Purchasing and Procurement Principles
Documentation in Purchasing
The following are some of the important documents, which are used during the purchase procedure
- Purchase requisition
- Purchase enquiry
- Supplier’s quotation
- Comparative statement
- Purchase order
Purchase Requisition: Purchase requisition is a written list of materials for re-coupment sent to the purchase department for their procurement. It is submitted to the head of purchase department and is generally prepared in triplicate. One is sent to the purchase department , the second to the material control department and another to the requisitioning department as a copy for future reference . The Inventory controller or stores in charge prepare purchase requisition. Sometimes the purchase requisition is sent to the purchasing department by the production or user account.
Purchase Inquiry: Purchase inquiry is a letter sent by the purchase department to the supplier for quoting his prices for the supply of materials detailed therein. The main purpose of this inquiry is to find out the prices and quality of goods or materials which can be supplied by different suppliers. The purchasing department can call tenders. Inquires can be made through telephone or fax where urgent information is required.
Suppliers quotation: On inquiry the supplier quotes his price and terms and conditions of the supply material to the purchase department indicating the quality, quantity, time of delivery prose, discount and other concessions that is his reply to the inquiry. Usually this is known as submission of quotations. This is one of the important documents and requires proper and careful handling in the purchase department. It is an offer in legal terms, hence requires proper preservation. A pro-forma invoice also sometimes serves the purpose of a quotation.
Purchase order: Purchase order is a legal document for all practical purposes and is prepared with great care and in all details so as to help the supplier to supply the materials of right quality, in right quantity and at the right time. Purchase order is an order to the supplier to supply the required materials as per quotations submitted by him in accordance with instructions contained therein.
Suppliers Advice Notes: When a supplier has goods ready for a delivery, he normally prepares an advice note to be sent through the post to his customer. This document gives a description of the goods, the quantity involved, the method of transport and the date of dispatch and the intention is that it should be in the hands of the storekeeper before the goods themselves arrive.
Consignment note/Carriers note: This is a document provided by the carrier in which the seller fills in the details of goods to be dispatched. The carriers consignment note shows the name and address of the consignor, the description of goods the number of packages and their identification marks if any, the weight details of the delivery vehicle and the name and address of the carrier. It indicates whether the freight is already pid or whether the buyer has to pay for it at the destination. When the goods are delivered by the carrier, the buyer has to sign it as proof that the goods have been delivered to him.
Delivery Note: This is a document showing the list of goods, without showing the process which is sent to the buyer. It is used for checking the goods without having to make use of the invoice. When the goods are delivered to the buyer he is supposed to retain one copy and return the other copy to the seller duly signed by him. It proves that the buyer has already received the goods.
Goods Received information/Goods Received Note (GRN): This may be directly keyed into the computer, or a separate goods received note may be prepared for each delivery. The information on the receipts need to be passed to various locations. Typically, the accounts payable section, the purchasing department, the using department and the inspection department will need to know. The information may be made available via the computer, or hard copies of goods received notes.
Invoice: Invoice is a document which gives the quality, quantity, unit price, total value of the goods dispatched, any discount allowed, transport charges if any among others. To ensure that goods paid for have actually been received and are authorized purchases, invoices are matched with goods received notes and purchase orders. If all here agree, the invoice is cleared for payment. Any clarification required will be obtained from purchase Thereafter, the various extensions will be checked and the invoice will be sent to the payment section.