ecked before creating a request for purchase.
Step 1: Purchase Requisition
Typically, a procurement process starts with a purchase requisition. The requester sends a request for procurement (paper form, electronic, or phone) to the purchasing department.
Step 2: Review of Request
The purchase request is then reviewed by the procurement/finance team. Approved requests become POs, while rejected requests are sent back to the requester with the reason for rejection. All these can be handled with a simple purchase order app
Step 3: Budget Approval
In enterprises, once the procurement team raises a PO, it is forwarded to the accounting department to receive budget approval.
Step 4: Quotation Requests
Once the budget is approved, the procurement team forwards several requests for quotation (RFQ) to vendors with the intention to receive and compare bids to shortlist the perfect vendor.
Step 5: Negotiation & Contract
Once a vendor is selected, the contract negotiation and signing are completed, and the purchase order is then forwarded to the vendor. A legally binding contract activates right after a vendor accepts a PO and acknowledges it.
Step 6: Receive Goods/Services
The vendor delivers the promised goods/services within the stipulated timeline. After receiving them, the purchaser examines the order and notifies the vendor of any issues with the received items.
Step 7: Three-Way Matching
At this step, three documents purchase orders, packaging slips (that arrive with the order), and vendor invoices are lined up and reconciled to pinpoint discrepancies and ensure that the transaction is accurate. Discrepancies should be addressed once they are discovered.
Step 8: Invoice Approval Payment
Once three-way matching is complete, the invoice is approved and forwarded to payment processing depending on organizational norms.
Step 9: Record Keeping
After the payment process, buyers make a record of it for bookkeeping and auditing. All appropriate documents right from purchase requests to approved invoices are stored in a centralized location.