Purchase Order Tracking - A Purchase Order Is An Offer To Buy A Specified Product In A Specified Quantity And At A Specified
A purchase order is an offer to buy a specified product in a specified quantity and at a specified price. Once accepted it becomes a contract between buyer and seller.
It is likely you buy raw materials, components or even contract labor on a regular basis. Too many small businesses handle these transactions with nothing but a verbal order often with little or no discussion on price. Many times they routinely sign the vendor's proposals along never considering the onerous terms in small print on the reverse side.
Purchase Order Tracking - If you prepare a written purchase order it allows you to specify the exact product, state the price you expect the pay and the terms of the agreement. If you order 300 blue widget bolts you purchase order may say 300 each blue widget bolts with nut part number xyz704 at a price of $.35 per unit. It avoids the confusion of changing parts or changing prices. And the onerous terms on the reverse side can be to your advantage not theirs.
Have you ever ordered a part and after the delivery is received and the parts are already in production discovered a price increase you didn't know about. After the parts are half gone is the wrong time to discuss price.
Once you are comfortable with the system you should develop a system where you pay off the purchase orders. When we were building homes we would send out the purchase order in duplicate - one white and one pink. When the work was completed the trade contractor had our field superintendent approve the work and the contractor returned the pink copy as their invoice.
The revision system did a couple of things for us; it highlighted contractors who were constantly going over budget and made our superintendents responsible for tracking and reducing changes. The superintendent had to fill out a report on each revision giving the reason for the change. I reviewed these forms monthly. It allowed us to pinpoint problems and work to correct them. In one case we found that our cleaning contract on one subdivision was getting more revision than on another.
About the Author:
Purchasing Management - ExpenseWatch.com delivers spend management products & services for businesses that automate manual, time consuming paper-based processes for company purchases, payable invoices and expense reports, while enabling visibility and control of all company spending.ExpenseWatch.com delivers expense control products & services for businesses that automate manual, time consuming paper-based processes while enabling visibility and control of all company spending.
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