Don’t Hand Your Employees a Blank Check

Success Starts Here Freeway Style Desert LandscapeNot having a purchasing procedure is like handing your employees a blank check. While this may seem like an exaggeration, when you think about it, it is not the case at all.With a budget, computer and accounting software most business owners feel that they are covered, but how wrong they are. Without a written procedure, you are flying blindly in trying to track your companys expenditures.

The first item that you need to set up is a purchase request form. This form should be numbered and all of the numbers must be accounted for. The request form should contain the  following information: vendor name, terms for payment, description of product, quantity, unit price, the person requesting the item(s),expected date to receive the product, and the shipping method. After all of this information is completed, the form should be taken to the business owner or controller, for their signature. A copy should be kept in the accounting department and the other copy in the receiving department.

After the item(s) have been approved for purchasing, a purchase order should be produced and sent to the vendor by the accounting department. The original purchase order copy should be kept in the accounting department and a copy should be kept in the receiving department. As with the purchase requisition, all of the purchase order numbers must be accounted for.

When the product(s) are received, the purchase request, purchase order, and the appropriate receiving paperwork should be attached together and signed by the receiving person with product counts being verified. This paperwork should then be sent to the accounting department, awaiting an invoice from the vendor.

When the invoice is received, the receiving paperwork should be pulled from the open purchase order file and attached to the vendor invoice. The accounting department must verify that all of the product(s) have been received, the unit price is correct, and all the appropriate paperwork is attached to the invoice. The business owner or controller should review the paperwork and sign off on the invoice that it is approved and ready to be entered into the accounts payable module.

The business owner should be familiar with all of the vendors which will act as a deterrent to fake vendors being created and paid to someone other than an official vendor of the company. After the vendor is paid, a copy of the accounts payable check should be attached to the invoice and accompanying paperwork and filed. Once again, all of the check numbers must be accounted for.

While this procedure may seem lengthy when it is written out, it is actually a fairly simple procedure to follow. If this procedure is followed, you will have better control over your company’s expenditures and as the business owner you will have a better feel for the cash flow of your company.

Please contact us for a no obligation consultation at 330-620-2761. We look forward to helping you grow your business.

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