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𝐏𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐨𝐫𝐝𝐞𝐫 (𝐏𝐎). It is a document that is used to authorize the purchase of 𝐠𝐨𝐨𝐝𝐬 or 𝐬𝐞𝐫𝐯𝐢𝐜𝐞𝐬. The process of creating a purchase order can vary depending on the organization, but there are some 𝐠𝐞𝐧𝐞𝐫𝐚𝐥 𝐬𝐭𝐞𝐩𝐬 that are typically involved: 1. 𝐈𝐧𝐢𝐭𝐢𝐚𝐭𝐞 𝐭𝐡𝐞 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐨𝐫𝐝𝐞𝐫: The purchase order process is typically initiated by a requisition, which is a document that requests the purchase of goods or services. The requisition should include the following information: · The name of the buyer and the seller. · The quantity and description of the goods or services being purchased. · The price of the goods or services. · The delivery dates: The date on which the goods or services are to be delivered. · The payment terms: The terms under which payment is made for goods or services. 2. 𝐑𝐞𝐯𝐢𝐞𝐰 𝐚𝐧𝐝 𝐚𝐩𝐩𝐫𝐨𝐯𝐞 𝐭𝐡𝐞 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐨𝐫𝐝𝐞𝐫: The requisition is then reviewed and approved by the appropriate personnel, such as the buyer, the project manager, or the finance manager. Once the purchase order is approved, it is sent to the supplier. 3. 𝐑𝐞𝐜𝐞𝐢𝐯𝐞 𝐚𝐧𝐝 𝐢𝐧𝐬𝐩𝐞𝐜𝐭 𝐭𝐡𝐞 𝐠𝐨𝐨𝐝𝐬 𝐨𝐫 𝐬𝐞𝐫𝐯𝐢𝐜𝐞𝐬: Once the goods or services are received, they should be inspected to make sure that they meet the requirements of the purchase order. If there are any problems with the goods or services, the supplier should be notified so that they can be corrected. 4. 𝐈𝐧𝐯𝐨𝐢𝐜𝐞 𝐚𝐧𝐝 𝐩𝐚𝐲𝐦𝐞𝐧𝐭: The supplier will then send an invoice to the buyer requesting payment for the goods or services that have been delivered. The invoice should be reviewed and approved by the appropriate personnel, and then payment should be made to the supplier. Additional steps that may be involved in the purchase order process: · 𝐍𝐞𝐠𝐨𝐭𝐢𝐚𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐩𝐫𝐢𝐜𝐞: The buyer and the seller may negotiate the price of the goods or services before the purchase order is created. · 𝐎𝐛𝐭𝐚𝐢𝐧𝐢𝐧𝐠 𝐚𝐩𝐩𝐫𝐨𝐯𝐚𝐥 𝐟𝐫𝐨𝐦 𝐚 𝐡𝐢𝐠𝐡𝐞𝐫 𝐚𝐮𝐭𝐡𝐨𝐫𝐢𝐭𝐲: In some cases, the purchase order may require approval from a higher authority, such as the CEO or the board of directors. · 𝐓𝐫𝐚𝐜𝐤𝐢𝐧𝐠 𝐭𝐡𝐞 𝐬𝐭𝐚𝐭𝐮𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐨𝐫𝐝𝐞𝐫: The buyer should track the status of the purchase order to make sure that it is processed and delivered on time. The 𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐨𝐫𝐝𝐞𝐫 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 can be 𝐜𝐨𝐦𝐩𝐥𝐞𝐱, but it is an important part of ensuring that the organization gets the 𝐠𝐨𝐨𝐝𝐬 or 𝐬𝐞𝐫𝐯𝐢𝐜𝐞𝐬 that it needs in a timely and efficient manner. #PO #purchasing #purchaseorder #purchaseorders #purchasemanagement #process #contracts #procurement

9 Steps in the Procurement Process Procurement processes vary greatly depending on each company’s structure and needs, but generally include the following nine core steps: 1. Identify which goods and services the company needs. First, a business must identify its requirements for a specific item or a service. This may be a new item that the company hasn’t previously purchased, a restock of existing goods or a subscription renewal. 2. Submit purchase request. When an employee or business group needs to procure a significant quantity of new supplies or services, they make a formal purchase request. A purchase request notifies the company that a need exists, usually via department managers, purchasing staff or the financial team. 3. Assess and select vendors. With a clear list of requirements and an approved purchase request, now is the time to find the best vendor and submit a request for quote (RFQ) – this is what the purchasing team sends to potential suppliers in order to receive a quote – it is important to be as detailed as possible so you can compare apples to apples. 4. Negotiate price and terms. A common best practice is to get at least three quotes from suppliers before making a decision. Examine each quote carefully and negotiate where possible. 5. Create a purchase order. Fill out a purchase order (PO) and send it to the supplier. The PO should be sufficiently detailed to identify the exact services or goods needed and to enable the supplier to fill the order. 6. Receive and inspect the delivered goods. Carefully examine deliveries for any errors or damage. Make sure everything is delivered as specified in the PO and that the quality meets or exceeds expectations. 7. Conduct three-way matching. Accounts payable should conduct three-way matching by comparing the purchase order, order receipt or packing list and invoice. 8. Approve the invoice and arrange payment. If the three-way match is accurate, approve and pay the invoice. Businesses should strive to have a consistent invoice payment process through accounts payable that checks that payments match the invoice amount and due date. 9. Recordkeeping. It’s important to maintain records for the entire procurement process, from purchase requests to price negotiations, invoices, receipts and everything in between. These records may be useful for multiple reasons. #LINKEDIN #PROCUREMENT #LPU #MANAGEMENT

The Procurement Process Flow: Every company’s buying procedure is different. In business, however, procurement often begins with the identification of a need and the creation of a buy order that specifies all of the needs’ specifications. The purchase order will be forwarded to the relevant procurement or finance team for approval in a purchase when there is already an approved supplier for the demand. If it’s refused, you’ll get a letter explaining why. The purchase order is converted into a buy requisition once it has been approved. The procurement team puts out numerous RFQs (Request for Quotations) specifying the parameters provided in the purchase order for purchases that do not have a pre-approved supplier or vendor. The obtained quotations are examined, and a suitable vendor is chosen. After that, the procurement team negotiates a favorable deal with the chosen vendor and issues a buy order. When the bought products are received, a three-way matching verification is performed on the vendor’s invoice. The comparison and verification of the purchase order, vendor’s invoice, and the actual delivery of the products are known as three-way matching. This stage verifies that the organization made the order with the designated vendor and that the vendor has delivered and billed the goods in accordance with the purchase order. The receipt of the products is then compared to verify if the order was received as requested and as invoiced. The vendor’s invoice is authorized and payment is sent to the vendor when the three-way verification is complete. The finance department is in charge of accounting for the money. #Procurement #workflow

If you're looking to cut costs at your business - the procurement process is a good place to start. Procurement costs can significantly reduce cash performance if left unchecked. Contract and negotiation fees, transportation fees, late fees, invoice processing fees, restocking fees - these are just a few examples of additional costs increasing your overall purchase price. Luckily, there are many ways to improve your procurement process and reduce costs. Leveraging technology to automate manual tasks like requisition, sourcing, and payments saves businesses time and money. Learn more cost reduction strategies for procurement here: https://hubs.la/Q02lnZ3T0 #procurementautomation #procurementsoftware

Many organizations struggle with managing their purchases efficiently. But there’s a solution that can streamline your procurement, reduce errors, and save you both time and money: a Purchase Order System. From improved organization to enhanced financial control, here’s how this system can be a game-changer for you.

Procurement: More Than Just Buying and Negotiating Looking to save money for your small business? Let me tell you, it's all about procurement! Now, I know what you're thinking, "Procurement? What's that?" Well, my fellow small business owners, procurement is more than just buying and negotiating. It's a strategic approach to obtaining goods and services that can have a huge impact on your bottom line. So, what do you need to do to achieve your goal of saving money through procurement? Let me break it down for you with these quick and easy steps: Step 1: Supplier Research Do your homework and find reliable suppliers who offer high-quality products at competitive prices. Look for testimonials, check their track record, and compare prices to make sure you're getting the best deal. Step 2: Analyze Your Needs Take a close look at your business needs and identify areas where you can cut costs. Is there a more cost-effective alternative to the supplier you're currently using? Can you negotiate better terms or find a more affordable option without compromising quality? Step 3: Build Relationships Don't underestimate the power of building relationships with your suppliers. Establishing strong connections can lead to better deals, discounts, and even priority access to new products or services. Communicate your needs clearly and work together to find win-win solutions. Step 4: Embrace Technology Leveraging technology can streamline your procurement process and save you time and money. From automated inventory management systems to online marketplaces, there are countless tools available to help you optimize your procurement practices. Step 5: Monitor Performance Keep a close eye on your suppliers' performance. Are they delivering on time? Are they meeting your quality standards? Regularly assess their performance and don't hesitate to make changes if necessary. Remember, loyalty should be earned. So, small business owners, don't overlook the power of procurement when it comes to saving money. By following these steps and adopting a strategic approach, you can make a significant impact on your business's financial health. Start taking control of your procurement process today and watch those savings soar!

Types of Purchase Order: Purchase orders come in various types, each serving a specific purpose based on the nature of the transaction. Here are some common types of purchase orders: Standard Purchase Order: Description: The most common type of purchase order used for routine purchases of goods or services. Use Case: When a business needs to order standard items or services on a regular basis. Blanket Purchase Order: Description: Covers multiple delivery dates and is used when there's an ongoing need for goods or services. Use Case: Ideal for long-term agreements where quantities may vary over time. Contract Purchase Order: Description: A legally binding agreement with specific terms and conditions, often used for long-term contracts. Use Case: Suitable for large-scale projects or ongoing services where a detailed contract is necessary. Planned Purchase Order: Description: Created in advance to plan and track future purchases, but it doesn't commit funds until goods or services are received. Use Case: Useful for budgeting and planning purposes without an immediate need for delivery. Scheduling Agreement: Description: Similar to a blanket purchase order but includes specific delivery dates for agreed-upon quantities. Use Case: Common in industries where there's a regular delivery schedule, such as manufacturing. Contract Release Order: Description: Generated against a framework agreement or a contract and specifies details like quantity and delivery dates. Use Case: Used in scenarios where you want to release specific quantities against a larger contract. Standard Service Order: Description: Used when procuring services rather than goods, outlining the scope, terms, and conditions. Use Case: Common in industries where services are a significant part of the business process. Subcontracting Purchase Order: Description: Issued to subcontractors for specific work or services that are part of a larger project. Use Case: Common in construction or manufacturing where specialized tasks are outsourced. Emergency Purchase Order: Description: Issued in urgent situations where the regular procurement process is not feasible. Use Case: Used when immediate action is required to address unexpected needs or emergencies. Understanding the different types of purchase orders allows businesses to tailor their procurement processes to specific requirements and situations. Each type serves a unique purpose, contributing to effective supply chain and vendor management. #purchaseorder #purchasemanagement #purchase #PurchaseOrderBasics

Way Matching Processes in Procurement What is Matching? Matching is a process performed for goods and services ordered through a purchase order that takes place during the online invoice approval process. Invoices are matched to purchase orders (2-way matching), receiving information (3-way matching), and inspection information (4-way matching) as applicable. The invoices must meet matching tolerances or a hold is placed on the invoice and payment cannot be made until the hold is resolved or manually released. The default setting for all invoices is 2-way matching; if 3- or 4-way matching is required, it must be set on each purchase order when it is created. 2-Way Matching Process In the 2-way matching process, the quantity and amount on the invoice are matched to the quantity and amount on the corresponding purchase order. 3-Way Matching Process The 3-way matching process is used when an operating location uses online receiving. In 3-way matching, an invoice is matched to the corresponding purchase order for quantity and amount and to receiving information. 4-Way Matching Process The 4-way matching process is used when an operating location uses online receiving and inspection. In 4-way matching, an invoice is matched to the corresponding purchase order for quantity and amount, receiving, and inspection information. Source: https://lnkd.in/d8Z7Ktb9

For you Procurement Officers out there check out this Procurement Software, very easy to use and integrates many different aspects of the procurement process.

Today’s contract tip is about vendor requests to negotiate the terms and conditions attached to the purchase order (aka PO terms). Companies have different approaches, but my personal preference is to avoid doing this if possible. Most companies are not set up to manage negotiated versions of the PO terms. When someone in a company wants to issue a purchase order, they enter some basic data about the vendor, the item purchased, the price, and other details into the company’s management system. The system then generates a purchase order with the company’s standard terms attached. These management systems track that basic data and incorporate it into finance, planning, and other systems. But these management systems typically are not set up to flag the changes to the PO terms. Here is my approach - If we need to negotiate a few commercial things, we add them to the notes on the cover of the PO. But if we need to negotiate more than that and the team purchasing it supports investing in negotiations, I work off a stand-alone contract template. With most companies, we end up with a messy documentation trail when we start negotiating PO terms. I find life is better when I limit our negotiations to stand-alone signed agreements. What’s your approach to negotiating PO terms? #HowToContract #procurement #contracts