Steps in the conventional purchasing cycle
Purchasing cycle wikipedia
Auditing and Closing the transaction Three documents must match when an invoice requests payment — the invoice itself, the receiving document and the original purchase order. Manage Contract This is the period in the purchasing cycle when the goods are delivered. The product may be one that needs to be reordered, or it may be a new item for the company. Step 4: Price and Terms The business will investigate all relevant information to determine the best price and terms for the product. If there is doubt that delivery dates can be met, purchasing must find out the problem in time and take corrective action. Evaluation This is the most exciting part of the purchasing cycle and can take many weeks for a big tender. Step Record Maintenance In the case of audits, the company must maintain proper records. A copy of the receiving report is then sent to the purchasing department noting any variance or discrepancy from the purchase order. Authorization of Need Buyers spend huge sums of money on purchases hence care must be taken to avoid inappropriate or irresponsible requisitions. Qualifying A number of meetings are held to clarify any questions that suppliers may have. The purchasing department needs to be notified to update any outstanding invoices, as well as the accounting department and the operational unit who will be handling the item.
Step 3: Source Options The business needs to determine where to obtain the product. By: Lea Nathan Management in any company must understand the art of obtaining products and services.
What is purchasing cycle
The items and the quantities should be the same on all; the prices, and extensions to prices, should be the same on the purchase order and the invoice. Step 4: Price and Terms The business will investigate all relevant information to determine the best price and terms for the product. It specifically defines the price, specifications and terms and conditions of the product or service and any additional obligations. Finally, when the item is received, floor managers need to make sure their department has enough wire shelving and warehouse storage to properly receive and store the item. If further inspection is required, such as by quality control, the goods are sent to quality control or held there for inspection. Identity of originator, signed approval, and account to which cost is assigned. Approval And Payment If the contract is carried out completely then full payment is made. This is achieved through authorization procedures at three main points in the purchasing cycle: A requisition must be signed by an authorized individual before being passed to purchasing.
Other industries have no point of reference. You Also Might Like The quotations must be evaluated for technical factors and price.
Once the shipment arrives, it needs to be checked immediately for quality and quantity of items to ensure the order is correct. Acceptance of the items obligates the company to pay for them. Responsible management of public and corporate funds is vital when handling this necessary process, whether in strong or weak economic markets.
A copy is sent to the supplier; copies are retained by purchasing and are also sent to other departments such as accounting, the originating department, and receiving.
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