece once even after rework.

That definition is used identically by the billing pull, the billing worksheet and all three reports, so the number never changes depending on which door you came in through.

Getting the commitment in place

Two buttons on a submitted Production Order, under Subcontract:

• Create Subcontract PO — commits this order's external batches to a purchase order, so the supplier has something to work against.
• Create Blanket Order — records a negotiated framework agreement that those POs then draw against. Use it when you have agreed a rate for a season rather than for one order.

Getting the bill out

Three doors, all reading the same billable quantity.

1. The billing worksheet — the deliberate route

Subcontract Billing Worksheet is a staging document you review before anything financial exists. Pick a supplier and a date range, pull every billable ledger entry into a grid — one row per transaction, with its date, source unit and model — sanity-check each against its Tech Pack reference rate, override the rate wherever the negotiation differed, and watch the total move.

Submit then:

• generates the Purchase Invoice or Purchase Order from the reviewed lines,
• writes the negotiated rates back onto each batch's operation step,
• attaches the coverage, and
• locks the worksheet. No second bill can be raised for the same work.

Cancelling removes the draft bill and frees the ledger entries again — but only while the bill is still a draft. Once the invoice is submitted, cancel the invoice first.

Use this route when rates need reviewing, which is most of the time.

2. The pull button — the quick route

On a draft Purchase Invoice or Purchase Order: Get Items From → Subcontracted Work. It pulls that supplier's done-but-unbilled external steps in as one summary line per service item. Leave the dates blank for all outstanding work.

3. The billing queue report — the worklist route

Subcontract Billing Queue lists all done, unbilled external work grouped by supplier and service item, with pending pieces, the resolved rate and the estimated amount, plus a summary of suppliers to bill. It has a Create Bill action that produces a draft PO or PI for finance to review and submit.

Use it as the "who do we owe money to" screen at month end.

How cost lands back on the batch

When the buying document is submitted, GarmentFlow creates Subcontract Cost Allocation rows — the bridge between one buying-document line and the many operation steps it pays for. A single monthly invoice line can cover thousands of batches; the invoice stays a short, native ERPNext document while the per-step detail lives in these rows.

Cost rollup then sums those rows by operation step to set each step's actual cost.

Three properties are worth knowing:

• Always net. Allocations carry the buying line's net amount. Input tax is recoverable and is not part of an operation's cost.
• Always live. Rows are created on submit and removed on cancel, so the table only ever holds current allocations. A step is "billed" if and only if it has a row.
• Never blocking. The sync runs after ERPNext's own submit logic and is best-effort, so a subcontract-allocation problem can never stop a normal purchase from posting. A daily reconcile job is the backstop, so nothing drifts silently.

The three reports

Subcontract Billing Queue — what is owed and not yet billed: supplier, service item, how it will be billed, ledger entries, pending pieces, rate, estimated amount.

Subcontract Three-Way — earned vs committed vs invoiced, one row per supplier, batch and operation:

• Earned (OLE) — pieces production actually completed.
• Committed (PO) — what you ordered.
• Invoiced (PI) — what was billed.

From those it derives Open Commit (ordered but not yet billed), Unbilled (earned but not billed) and Over-billed (billed beyond what was earned), with the net amounts alongside. It is the report to open when a supplier's statement doesn't match yours.

Subcontract Reconciliation — invoiced quantity against ledger quantity for each buying-document line, with the variance, the invoiced net and the allocated net. Its summary counts mismatches and totals over- and under-billed quantity. This is the month-end tie-out.

Find all three in the Production sidebar under Subcontracting.

What to do next

Read Cost rollup for how these numbers land on a batch, or Closing the order for the check that catches steps with no cost data at all.