Introduction to Purchasing and Receiving
Purchase procedure different from business to business, but all of them follow a usual pattern or technique. There should be an appropriate Purchase Procedure to make sure that at right time right type of material is purchased, and that should be in right quantity, at right place and at right prices.
All these things need a well-defined technique of purchasing. The steps in Purchase Procedure are described below.
Ø Purchase Requisition: A form termed as 'Purchase Requisition' is generally used like a format demanding the purchase department to purchase the needed material. Generally the purchase requisition is issued through the Stores Department while the quantity of the concerned material extent the minimum level. Just in the cases of materials that are not reserved in the stores on regular basis, the demand is issued via the concerned department. Purchase requisition has information such as the quantity needed, the expected date of receipt, the department where the material is needed, description of material etc. The purchase requisition's copies are sent to the Accounts department and the concerned department that is in need of the material.
Ø Purchase Order: later than the receipt of purchase requisition, the purchase department put an order along with a supplier, that are offering to buy specific material at stated price and terms. Though before issuing the purchase order, quotations might be invited from several suppliers for arriving at the best deal. The purchase department generally preserve a list of suppliers from whom the quotations are invited. The quotations received are observed on several parameters such as terms and conditions, price, delivery period, quality of material etc. Later than this, purchase order is issued to the particular supplier. It should be keep in mind that a purchase order is a legal document and it outcomes into a contract among the company and the supplier. Though the terms and conditions in the purchase order should be drafted noticeably without any uncertainty.
Ø Receiving the Materials: The receiving department executes the function of unloading and unpacking materials that are received through an organization. This will require an inspection report that is sometimes included in the receiving report that is indicating the items rejected and accepted with reasons. Copies of the receiving report with the inspection report are sent to several departments such as concerned department, accounts department, purchase, stores and costing department.
Ø Approval of invoice: Approval of invoice points out that goods as per the purchase order have been received and for the same payments can be made. Though if the goods are not conforming the quality ordered or is in excess of the quantity particular or are damaged or are of lower quality, payment is suspended.
Ø Making the Payment: the payment is made to the supplier after the invoice is approved. The purchase procedure is finished with the payment released.
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