Different order forms are used for various purchases, including purchase requisitions, regular orders, standing orders, open purchase orders, service contracts, and change orders. The purchasing process involves preparing an order request, selecting a supplier, issuing a purchase order, and obtaining approval. Bid requests may be necessary for certain purchases.
Orders have the function of authorizing the purchase of goods or services from different suppliers. Various order forms are used for different sizes and types of purchases. These forms include purchase requisitions or requests, regular orders, standing orders, open purchase orders, service contracts, and change orders.
In a regular ordering process, if a business unit needs to make a purchase, it prepares an order request or requisition detailing the desired items, quantity, unit cost, when the items are needed, and the preferred supplier, if any. The business unit presents the request to a manager authorized to approve the purchase or to a purchasing department for approval. If the order is for a large purchase or a large sum of money, more than one level of approval may be required before it can be finalized.
The purchasing department reviews the request and selects the best supplier for the material or services. After the request is approved, a purchase order is issued and assigned a number, and this number is referenced in all correspondence relating to that order, through delivery and payment. Purchase order forms can be electronic or paper. The appearance of the purchase order form is not important; it is the information contained therein that establishes the agreement between the supplier and the buyer.
Standing order forms are used when a company needs a regular delivery of an identical quantity of material, such as a monthly shipment. A standing order approves the delivery interval and price of the commodity, and specifies how long the standing order will remain in effect. A standing order can also be used for equipment or maintenance leases that will continue for a specified period.
General order forms are used to cover the routine purchase of small quantities of low value items. For example, an office might have a general purchase order to purchase paper, ink, and toner supplies for copying and printing functions. A blanket order typically restricts the types of items that can be purchased and sets an individual order limit and total amount, as well as an expiration date.
Contract order forms are generally used to cover work required to complete a project. They specify exactly which job will be performed and at what time. A contractual purchase order can provide interim payments as the project reaches certain milestones. If, during the course of the project, it becomes necessary to modify the requirements, a change order can be issued. The change order details precisely which specifications have changed and is incorporated into the original purchase order.
Business requirements may require a bid for any purchase that costs more than a certain amount of money or involves a specific type of goods or services. In this case, the purchasing department will request bids. Once bids have been received and reviewed, the purchasing department will award the order to the winning bidder.
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