Purchasing Systems and Law

Receiving and Checking your Purchase
Many firms do not have the proper documentation recording the receipt of goods and the checking to see that the quantity is correct, and the quality is acceptable. This can cause problems if there are any disputes later on. On receipt of the goods, it is important that the delivery is checked to make sure the correct quantity of goods has been received, and the quality is as requested.

There should be a document recording the receipt and this document should include the following:

  • The date of receipt.
  • The time of receipt.
  • The quantity of goods received.
  • Is the quality acceptable?
  • The names of the people who received the goods.
  • The name of the person who delivered the goods.

Simple System for Paying for your Purchases
When it is time for the purchases to be paid for, your bookkeeper or accountant will need the proper documentation for the purchase to be verified and confirmed for payment.

Documents that will be required are:

  • The original purchase order.
  • The goods received report.
  • The packing slip that came with the goods (if there is one).
  • The invoice from the supplier.

All these documents have to be brought together and matched up before a payment can be authorised.

What is Just In Time (JIT)
Just in time is becoming more and more popular and its benefits are obvious. Your order will come in when you need it so that storage is supplies is not necessary and there is saving in space, energy and transport. You money is not tied up in stock that could be damaged or become obsolete while sitting on the shelves.

Just in time (which involves the orders being produced when the order is received rather than being taken off the shelves from previous stocks) is an advantage to the manufacturer in that the manufacturer will produce based on an order received. It is also an advantage to the purchaser because they will get the exact goods that have been ordered.

The supplier has to work under the just in time system, which means that they must guarantee delivery on the date they indicate. If they don’t, then the system won't work. Make sure (if you are the purchaser) that you have a written agreement about the delivery times. In return, the supplier can get paid faster and their cash flow will benefit.