Job Work Orders & Receipts

The previous chapter introduced the concept of job work and the contractor master. This chapter covers the operational side — creating job work orders to send materials to a contractor, and recording job work receipts when the processed goods come back.

A job work order is the formal document that authorizes the movement of your materials to an external contractor's facility for processing. The job work receipt records what was returned — how much was received, how much was acceptable, and how much was rejected. Together, these two records provide complete traceability of outsourced manufacturing activity.

What You Will Learn

• The job work order workflow: create, send, receive, close
• Job work order fields and their purpose
• Tracking sent vs. received quantities
• Recording job work receipts with accepted and rejected quantities
• How to handle quality issues on received goods
• Step-by-step: creating a job work order and recording a receipt
• Managing outstanding job work for GST compliance

Prerequisites

Required: Before creating job work orders:

• At least one contractor exists in Active status (see Chapter 17)
• Items to be sent for processing exist in the Item Master
• Warehouse locations are configured (see Chapter 9)
• You understand the GST implications of job work (see Chapter 17)

The Job Work Order Workflow

The complete job work cycle follows four stages:

Stage 1: Create the Order

The production planner creates a job work order specifying what items are being sent, to which contractor, in what quantity, and when the processed goods are expected back. This is the planning and documentation stage.

Stage 2: Send Materials

The materials are physically dispatched to the contractor's facility. The job work order serves as the basis for the delivery challan (the document accompanying the goods in transit). Stock is transferred out of your warehouse — the items are now at the contractor's premises but still belong to you.

Stage 3: Receive Processed Goods

When the contractor completes the processing and returns the goods, you create a job work receipt. The receipt records the received quantity, the date of receipt, and — critically — how many units were accepted and how many were rejected.

Stage 4: Close and Reconcile

Once all materials have been received back (or accounted for), the job work order can be closed. Any discrepancies between sent and received quantities are investigated and resolved.

Job Work Order Fields

Understanding Each Field

Contractor. Select from the list of active contractors. Only active contractors appear in the dropdown. If you need to use a contractor that has been deactivated, reactivate them first through the contractor master (see Chapter 17).

Item. The item being sent for job work. This could be a raw material (sending MS plate for cutting), a semi-finished good (sending machined flanges for heat treatment), or even a finished good (sending painted products for packaging). The item must exist in the item master.

Quantity. The number of units being sent. This is expressed in the item's default unit of measure.

Sent Date. The date the materials physically leave your premises. This date is important for GST compliance — the one-year clock for return of inputs starts from this date.

Expected Return Date. When you expect the contractor to complete the processing and return the goods. This date drives follow-up and planning. If you need the heat-treated flanges by 20 March to meet a customer delivery, set the expected return date to 18 March to allow time for receiving inspection.

Location. The warehouse location from which the materials are being dispatched. Stock at this location will be reduced when the materials are sent.

Notes. Use this field for processing instructions that the contractor needs. For example: "Heat treatment specification: Normalize at 920 degrees C, air cool. Hardness requirement: 180-220 BHN." These notes can be printed on the delivery challan.

Tracking Sent vs. Received Quantities

One of the most important functions of job work tracking is reconciling what you sent with what you received back. Discrepancies are common and have several causes:

The job work receipt mechanism handles all these scenarios by recording received quantity, accepted quantity, and rejected quantity separately.

Job Work Receipts

A job work receipt is the record of processed goods returning from the contractor. Each receipt captures:

The Relationship Between Quantities

The following rule must hold for every receipt:

Accepted Quantity + Rejected Quantity = Received Quantity

If you receive 195 pieces and 15 fail your incoming quality check:

• Received Quantity: 195
• Accepted Quantity: 180
• Rejected Quantity: 15

Multiple Receipts per Order

A single job work order can have multiple receipts. This is common when:

• The contractor delivers in batches (100 pieces this week, 100 next week)
• You reject pieces and the contractor reworks and returns them separately
• Some pieces require additional processing time

The system tracks the total received across all receipts against the original sent quantity, giving you visibility into what is still outstanding at the contractor's premises.

Quality Check on Received Goods

When processed goods return from a contractor, they should be inspected before being accepted into stock. This is effectively an incoming inspection (see Chapter 16) with the contractor as the "vendor."

The quality check should verify:

• Processing quality — did the contractor perform the specified process correctly? (e.g., is the hardness within the specified range after heat treatment?)
• Dimensional integrity — did the processing operation distort or damage the parts? (e.g., did heat treatment cause warping?)
• Quantity accuracy — does the received count match what the contractor claims to have returned?
• Surface condition — are there any new defects (scratches, dents, contamination) that occurred during processing or transit?

Record the quality check results in the job work receipt through the accepted and rejected quantity fields, and in the notes field. For formal traceability, you can also create a Quality Inspection record linked to the job work order.

Tip: Perform the quality check immediately upon receipt, while the contractor's delivery person is still present if possible. Discovering defects days later makes it harder to establish whether the damage occurred during processing, during transit, or after receipt at your facility.

Step by Step: Creating a Job Work Order

Scenario

Your steel fabrication shop has cut and drilled 200 MS flange blanks. These blanks now need heat treatment at Sagar Heat Treatment Works. You expect the treated flanges back within 5 working days.

Step 1: Navigate to job work orders.

Go to Manufacturing > Job Work Orders. Click New Job Work Order.

Step 2: Fill in the order details.

Step 3: Save the job work order.

Click Save. The system generates an order number (e.g., JW-2026-0015). The materials are now tracked as being at the contractor's premises.

Step 4: Prepare the delivery challan.

Print or generate the delivery challan from the job work order. This document accompanies the goods in transit and must include:

• Your GSTIN and the contractor's GSTIN
• Description and quantity of goods
• HSN code
• Value of goods (even though no sale is occurring, the challan must state the value)
• Statement that the goods are being sent for job work under Section 143 of the CGST Act

Warning: A valid delivery challan is legally required when sending goods for job work. Goods in transit without a proper challan can be detained and penalized during a roadside check by GST authorities.

Step by Step: Recording a Job Work Receipt

Scenario

Sagar Heat Treatment Works returns 195 pieces on 18 March. Five pieces cracked during heat treatment (a known risk with certain geometries). Of the 195 returned, your quality inspector finds that 188 meet the hardness specification and 7 are outside the acceptable range.

Step 1: Open the job work order.

Navigate to Manufacturing > Job Work Orders and open JW-2026-0015.

Step 2: Create a new receipt.

In the Job Work Receipts section, click Add Receipt.

Step 3: Fill in the receipt details.

Step 4: Save the receipt.

Click Save. The receipt is recorded against the job work order.

Understanding the Outcome

After this receipt, the job work order shows:

The 188 accepted pieces proceed to the next production step (final assembly and coating). The 7 rejected pieces need a disposition decision — send back for re-treatment, rework in-house, or scrap.

The 5 pieces that cracked at the contractor's premises should be discussed with the contractor — is this a normal process loss, or was there a process deviation? Your job work order notes should document this conversation and the agreed resolution (credit note from the contractor, replacement, etc.).

Managing Outstanding Job Work

For GST compliance, you need to track materials that are currently at contractors' premises. The key concerns are:

Time limit tracking. Under Section 143 of the CGST Act, inputs must be returned within one year. For each open job work order, calculate how long the materials have been at the contractor.

Outstanding quantity. For each open job work order, the outstanding quantity is:

Sent Quantity - Total Received Quantity (across all receipts) = Outstanding at Contractor

Review outstanding job work orders weekly. Follow up on overdue returns promptly.

Tip: Create a routine — every Monday morning, review all open job work orders sorted by expected return date. Any order past its expected return date should trigger a follow-up call to the contractor. Any order approaching the one-year GST time limit should be escalated immediately.

Tips & Best Practices

Tip: When negotiating with contractors, discuss processing loss expectations upfront. A 2-3% loss rate may be acceptable for heat treatment, but a 10% rate indicates a process problem. Setting expectations in advance avoids disputes when goods are returned.

Tip: Take photographs of materials before sending them for job work, especially for high-value items. This provides evidence of the condition at dispatch and helps resolve disputes about damage during processing.

Tip: For repeat job work (same contractor, same item, same process), track yield rates over time. If the accepted quantity as a percentage of sent quantity is declining, investigate — the contractor may be experiencing equipment issues, staffing changes, or using the wrong process parameters.

Warning: Never lose track of materials at a contractor's premises. Materials at the job worker are still your inventory — they are your assets and they count toward your stock valuation. More importantly, exceeding the one-year time limit without return converts the transaction into a deemed supply, triggering GST liability with interest and potential penalties.

Warning: Ensure that rejected items from job work receipts are properly dispositioned. Do not let rejected stock accumulate in a corner of the warehouse without a decision. Either send it back for rework, rework it in-house, or scrap it and write off the cost. Undecided rejections are a hidden cost.

Quick Reference

Job Work Order Fields

Job Work Receipt Fields