Steps in the Purchasing Process

When you run or manage a company that relies largely on buying supplies or raw materials, you have to get familiar with the purchasing process. The purchasing process involves a number of steps that ensures that you get the right items when you need them. Plan ahead, so that your ordering process runs smoothly.

Preliminary Decisions

The first step in the purchasing process is to determine what you need, as well as the frequency with which you will need the items for your business. For instance, if you plan to order office supplies, decide if you want to re-order each week, each month or just when you reach a certain inventory level. You should also determine how much you can afford to spend on the items you need to purchase so that you can negotiate rates with suppliers.

Contact Suppliers

Once you know what you need, you must then contact the suppliers who can provide you with what you need. Call a variety of suppliers to request a catalog or price sheet detailing the various items on your list. Negotiate a supplier arrangement with each company you want to order from to determine the exact terms of the agreement. Terms include who will pay for shipping, the discount schedule or per-item cost, and the number of days you can wait to pay for the order (usually 30 or more days).

Submit Purchase Order

Once you know what you want to purchase, the next step is submitting your purchase order to the supplier. A purchase order is a form that lists your business information as well as that of the supplier along with a complete itemized list of the items you wish to order. You can send your purchase order through the mail, via fax or through email.

Submit Payment

After you receive your order from the supplier you need to fulfill your side of the purchasing agreement. The supplier sends you an invoice listing the total amount due, which quotes the payment due date per your initial agreement. Send your payment to the supplier within the time established in your arrangement via a business check or a credit card. Make sure you verify that you've received all items ordered before paying the invoice.