How Book-keeping Makes Procurement Snapy

Once you have decided on a vendor and are ready to proceed with a procurement, it is always a good idea to use written purchase orders.

If you don’t use purchase orders you are going to find yourself receiving goods and services that are the wrong style, type, or color than those you ordered. You may be charged a higher price or sent the wrong quantity.

The purchase order should specify the name of the item or service you are purchasing, and any procurement details specified in your specification sheet. You need to state the quantity you are purchasing, the delivery date, your address, shipping method and payment, and packing and receiving requirements.

You should detail each cost you are incurring and also state the total cost of the items or services you are ordering to avoid misunderstanding with your supplier.

It is also a good idea that you use purchase orders printed with your company name in order to add credibility to your procurement. If you don’t, you are most likely to be asked for a prepayment or cash deposit on the goods or services you are ordering.

Reporting

Always report procurements in the accounting period in which you acquired title to the merchandise or service. For example if your reporting format is monthly, then you should report all purchases against which you received title between the first and closing days of the relevant month.

Recommended Book-Keeping Approach

In order to take full command of your tax obligations, it is always important that you keep track of all your payments by way of supporting documents. You then immediately record all transactions arising from your procurement in the cash book.

Every time you make a purchase, ask for an invoice or a receipt.

• Keep a note of all purchases for which you do not have a receipt.


• File the bills in Purchases Unpaid in date order, with the most recent on the top.

When you pay a bill, write the date, supplier and amount on your cheque stub.

• If you pay several invoices with one cheque, write down each amount and the total.


• Take the invoice out of the Purchases Unpaid file and write the date and cheque number in the top right-hand corner.


• File the invoice in Purchases Paid in date and order of procurement.


• If you have a receipt, as well as an invoice, staple them together.

Once a week update your Cash Book or accounting software accordingly.

• Look through your cheque stubs. Enter the details of the bills you have paid into the Cash Book.


• Check the details against the invoices in the Purchases Paid file.

Put a tick against the cheque number (in the top right-hand corner) to show that the full invoice details of your procurement have been entered into your Cash Book.

Everything will match. Invoices will be in the same order as entries in the Cash Book, which will be in roughly the same order as entries on your bank statement

Cash Procurement

Pay the cash out of your own pocket.

Write details of the purchase on the receipt.

Keep the receipts in your Petty Cash file.

• Or use a spike, which is convenient and automatically keeps the receipts in date order until you deal with them.

Accounting For Cash Payments

Total all the petty cash receipts monthly, depending on the frequency of your payments.

• Write yourself a check for the monthly total or sub totals comprising daily to weekly payments .


• Attach the procurement receipts to an A4 sheet and file in Purchases Paid.

Enter the details in the Cash Book.

You can treat procurements by personal credit card in exactly the same way.

• Refund yourself the total of all the business purchases with a business cheque when the credit card bill arrives.


• Staple all the receipts to an A4 sheet.


• Enter details in the Cash Book, with your name and ‘credit card refund’ in the supplier column.

Return from Procurement To Book-Keeping.