I would think you can just turn the PO into a purchase invoice and instead of Pay Later, mark it Paid by Cheque. That should update your inventory and make a deposit to the bank. There are variations of this technique but that's the basics.

Make sure you look the journal entry before you post and backup first so you can restore the file if you make some mistakes you don't wish to adjust.

a negative purchase order or a negative purchase invoice ?
a purchase order doesn't allow for negative quantities ordered (premium edition)
the purchase order can be converted to a purchase invoice

to properly update inventory the purchase invoice will need a negative quantity


then you can pay the purchase invoice by cash from your bank (you'll get a warning if paid by cheque, you don't want to use up a payable cheque #)

note, if you use 'cash to be deposited', when you use Sage's make-deposit function, this cheque won't be in the list (hopefully a sage future enhancement)

if you want to include the cheque in make-a-deposit (because it's part of a multi-cheque bank deposit)
set up an account called something like 'clearing bank account' of type bank

set up a customer called something like 'clearing bank account',
revenue account = clearing bank account
no taxes

when you pay the purchase invoice (above), pay it from the clearing bank account
create a sales invoice to customer 'clearing bank account'

create a receipt from 'clearing bank account'
deposited to 'cash to be deposited'
by cheque, the cheque number being the vendor's cheque #

because Sage's make-deposit only accesses payments from 'create-a-receipt', the clearing bank account is used as a tunnel between AP and AR (net 0.00 effect)

there are variations of this, where can create a sales invoice for a one-time customer (the vendor), but then you need to remember to select
no tax
and the correct account

Roger L said:

a negative purchase order or a negative purchase invoice ?
a purchase order doesn't allow for negative quantities ordered (premium edition)

Thanks Roger.  I thought it was a little strange but it was the end of the day and I didn't have the program open to test to make sure my recollection was the same as your's.  I chose not to dispute what the OP said they did without doing any testing.

Roger L said:

note, if you use 'cash to be deposited', when you use Sage's make-deposit function, this cheque won't be in the list (hopefully a sage future enhancement)

Don't hold your breath.  I doubt this feature will be enhanced at all.  Sage knows about the issues with it and have had a lot of years to make changes if they were inclined.